Tuesday, July 25, 2017

The Totalitarianism of the Environmentalists

The Totalitarianism of the Environmentalists

The Totalitarianism of the Environmentalists

Late last year, I gave a talk about human progress to an audience of college students in Ottawa, Canada. I went through the usual multitude of indicators – rising life expectancy, literacy, and per capita incomes; declining infant mortality, malnutrition, and cancer death rates – to show that the world was becoming a much better place for an ever-growing share of its population.

It seemed to me that the audience was genuinely delighted to hear some good news for a change. I had won them over to the cause of rational optimism. And then someone in the audience asked about climate change and I blew it.

While acknowledging that the available data suggests a “lukewarming” trend in global temperatures, I cautioned against excessive alarmism. Available resources, I said, should be spent on adaptation to climate change, not on preventing changes in global temperature – a task that I, along with many others, consider to be both ruinously expensive and, largely, futile.

The audience was at first shocked – I reckon they considered me a rational and data-savvy academic up to that point – and then became angry and, during a breakout session, hostile. I even noticed one of the students scratching out five, the highest mark a speaker could get on an evaluation form, and replacing it with one. I suppose I should be glad he did not mark me down to zero.

My Ottawa audience was in no way exceptional. Very often, when speaking to audiences in Europe and North America about the improving state of the world, people acknowledge the positive trends, but worry that, as Matt Ridley puts it, “this happy interlude [in human history will come] to a terrible end.”

Of course, apocalyptic writings are as old as humanity itself. The Bible, for example, contains the story of the Great Flood, in which God “destroyed all living things which were on the face of the ground: both man and cattle, creeping thing and bird of the air.” The Akkadian poem of Gilgamesh similarly contains a myth of angry gods flooding the Earth, while an apocalyptic deluge plays a prominent part in the Hindu Dharmasastra.

And then there is Al Gore. In his 2006 film An Inconvenient Truth, Gore warns that “if Greenland broke up and melted, or if half of Greenland and half of West Antarctica broke up and melted, this is what would happen to the sea level in Florida,” before an animation shows much of the state underwater. Gore also shows animations of San Francisco, Holland, Beijing, Shanghai, Calcutta, and Manhattan drowning. “But this is what would happen to Manhattan, they can measure this precisely,” Gore says as he shows much of the city underwater.

Thinking Environmentalist Laws Through

It is possible, I suppose, that our eschatological obsessions are innate. The latest research suggests that our species, Homo Sapiens Sapiens, is 300,000 years old. For most of our existence, life was, to quote Thomas Hobbes, “solitary, poor, nasty, brutish, and short.” Our life expectancy was between 25 years and 30 years, and our incomes were stuck at a subsistence level for millennia. Conversely, our experience with relative abundance is, at most, two centuries old. That amounts to 0.07 percent of our time on Earth. Is there any wonder that we are prone to be pessimistic?

That said, I wonder how many global warming enthusiasts have thought through the full implications of their (in my view overblown) fears of a looming apocalypse. If it is true that global warming threatens the very survival of life on Earth, then all other considerations must, by necessity, be secondary to preventing global warming from happening.

That includes, first and foremost, the reproductive rights of women. Some global warming fearmongers have been good enough to acknowledge as much. Bill Nye, a progressive TV personality, wondered if we should “have policies that penalize people for having extra kids.”

Then there is travel and nutrition. Is it really so difficult to imagine a future in which each of us is issued with a carbon credit at the start of each year, limiting what kind of food we eat (locally grown potatoes will be fine, but Alaskan salmon will be verboten) and how far we can travel (visiting our in-laws in Ohio once a year will be permitted, but not Paris)? In fact, it is almost impossible to imagine a single aspect of human existence that would be free from government interference – all in the name of saving the environment.

These ideas might sound nutty, but they are slowly gaining ground. Just last week, a study came out estimating the environmental benefits of “having one fewer child (an average for developed countries of 58.6 tonnes CO2-equivalent (tCO2e) emission reductions per year), living car-free (2.4 tCO2e saved per year), avoiding air travel (1.6 tCO2e saved per roundtrip transatlantic flight), and eating a plant-based diet (0.8 tCO2e saved per year).”

And then there is Travis N. Rieder, a research scholar at Johns Hopkins’ Berman Institute of Bioethics, who says that “maybe we should protect our kids by not having them.” He wants tax penalties to punish new parents in rich countries. The proposed tax penalty would become harsher with each additional child.

And that brings me to my final point. Since the fall of communism, global warming has been, without question, the most potent weapon in the hands of those who wish to control the behavior of their fellow human beings. Lukewarmists like me do not caution against visions of an environmental apocalypse out of some perverse hatred of nature. On the contrary, concern for the environment is laudable and, I happen to believe, nearly universal. But environmentalism, like all –isms, can become totalitarian. It is for that reason that, when it comes to our environmental policies, we ought to tread very carefully.

Reprinted from CapX.


Marian L. Tupy


Marian L. Tupy is the editor of HumanProgress.org and a senior policy analyst at the Center for Global Liberty and Prosperity.

This article was originally published on FEE.org. Read the original article.

MegaCon 2017: Tom Wilson

MegaCon 2017: Tom Wilson

Steve Jobs Wanted to Break Up the Education Monopoly

Steve Jobs Wanted to Break Up the Education Monopoly

Steve Jobs Wanted to Break Up the Education Monopoly

Steve Jobs said in a 1995 interview, “The unions are the worst thing that ever happened in education.”

Jobs spoke with Computerworld’s Daniel Morrow in a 1995 interview, which covered a wide range of topics, but frequently delved into Jobs’s views on the American education system. As he said, “I’d like the people teaching my kids to be good enough that they could get a job at the company I work for making $100,000 a year.”

But Jobs blamed teachers unions for getting in the way of good teachers getting better pay. “It’s not a meritocracy,” said Jobs. “It turns into a bureaucracy, which is exactly what’s happened. And teachers can’t teach, and administrators run the place, and nobody can be fired. It’s terrible.”

He noted that one solution is school choice: “I’ve been a very strong believer that what we need to do in education is go to the full voucher system.” Jobs explained that education in America had been taken over by a government monopoly, which was providing a poor quality education for children.

He referenced the government-created phone monopoly, broken up in 1982: “I remember seeing a bumper sticker with the Bell logo on it and it said, ‘We don’t care, we don’t have to.' That’s certainly what the public school system is. They don’t have to care.”

Jobs said that one way to open up a free market in education would be to offer a voucher to families. He gave an example of the California public school system, which in 1995 spent $4,400 per pupil: “I believe strongly that if the country gave each parent a voucher – a check for $4,400 that they could only spend at any accredited school – that several things would happen.”

First, “Schools would start marketing themselves like crazy to parents, to get students.”

Second, many new schools would begin popping up. “You could have 25-year-old kids out of college – very idealistic, full of energy – instead of starting a Silicon Valley company, they would start a school, and I believe they would do far better than many of our public school teachers do.”

 

Finally, the quality of education would rise in a competitive market: “A lot of schools would go broke, there’s no question about it. It would be rather painful for the first several years, but I think far less painful than the kids going through the system as it is right now.”

Jobs said that the main complaint against school choice is that schools would cater only to rich kids, and the poor kids would be “left to wallow together.”

However, he said, “that’s like saying, well, all the car manufacturers are going to make BMWs and Mercedes and nobody’s going to make a $10,000 car. Well, I think the most hotly competitive market right now is the $10,000 car.”

In other words, Jobs said, all students would benefit from more school choice, as the monopoly in education was broken up.

“The market competition model seems to indicate that where there is a need, there is a lot of providers willing to tailor their products to fit that need, and a lot of competition which keeps forcing them to get better and better.”


Joe Kent


Joe Kent is the Vice President of Research at the Grassroot Institute of Hawaii, a free market think tank. Joe previously worked as a public school teacher for eight years, both in Hawaii and in Minnesota.

This article was originally published on FEE.org. Read the original article.

Monday, July 24, 2017

Everything You Need to Know about Government, in One Story

Everything You Need to Know about Government, in One Story

Everything You Need to Know about Government, in One Story

Every so often, I run across a chart, cartoon, or story that captures the essence of an issue. And when that happens, I make it part of my “everything you need to know” series.

I don’t actually think those columns tell us everything we need to know, of course, but they do show something very important. At least I hope.

And now, from our (normally) semi-rational northern neighbor, I have a new example.

This story from Toronto truly is a powerful example of the difference between government action and private action.
A Toronto man who spent $550 building a set of stairs in his community park says he has no regrets, despite the city’s insistence that he should have waited for a $65,000 city project to handle the problem. 
Retired mechanic Adi Astl says he took it upon himself to build the stairs after several neighbours fell down the steep path to a community garden in Tom Riley Park, in Etobicoke, Ont. Astl says his neighbours chipped in on the project, which only ended up costing $550 – a far cry from the $65,000-$150,000 price tag the city had estimated for the job. …Astl says he hired a homeless person to help him and built the eight steps in a matter of hours. …Astl says members of his gardening group have been thanking him for taking care of the project, especially after one of them broke her wrist falling down the slope last year.
There are actually two profound lessons to learn from this story.

Since I’m a fiscal wonk, the part that grabbed my attention was the $550 cost of private action compared to $65,000 for government. Or maybe $150,000. Heck, probably more considering government cost overruns.

Though we’re not actually talking about government action. God only knows how long it would have taken the bureaucracy to complete this task. So this is a story of inexpensive private action vs. costly government inaction.

But there’s another part of this story that also caught my eye. The bureaucracy is responding with spite.
The city is now threatening to tear down the stairs because they were not built to regulation standards…City bylaw officers have taped off the stairs while officials make a decision on what to do with it. …Mayor John Tory…says that still doesn’t justify allowing private citizens to bypass city bylaws to build public structures themselves. …“We just can’t have people decide to go out to Home Depot and build a staircase in a park because that’s what they would like to have.”
But there is a silver lining. With infinite mercy, the government isn’t going to throw Mr. Astl in jail or make him pay a fine. At least not yet.
Astl has not been charged with any sort of violation.
Gee, how nice and thoughtful.

One woman has drawn the appropriate conclusion from this episode.
Area resident Dana Beamon told CTV Toronto she’s happy to have the stairs there, whether or not they are up to city standards. “We have far too much bureaucracy,” she said. “We don’t have enough self-initiative in our city, so I’m impressed.”
Which is the lesson I think everybody should take away. Private initiative works much faster and much cheaper than government.

P.S. Let’s also call this an example of super-federalism, or super-decentralization. Imagine how expensive it would have been for the national government in Ottawa to build the stairs? Or how long it would have taken? Probably millions of dollars and a couple of years.

Now imagine how costly and time-consuming it would have been if the Ontario provincial government was in charge? Perhaps not as bad, but still very expensive and time-consuming.

And we already know the cost (and inaction) of the city government. Reminds me of the $1 million bus stop in Arlington, VA.

But when actual users of the park take responsibility (both in terms of action and money), the stairs were built quickly and efficiently.

In other words, let’s have decentralization. But the most radical federalism is when private action replaces government.

Reprinted from International Liberty

Editors Note: Since this article was originally published, the local government tore down Astl's $500 stairs, citing "safety standards," and plans to replace it with a $10,000 set.


Daniel J. Mitchell


Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

This article was originally published on FEE.org. Read the original article.

Antic (March 1987)

Antic (March 1987)




Sunday, July 23, 2017

The West’s Advancement of Liberty

The West’s Advancement of Liberty

The West's Advancement of Liberty

Selections from an AMA with Robin Koerner. Founder of WatchingAmerica.com, the original "Blue Republican" and author of "If You Can Keep It".

Q: Hi Robin, thanks so much for doing this AMA. What's the most striking difference you see between the fortunes of human liberty in the US vs. the UK?

A: The US has a conscious, explicit and foundational tradition of liberty. I couldn’t do what I do in the UK (go around talking a lot about liberty and how to sell it) simply because the political vocabulary and interest in that concept per se are largely absent.  That is a huge thing.

It’s not just that the US has a classical liberal Constitution, but that the spirit of that constitution is “in the air”. It’s actually in the culture. It’s popular.  As a result, mostly unconscious, when Americans are considering any political issue, which necessarily involves the government, they are always thinking not only about the issue per se but also about the nature of government/governance itself.

On the flip side, I am more scared of the US government than the British (as a citizen of both countries). Because Americans, despite their self-narrative of rugged individualism, have a respect for, and deference to, authority, including most importantly political authority (people in the office) and law enforcement (people in uniform) that you would never find in Britain.

So in short, there are many dimensions on which the US/the UK are ahead of/behind each other in the liberty-stakes. But if you ask me to pick one best place to protect liberty, I still choose the US, once I net it all out. And I voted with my feet.

Q: The expenses associated with Brexit are going to be astronomical. While I see the need for Britain to retain its sovereignty, is it worth the cost?

A: With respect to “retain its sovereignty” – and the general thrust about weighing freedom with economic benefit, yes it absolutely worth it, for exactly the same reason that “picking cotton will become more expensive” was not a good argument against freeing the slaves. Getting out of the EU must be done at almost any cost if the British people are going to be not only free in the long run, but also, simply, a self-determined people.

Regarding the premise about the high cost of leaving, I don’t believe it’s necessarily the case. The EU side – and therefore the pro-EU media – has a massive interest in pumping out the propaganda that it’s going to hurt the UK to be outside of the union. But we heard the exact same thing when the UK didn’t join the Euro – and then when we voted for Brexit (which was before any negotiations apparently going to have a massive negative impact on our economy: the opposite happened, of course).

But there is absolutely no legal reason that this has to cost us any more than the adjustment costs that will be borne by large private and public companies that invested based on one future (if they were not very good at reading the public) and now have to adjust to another. But that’s life. That’s just what it means to operate in a dynamic marketplace.

Q: What would you say is/are the toughest obstacle(s) for Liberty activists to overcome in order to persuade others to consider or support a different perspective (e.g. Persuading a leftist or neocon to support libertarian views)? And how can they overcome those obstacles in order to gain supporters for Liberty?

A: The biggest obstacle is lack of intellectual humility. They can overcome this one by seeking out smart people (preferably smarter than themselves!) they can respect with views that oppose their own, and deeply engaging the objections from a position that isn't motivated by "let me find where this is wrong" but rather by "let me see where this opposing view points to something that I've not fully considered/assimilated".

The second is mistaking the map for the territory. A political philosophy is an abstraction of reality. Its test is against the experiences of other people, who are the only ends of politics. If you keep not being able to persuade people (real things) of your version of libertarian ideas, that's as likely to do with a mismatch between your ideas and human nature or the current experiences of human beings in our culture (which must be taken into account as the context for any political change) as it is to do with the fact that everyone else is an idiot. (They're not.)

In short, to persuade person X of Proposition Y, it is more important to understand the nature of X than the logic of Y. So activists should spend a bit more time on the former and a bit less on the latter. Literally, spend more time exploring those fields than re-reading the Creature from Jekyll Island (awesome as that book is!) It's a corollary of "seeking first to understand before being understood". Travel (to different places, cultures etc.) is good for that too.

Q: You were heavily involved in 2012 prez election and saw the "movement" first hand. I think you might agree that there are fewer people around today who might be classified as a liberty "activist" in the sense that people were in those days. It is not obvious to me that this is regrettable. I would rather see sincerity and sophistication rather than sheer numbers. What is your view of this?

A: There are always more people doing anything that is getting more attention in the media and culture. “What we focus on we make bigger”. The presidential election is (alas) like a presidential super bowl that goes on for years… which means there’s plenty of time for people with myriad reasons to latch on to do so. The more attention something gets and the more of the “cultural space” it occupies, the more personal reasons people will have to get involved. It’s not unreasonable, it is attention and cultural space that presage real political change after all. (Culture precedes politics.)

So now that that presidential super bowl is over and especially since our (Liberty’s) team (Ron Paul) was playing, inevitably fewer fans are engaged (if you’ll allow me to stretch the analogy).

The citizens committed enough to set the direction of cultural and political change are always few, sincere and sophisticated. So like you, I am an optimist. Because our activist core is sincere and growing, and with this generation I believe, determined to become more sophisticated, using the new technological communication- and education-related tools for just that purpose.

Q: What's your favorite beer?

A: Now we're getting to what really matters! Not a single favorite, Grant. Rather, I love to explore the amazingly diverse and flavorsome Belgian beers (anything from Duvel to a Lambic). Closer to home, I'm partial to a good locally brewed IPA on draft...


Robin Koerner


Robin Koerner is British-born and recently became a citizen of the USA. A decade ago, he founded WatchingAmerica.com, an organization of over 200 volunteers that translates and posts views about the USA from all over the world, works as a trainer and a consultant, and recently wrote the book If You Can Keep It.

This article was originally published on FEE.org. Read the original article.


MegaCon 2017: Rocky Horror Picture Show Cast

MegaCon 2017: Rocky Horror Picture Show Cast

Friday, July 21, 2017

Health Care Is a Mess… But Why?

Health Care Is a Mess… But Why?

Health Care Is a Mess... But Why?

You probably know a couple who both work full time to support their children, but even with their dual incomes, they’re finding it more and more difficult to afford health insurance.

Everyday incidents like sports injuries, asthma, and blood pressure, combined with their anxiety over rising premiums, are turning their American dream into sleepless nights.

Why can’t people catch a break? It wasn’t always this way!

According to the Consumer Price Index and Medical-care price index from 1935 to 2009, the health care spending crisis didn’t start until the mid 1960s, around the same time when Medicare and Medicaid were signed into law, and at the same time that we began requiring doctors to go through all sorts of expensive licensing procedures beyond medical school.

Since then, health care spending has doubled, even adjusted for inflation. Why? Well, there are a few reasons.

Everyone wants health care, but there’s only so much to go around. And short supply leads to high prices. Normally what happens in a marketplace is that when prices are high, entrepreneurs try to profit by finding more affordable ways to provide goods and services.

The more people become involved in providing these services, the less scarce they become and the lower the prices drop, so that over time, more and more people can afford them.

This is what happened to televisions, microwaves, computers, cell phones, internet service, delivery services, food, shipping, transportation/air-travel, entertainment, home security, fitness, yoga, massages, and even all the medical technology, like LASIK, that isn't as heavily regulated or controlled by government.

Can't government drive down the price of goods and services like the free market?


Let's look at what happened with Medicare and Medicaid as an example. In 1965, these two single payer health insurance programs were instituted in the US. These programs made the unfortunate less dependant on impartial private charities and more dependant on political institutions and pharmaceutical companies.

On top of that, these programs constantly require tax increases, and because they function more to satisfy the health care industry than the worker, they continually lead to more expensive and wasteful ways of treating patients.

As a result, prices shot up, making it even more difficult for people to afford health insurance. Not only that, but in 1965, government took over the training of new doctors, and in 1997 they limited the number of new doctors they would train at 110,000 per year – and the number hasn’t changed since!

Even worse, our government won’t let migrant doctors from developed western countries practice in the US without undergoing this training. So, not only do experienced doctors from other countries not want to practice medicine here, but the ones who do are taking up 15% of those few 110,000 slots, limiting the supply of doctors even more.

Won't Obamacare solve these problems?

Unfortunately, Obamacare suffers from similar problems. It eliminated the pricing structure by seriously restricting competition because all providers have to offer the same kinds of plans at the same price. And because that price isn’t really determined by the market, providers can charge the taxpayer way more than they could otherwise. It’s basically just a handout to big insurance companies.

But it doesn’t have to be this way! If we get the government out of health care, more people like those you know will be able to get the care they need.


Seamus Coughlin


Seamus Coughlin is a comedy writer and animator with a deep interest in politics and morality. A good deal of his work can be found on the FreedomToons YouTube channel.

This article was originally published on FEE.org. Read the original article.

Electronic Gaming Monthly – Holiday 2007

Electronic Gaming Monthly – Holiday 2007








Thursday, July 20, 2017

How I Paid for My Haircut, and Much More, In Bitcoin

How I Paid for My Haircut, and Much More, In Bitcoin

How I Paid for My Haircut, and Much More, In Bitcoin

In the early days of Bitcoin, by which I mean only a few years ago, people would dismiss the new currency this way, “Can I use it to pay my local sandwich shop? If not, it is not a money.”

That’s true as stated but trivial. If you don’t have it, or if you have it and can’t find anyone to take it, it is not a money for you. In that same way, I don’t own any Birr, the currency of Ethiopia, and no one I know would take it if I did. Still, it’s a money somewhere.

In some prisons, mackerel cans serve as money. In others, It’s Ramen noodles. Indeed, anything you acquire not to consume but rather to use in future exchange is technically serving a monetary function (that is, it is used for indirect exchange).

It’s a Process

In that same way, Bitcoin has been a money for some people somewhere since October 5, 2009, the date that the first dollar exchange ratio was posted. That it took so long to get to you and me is not a surprise. Carl Menger wrote that this is the way money emerges in a market, gradually, in ever expanding circles based on access and success in doing what money is supposed to do.
Men have been led, with increasing knowledge of their individual interests, each by his own economic interests, without convention, without legal compulsion, nay, even without any regard to the common interest, to exchange goods destined for exchange (their “wares”) for other goods equally destined for exchange, but more saleable.
In other words, there is not some switch in the sky that transforms a non-money into a money. Discovering what goods are saleable is a matter of discovery. There is no obvious and immediate answer, and the answer is always changing. It’s a process that gradually unfolds, as human ingenuity comes up with solutions to practical problems.

It’s been this way with Bitcoin. It was a curiosity. Then an investment. Then a solution for the technically inclined. Then a thing to push harder for wider acceptance. More and more people got involved, and merchants began to accept it. Then the demand grew and grew. Some have proven that you can live off Bitcoin if you are enterprising enough.

Now, keep in mind that cryptocurrency’s main use is not in fact using it at the local sandwich shop. You can do that with dollars, which is probably why it has taken so long for the physical-world market to become friendly to it. There are rarified places that accept it (I have far less trouble spending this stuff abroad) but most places do not.You can get nearly anything with Bitcoin but you may not be able to use it as payment with everyone from whom you want to buy.

Innovation in Money

I’ve not known entirely what to make of these various objections to Bitcoin I’ve heard for years. Are they tossed out as a problem to be solved or as a suggestive proof that there is no such thing as computer-created money that is not based on an existing approved currency? If the point is to debunk it fundamentally, I’m confident that the incredulity will gradually die off.

If the point is to raise an existing limitation (“wallets are not user friendly” etc.), that only speaks to the early point in this period of history in which we find ourselves. The whole point of innovation is to solve problems, and, as we know from the block-size debate, Bitcoin is far from complete.

Let’s consider one problem in particular: allegedly, you can’t use it for a sandwich. Actually, that problem has been solved.

There are many vendors out there but I chose to experiment with BitPay’s Visa card. It’s relatively new and not in broad circulation. Only 24,000 have been issued in the US and foreign nations.

Still, I have to say that it is wonderful. It can do anything that a regular debit card can do. You can buy groceries. You can get a drink at a bar. You can pay for a haircut. You can buy fast food. You can use it to shop online, buying anything from Amazon or eBay. I’ve used it to do all these things without a hitch.

But why bother with this circuitous method when any old credit card will do? Here’s a story to explain. I was at the UPS store to mail a letter and used it. The clerk became really excited when he saw it. It turns out that he loves mining new coins with strange names in hopes that one of them will be a hit. We struck up a wonderful conversation and we both experienced a sense of camaraderie that otherwise would never have existed.

There’s another factor to it also: the sheer fun of it. My goodness, I’m paying for stuff with a money invented by a handful of code monkeys that only a few people on planet earth even believed was possible a decade ago. That factor – downplay it if you want to – is truly underappreciated.

How It Works

How does this thing work? You sign up and get your card and go to the website to fill it up with Bitcoin. That immediately transfers to your use. Now you can carry around spendable Bitcoin.

Now, astute readers will be asking the question: what happens when the value of Bitcoin changes. Does the purchasing power of the debit card change with it? The answer is no. Your dollar value is locked in the moment you pump crypto into the card. Technically, what happens is that you are transferring Bitcoin to BitPay in exchange for which you have dollars to spend at whatever the prevailing rate is. BitPay accepts the downside risk while the user loses the upside benefit. So, yes, technically, you are not exactly spending Bitcoin when you use it. You are spending dollars.

If you prefer to sell Bitcoin at the time of the spending, there are other options such as the Shift card. If you are clever, you can use one card to protect against a falling price and another card to capture a rising price. 

It’s also true that by using such a third-party intermediary, you are giving up a key feature of Bitcoin, which is its peer-to-peer network that allows instant trading between individuals. But don’t blame Bitcoin for this. Government regulations have made it extremely difficult to move between different monetary ecosystems. None of this would be happening if the US Treasury had permitted a free market in monetary exchange instead of imposing egregious regulations.

The beauty of this service is that it makes navigating between dollars and Bitcoin extremely easy and secure. For all the limitations, that alone makes it all worth it for me. Plus, as I mention, it is fun.

From the very beginning of public awareness of this new technology, there has been this expectation that it should be perfect in every way or else it is not valuable. That’s ridiculous. That didn’t happen with railroads, electricity, flight, or the world wide web. Everything has to go through a process of improvement through user feedback and entrepreneurial innovation.

Bitcoin is already money, just not yet a universal money. But you can feel it every day: the promise is there. It is just a matter of time and effort.


Jeffrey A. Tucker


Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

This article was originally published on FEE.org. Read the original article.


Wednesday, July 19, 2017

Governments Don’t Give People Rights

Governments Don’t Give People Rights

Governments Don't Give People Rights

Today’s Quotation of the Day is from pages 22-23 of Georgetown University law professor Randy Barnett’s must-read 2016 book, Our Republican Constitution:
If one views We the People as a collection of individuals, a completely different constitutional picture emerges [from the one seen today by “Progressives”]. Because those in government are merely a small subset of the people who serve as their servants or agents, the “just powers” of these servants must be limited to the purpose for which they are delegated. That purpose is not to reflect the people’s will or desire – which in practice means the will or desires of the majority – but to secure the pre-existing rights of We the People, each and every one of us.
Each of us has, throughout our lives, many agents. Some are formal (such as lawyers and realtors) while others are informal (such as the friend who agrees to run an errand for you). These people serve us, and we, in turn and in various ways, serve them – for example, we pay them money for their services.



Importantly, the ‘power’ of each of these agents to act for us is confined to the purpose for which we hire that agent. I delegate to my real-estate agent the power to represent me in selling my home; I do not thereby delegate to her the power to sell my car, to decide how my children are to be educated, or what I may eat for lunch.

Under the American constitutional system, elected officials are agents of the citizens of the politically defined regions from which these officials are elected. These political agents are no more the originating sources of their own powers and duties to represent the citizens who are their principals than, say, is your realtor the originating source of her power and duties to represent you, the person who hired her to sell your house.

Rights pre-exist government. Therefore, even if – as most people believe – government is necessary to help to secure individuals’ rights, government does not create that which it itself is created to help to secure. Your real-estate agent might be necessary to sell your home, but this fact does not thereby make her the source of your home’s value or the owner of your home.

And just as no amount of agreement by other homeowners and realtors to the proposition that your home now belongs by right to your neighborhood makes your home belong by right to your neighborhood, no amount of agreement by fellow citizens and political representatives that your property now belongs by right to the collective makes your property belong by right to the collective.

When any such transfer of ownership occurs – wherever there is any such stripping away of rights from the individuals who possess them – what is really there is a brute exercise of raw power regardless of how gaudy is the philosophy that is used to portray this occurrence as something more profound.

Reprinted from Cafe Hayek.


Donald J. Boudreaux


Donald Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, a professor of economics and former economics-department chair at George Mason University, and a former FEE president.

This article was originally published on FEE.org. Read the original article.

The Isgur Portfolio System (DOS, Macintosh, Atari ST)

The Isgur Portfolio System (DOS, Macintosh, Atari ST) 




MegaCon 2017: Richard Dean Anderson

MegaCon 2017: Richard Dean Anderson

The EU’s Chief Brexit Negotiator Is an Anti-Anglophone

The EU’s Chief Brexit Negotiator Is an Anti-Anglophone

The EU's Chief Brexit Negotiator Is an Anti-Anglophone

When the European Union Commission needed to appoint a negotiator for its talks with the United Kingdom, the task was of essential importance. This person needed to be a distinguished diplomat, a careful communicator in the media, and a connoisseur of the intricacy of the relationship between the British Isles and the continent. The toxic political environment surrounding Brexit deserves an open-minded and calm voice to represent the 27 remaining voices of the European Union, which all have individual interests in remaining faithful trading partners with the UK.

Unfortunately, who we got is French politician Michel Barnier.

When the news broke that Barnier would be appointed by Commission president Jean-Claude Juncker, many Brits were outraged. The political editor of The Sun tweeted:



Barnier's Previous Dealings with the United Kingdom

Michel Barnier embodies the archetype of a Brussels bureaucrat: his entire life has been inside politics, never working in the private sector in his life. In France, he was known for his advocacy for the European Union and further political integration. In 2005, after the French voted down the proposal for an EU constitution in a referendum, former president Jacques Chirac threw him out of the cabinet.

Between 2010 and 2014, Michel Barnier was the EU Commissioner for Internal Market and Services and infamous for his political priorities. After the financial crisis of 2008 hit the continent, Barnier was vocal in his support for a European Banking Authority, a proposal which was staunchly opposed by financial institutions in the City of London, the UK's financial heartland. Even German bankers criticised the implementation in ineffectiveness of the European Banking Authority (EBA), as the disagreements on an EU-level as to what it should actually do made directing it virtually impossible.

Barnier's EBA soon started regulating on its own. In 2013, the agency asked for a cap on the bonuses of managers, as it desired "guidelines on sound remuneration policies". These rules included a limit on awarding variable remuneration to 100% of fixed remuneration, or 200% with shareholder approval, and were opposed by both the government and UK regulators themselves. The British government even challenged the rules in the European Union Court of Justice.

In 2016, Brits were put off by the news that banks will likely raise provisions by 18 percent in order to offset the EBA's new accounting rules, which will apply from 2018 on.

One thing was clear, Michel Barnier would never set a friendly foot in the City of London again.

The Most Unconstructive Negotiators Imaginable

When the UK government under Prime Minister Theresa May appointed Brexit secretary David Davis the man certainly was in for one bumpy ride. Upon arrival in Brussels, the chairman of the Liberal Democrats in the European Parliament Guy Verhofstadt told the newly appointed minister "Welcome to Hell".

The EU wanted to make one thing clear from the start: it was going to make an example out of Britain. After the first negotiating between Davis and EU officials, Barnier said that the union "would make no concessions".

He added passive-aggressively:

"I will do all I can to put emotion to one side and stick to the facts, the figures, and the legal basis, and work with the United Kingdom to find an agreement in that frame of mind."

Far worse is Barnier's tendency to deliberately provoke the British. The EU’s chief Brexit negotiator demanded for the negotiating talks to be held in French, even though there are no official languages in the talks as all documents and speeches are translated regardless. In a similar fashion, EU Commission president Jean-Claude Juncker claimed that he prefers to express in French, as ‘English is slowly losing importance in Europe’.

Trade Relations between EU and UK

It frankly doesn't seem out of character for EU officials to despise the anglo-saxon view on the world. Not only is it rare for the continent to show appreciation for anything outside of the Queen and Harry Potter, the spirit of entrepreneurship and gratitude for the advantages of free-market capitalism seems rather repulsive to many Europeans. In fact, the differences in work ethic are apparent. In Michel Barnier's home country France, challenging the 35-hour working week is almost political taboo. Meanwhile, the UK profits off of the flexibility of less rigid labour regulations.

And yet, no matter how anti-British European Union officials might be, they have to comprehend that worsening trade relations with the United Kingdom will be detrimental to both sides, and especially the European public which the EU pretends to care so deeply about.

In April 2017, EU imports exceeded EU exports by £6.9 billion ($8.8 billion), meaning that the EU is more dependent on the Brits for trade relations than vice-versa. Getting back to WTO-tariffs means harming German car manufacturers, Italian parmesan-producers and French wineries.

The European Union needs to finally embrace free trade across the board, not only for its privileged members. Sneering at the Brits might be fun for boosting your own ego and publicity. It is not for the regular people who depend on trade.


Bill Wirtz


Bill Wirtz studies French Law at the University of Lorraine in Nancy, France.

This article was originally published on FEE.org. Read the original article.


Tuesday, July 18, 2017

Seattle’s $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

Seattle’s $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

Seattle's $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

In an important article in the Seattle Weekly, Daniel Person summarizes the situation in Seattle pretty well in the title of his exposé “The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley,” here’s a slice:
Two weeks. Two studies on minimum wage. Two very different results. Last week, a report out of the University of California – Berkeley found “Seattle’s minimum wage ordinance has raised wages for low-paid workers, without negatively affecting employment,” in the words of the Mayor’s Office. That report, produced by the Center on Wage and Employment Dynamics at Berkeley, was picked up far and wide as proof that the doomsday scenarios predicted by skeptics of the plan were failing to materialize.

And while another study that came out Monday from researchers at the University of Washington (UW) doesn’t exactly spell doomsday either, it wasn’t exactly rosy. “UW study finds Seattle’s minimum wage is costing jobs,” read the Seattle Times headline Monday morning. The study found that while wages for low-earners rose by 3 percent since the law went into effect, hours for those works dropped by 9 percent. The average worker making less than $19 an hour in Seattle has seen a total loss of $125 a month since the law went into effect.

There’s an old joke that economics is the only field where two people can win the Nobel Prize for saying the exact opposite thing. However, by all appearances, these two takeaways on Seattle’s historic minimum wage law are not a symptom of the vagaries of a social science but an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight. In short, the Mayor’s Office knew the unflattering UW report was coming out and reached out to other researchers to kick the tires on what threatened to be a damaging report to a central achievement of Ed Murray’s tenure as mayor.
And here’s the key takeaway of what Person uncovered:
To review, the timeline seems to have gone like this: The UW shares with City Hall an early draft of its study showing the minimum wage law is hurting the workers it was meant to help; the mayor’s office shares the study with researchers known to be sympathetic toward minimum wage laws, asking for feedback; those researchers release a report that’s high on Seattle’s minimum wage law just a week before the negative report comes out.
In other words, if you don’t like an unflattering study from a team of researchers from the local university that accurately exposes some of the negative employment effects of the city of Seattle’s $15 minimum wage, you shop around – out of state in this case — for a more favorable study of that questionable and risky public policy experiment.

And what didn’t the Seattle mayor’s office like about the UW study? Let’s find out by looking at some of the key findings of the 63-page NBER study “Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle” by Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor and Hilary Wething (all six are professors in the Daniel J. Evans School of Public Policy and Governance at the University of Washington). The selected excerpts below help tell the story that the city of Seattle didn’t want to hear (emphasis added):

Abstract:
This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.
Conclusion:
Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4% during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarterAlternative estimates show the number of low-wage jobs declined by 6.8%, which represents a loss of more than 5,000 jobs. These estimates are robust to cutoffs other than $19. A 3.1% increase in wages in jobs that paid less than $19 coupled with a 9.4% loss in hours yields a labor demand elasticity of roughly -3.0, and this large elasticity estimate is robust to other cutoffs.

These results suggest a fundamental rethinking of the nature of low-wage work. Prior elasticity estimates in the range from zero to -0.2 suggest there are few suitable substitutes for low-wage employees, that firms faced with labor cost increases have little option but to raise their wage bill. Seattle data show that payroll expenses on workers earning under $19 per hour either rose minimally or fell as the minimum wage increased from $9.47 to $13 in just over nine months. An elasticity of -3.0 suggests that low-wage labor is a more substitutable, expendable factor of production. The work of least-paid workers might be performed more efficiently by more skilled and experienced workers commanding a substantially higher wage. This work could, in some circumstances, be automated. In other circumstances, employers may conclude that the work of least-paid workers need not be done at all.

Importantly, the lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1%. Using data in Table 3, we compute that the average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.
Here’s one thing the UW study didn’t consider yet, because it’s too early: The additional $2 an hour increase in the city’s minimum wage that just took effect on January 1 of this year from $13 to $15 an hour for large employers. Once local employers feel the full effect of the 58% increase in labor costs for minimum wage workers from $9.47 to $15 an hour  in less than two years, it’s likely the negative employment effects uncovered by the UW team for 2016 will continue this year and into the future, and could likely increase.

Here’s some additional commentary on the developing Seattle minimum wage story:

1. The Seattle Times Editorial Board warns that “Seattle should open its eyes to minimum-wage research.”
Murray’s office said it had concerns about the “methodology” of the UW study. But the strategy is clear and galling: celebrate the research that fits your political agenda, and tear down the research that doesn’t.

The minimum-wage experiment sweeping the country needs good, thorough, independent research. Seattle led this movement, passing the highest local minimum wage in the country. Does City Hall really want to know the consequences, or does it want to put blinders on and pat itself on the back?
2. Forbes contributor Tim Worstall writes today that “As I Predicted, Seattle’s Minimum Wage Rise Is Reducing Employment.”

3. Max  writes in today’s Washington Post that “A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals.

4. Ben Casselman and Kathryn Casteel express their concerns in FiveThirtyEight that “Seattle’s Minimum Wage Hike May Have Gone Too Far.” Here’s a slice:
In January 2016, Seattle’s minimum wage jumped from $11 an hour to $13 for large employers, the second big increase in less than a year. New research released Monday by a team of economists at the University of Washington suggests the wage hike may have come at a significant cost: The increase led to steep declines in employment for low-wage workers, and a drop in hours for those who kept their jobs. Crucially, the negative impact of lost jobs and hours more than offset the benefits of higher wages — on average, low-wage workers earned $125 per month less because of the higher wage, a small but significant decline.

“The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city,” said Jacob Vigdor, a University of Washington economist who was one of the study’s authors. “You’ve got to watch out because at some point you run the risk of harming the people you set out to help.”

“This is a ‘canary in the coal mine’ moment,” said David Autor, an MIT economist who wasn’t involved in the Seattle research. Autor noted that high-cost cities such as Seattle are the places that should be in the best position to absorb the impact of a high minimum wage. So if the policy is hurting workers there — and Autor stressed that the Washington report is just one study — that could signal trouble as the recent wage hikes take effect in lower-cost parts of the country.

“Nobody in their right mind would say that raising the minimum wage to $25 an hour would have no effect on employment,” Autor said. “The question is where is the point where it becomes relevant. And apparently in Seattle, it’s around $13.”
Bottom Line:

If booming, high cost-of-living Seattle had a hard time absorbing a $13 an hour minimum wage last year without experiencing negative employment effects (reduced hours, jobs and earnings for low-wage workers), it will have an even more difficult time dealing with the additional $2 an hour increase that took place on January 1 without even greater negative consequences. And if Seattle’s risky experiment with a $15 an hour minimum wage represents the “canary in the coal mine” for cities around the country that want to increase their minimum wages to $15 an hour, those cities may want to hold off for a few years to get a final count of the “dead canaries” in Seattle before proceeding.

Reprinted from AEI.


Mark J. Perry


Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

This article was originally published on FEE.org. Read the original article.

Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don’t Apply Down Under

Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don’t Apply Down Under



"The laws of mathematics are very commendable but the only law that applies in Australia is the law of Australia", said Australian Prime Minister Malcolm Turnbull today. He has been rightly mocked for this nonsense claim, that foreshadows moves to require online messaging providers to provide law enforcement with back door access to encrypted messages. He explained that "We need to ensure that the internet is not used as a dark place for bad people to hide their criminal activities from the law." It bears repeating that Australia is part of the secretive spying and information sharing Five Eyes alliance.

But despite the well-deserved mockery that ensued, we shouldn't make too much light of the real risk that this poses to Internet freedom in Australia. It's true enough, for now, that a ban on end-to-end encrypted messaging in Australia would have absolutely no effect on "bad people", who would simply avoid using major platforms with weaker forms of encryption, in favor of other apps that use strong end-to-end encryption based on industry standard mathematical algorithms. It would hurt ordinary citizens who rely on encryption to make sure that their conversations are secure and private from prying eyes.

However, as similar demands are made elsewhere around the world, more and more app developers might fall under national laws that require them to compromise their encryption standards. Users of those apps, who may have a network of contacts who use the same app, might hesitate to shift to another app that those contacts don't use, even if it would be more secure. They might also worry that using end-to-end encryption would be breaking the law (a concern that "bad people" tend to be far less troubled by). This will put those users at risk.

If enough countries go down the same misguided path, that sees Australia following in the steps of Russia and the United Kingdom, the future could be a new international agreement banning strong encryption. Indeed, the Prime Minister's statement is explicit that this is exactly what he would like to see. It may seem like an unlikely prospect for now, with strong statements at the United Nations level in support of end-to-end encryption, but we truly can't know what the future will bring. What seems like a global accord today might very well start to crumble as more and more countries defect from it.

We can't rely on politicians to protect our privacy, but thankfully we can rely on math ("maths", as Australians say). That's what makes access to strong encryption so important, and Australia's move today so worrying. Law enforcement should have the tools they need to investigate crimes, but that cannot extend to a ban on the use of mathematical algorithms in software. Mr Turnbull has to understand that we either have an internet that "bad people" can use, or we don't have an Internet. It's actually as simple as that.

Source: Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don't Apply Down Under | Electronic Frontier Foundation

Monday, July 17, 2017

When Governments Tried to Ban Coffee

When Governments Tried to Ban Coffee

When Governments Tried to Ban Coffee

Calestous Juma’s excellent and entertaining Innovation and Its Enemies is an interesting tour through the histories of coffee, printing, margarine, farm machinery, transgenic crops, and other innovations that people have fought at various times. It reminded me that we shouldn’t take liberty and the rule of law for granted.

The Great Coffee Debate



In the chapter on coffee, Juma discusses how Middle Eastern and European societies resisted the beverage and, in particular, worked to shut down coffeehouses. Islamic jurists debated whether the kick from coffee is the same as intoxication and therefore something to be prohibited.

Appealing to “the principle of original permissibility — al-ibaha, al-asliya — under which products were considered acceptable until expressly outlawed,” the fifteenth-century jurist Muhamad al-Dhabani issued several fatwas in support of keeping coffee legal.

This wasn’t the last word on coffee, which was banned and permitted and banned and permitted and banned and permitted in various places over time. Some rulers were skeptical of coffee because it was brewed and consumed in public coffeehouses — places where people could indulge in vices like gambling and tobacco use or perhaps exchange unorthodox ideas that were a threat to their power. It seems absurd in retrospect, but political control of all things coffee is no laughing matter.

The bans extended to Europe, where coffee threatened beverages like tea, wine, and beer. Predictably, and all in the name of public safety (of course!), European governments with the counsel of experts like brewers, vintners, and the British East India Tea Company regulated coffee importation and consumption. The list of affected interest groups is long, as is the list of meddlesome governments.

Charles II of England would issue A Proclamation for the Suppression of Coffee Houses in 1675. Sweden prohibited coffee imports on five separate occasions between 1756 and 1817. In the late seventeenth century, France required that all coffee be imported through Marseilles so that it could be more easily monopolized and taxed.

A Society of Laws, Not Men

This brings a few things into high relief. First, there have been few things as constant as government interference with liberty, and coffee shows how governments are keen to interfere when power and treasure are at stake. Second, we can’t take the rule of law for granted.

A nation of laws and not of men is not one in which specific products are regulated in specific ways but one in which abstract and universally applicable principles govern exchange.

Finally, we are rich today because we live in a society that values innovation — a society in which opposition to innovation, while strenuous at times, was nonetheless overcome. The example of coffee — coffee, of all things, an innocuous daily pleasure — makes me wonder: which innovations are we fretting about today that will cause our children to look back in puzzled wonder?

Reprinted from Forbes.


Art Carden


Art Carden is an Associate Professor of Economics at Samford University’s Brock School of Business. In addition, he is a Senior Research Fellow with the Institute for Faith, Work, and Economics, a Senior Fellow with the Beacon Center of Tennessee, and a Research Fellow with the Independent Institute. He is a member of the FEE Faculty Network. Visit his website.

This article was originally published on FEE.org. Read the original article.

Top 20 Video Games of Sept./Oct. 2007

Top 20 Video Games of Sept./Oct. 2007








From Bitcoin to Ether: Today’s Blockchain Basics

From Bitcoin to Ether: Today’s Blockchain Basics

From Bitcoin to Ether: Today's Blockchain Basics

Bitcoin and its underlying technology blockchain are game-changing technologies that are reshaping and revolutionizing the world economy. (1)

Often hidden behind the headlines of Bitcoin’s meteoric rise in market value and blockchain’s technological promise is a basic understanding of what these two technologies are and where they come from.

This brief article examines the digital currencies Bitcoin and Ethereum and introduces Blockchain, the technology that facilitates the digital transfer of value and much more.

Bitcoin: The Beginning?


“I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash.” — Milton Friedman, ‘99’

In 2008, a person or group of people acting under the pseudonym Satoshi Nakamoto published a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper introduced a solution to two puzzling issues.

The first was our inability to transfer money digitally between willing participants without the need of a trusted third party. The second was that a function was needed to transfer money digitally with the ability to establish the order of transactions to avoid double spending.

Nakamoto proposed two solutions:


  1. A peer-to-peer currency capable of maintaining its value without a central authority.
  2. A decentralized digital ledger capable of establishing the order of transactions.

The ledger would operate much the same as any other, except that the recorded transactions would be distributed to computers around the world.

In 2009 the ability to transfer value digitally was born in what is widely known as Bitcoin. However, it is the second capacity, now known as blockchain that is proving to be of far greater significance.

Although blockchain has scarcely found its way into mainstream thinking and discourse, it is, as mentioned, revolutionizing the world economy.

Bitcoin and Ethereum

Since inception, Bitcoin has captured the attention of an ever-growing, and yet relatively small, number of investors, enthusiasts, companies, and others around the globe.

As it has grown, it has served the dual function of acting as proof of concept for a “peer-to-peer version of electronic cash” and simultaneously giving rise to thousands of other digital currencies.

The most well known of these currencies by market value are Bitcoin and Ethereum. Bitcoin’s current market value is $37 Billion USD, while Ethereum’s is $16 Billion USD.

Any attempt however to compare the two cannot be accurately described as an apples-to-apples comparison. More about this later. First, let's look at what Bitcoin actually is.

Bitcoin

Bitcoin is a decentralized peer to peer electronic version of cash that maintains its value without backing or inherent value. It allows the transference of money digitally without going through a trusted third party such as a bank or credit card. (3)

The first standardized value of Bitcoin was set on October 5th, 2009 at $.0008, calculated using $1USD equals 1309.03 Bitcoin (BTC). It presently trades at more than $2300 USD. This represents 2.9 million x its initial value. (4)

According to the Washington Post, if you had purchased $100 in Bitcoin seven years ago, those coins would be worth more than $73 million USD today. To put this into perspective, if you had invested $100 into Amazon.com when it went public in 1997, your investment would be worth just under $64,000. It is worth noting, however, that digital currencies are significantly more speculative than stocks like Amazon. (5(6)

As the price of Bitcoin goes higher, one question that naturally comes to mind is, Where do Bitcoins come from?

Mining

Where do Bitcoins come from if by definition they are not backed by any central authority? Bitcoins are actually “mined” into existence by Bitcoin miners.

The easiest way to think about this is to consider gold miners. Gold miners work to mine gold from the earth. As it is mined, it then enters the economy. Conceptually, Bitcoin is the same.

New Bitcoins are generated through a competitive process called mining. Miners are given Bitcoins as rewards for their services processing transactions and securing the network using highly specialized hardware. (7)

Investopedia offers a more in-depth explanation of the process of mining.

How Are Bitcoins Used?

After Bitcoins are mined into existence, how are they used and what are they used for?

Bitcoins are traded on exchanges like stocks, bonds, and currencies, and are also used as currency in the exchange of goods and services.

The number of vendors and merchants accepting Bitcoins for the exchange of goods and services is expected to grow from the 1000’s to the 100,000's now that Japan is accepting Bitcoins as currency.

Japan is the first nation to officially accept Bitcoin for payments. More than 300,000 merchants will begin accepting Bitcoin payments in that country alone. (8)

Here is a list of 100 major US-based retailers currently accepting Bitcoin.

Bitcoin, however, is not the only digital currency growing in value and capturing global attention. Ethereum shares many of these characteristics with Bitcoin while also possessing several unique qualities.

Ethereum

“I would say Ethereum boasts features and opportunities to things Bitcoin doesn’t. It’s like saying a telephone can beat an orange.” — Vitalik Buterin, 2014 (9)

While Bitcoin was first to market and has drawn most of the media attention, many believe that the Ethereum blockchain, and its currency Ether, is a much more powerful tool.

In 2013, then-19-year old Vitalik Buterin proposed Ethereum in a white paper titled “Ethereum White Paper: A Next Generation Smart Contract and Decentralized Application Platform.”

The development of the protocol was crowd-sold in 2014, raising over $150 million USD. The system itself was finally launched on July 30, 2015.

Ethereum is an open source blockchain platform and its fundamental contention is this, that blockchains can be used for more than just the transfer of money.

Additional use cases include currencies, financial instruments, property, domain names, along with more sophisticated cases like exchanges, derivatives, peer to peer gambling, and identity and reputation systems. (10)

Smart Contracts

“Smart contracts” are one of Ethereum’s most important contributions to the rapidly expanding universe of digital currencies and blockchains.

They can be thought of as a digital means of facilitating the exchange of anything of value in a way that is transparent and removes middlemen such as lawyers, notaries, and others. Smart contracts perform this function by carrying out the terms of the digital contract itself. (11)

Another of Ethereum’s unique characteristics is its digital currency Ether.

Ether

Ethereum, like Bitcoin is a digital currency. However, unlike Bitcoin, it is also a blockchain platform. Ethereum’s currency, Ether is used primarily to access the Ethereum network.

The Ethereum Foundation defines Ether as a fuel or a form of payment that is used by clients of the Ethereum platform to pay for the machines that are executing the requested operations. (12)

Unlike Bitcoin, Ethereum has two digital currencies trading in the market. The first is Ethereum which trades under the symbol — ETH. While the other, known as Ether Classic, trades under the symbol ETC.

In June 2016 a large scandal rocked the Ethereum community. A still-unknown hacker attempted to steal more than $50 million dollars due to a software bug. The end result was the creation of a second Ether trading currency.

If it is of greater interest here are two articles that explain the hack in more detail Article 1 & Article 2. For a more technical explanation read this article by Maria Paola Gelvez Gomez, former head of Coinbase in Latin America.

Where Does Ether Come From and What Is It Used For?

Similar to Bitcoin, Ethereum is also mined. Groups of “miners” work to validate and store the transactions taking place on the Ethereum platform. The Huffington Post presented a clear and coherent article on Ethereum mining.

While Bitcoin and other digital currencies can be used to purchase goods and services, as mentioned, Ether is primarily used for transactions associated with accessing the Ethereum network and trading.

What is most important to remember about Ethereum is that it is not only a digital currency, it is also blockchain based platform with smart contracts, and it allows for the building of apps, of which digital currencies are but one expression.

Blockchain

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don and Alex Tapscott (13)

What is a Blockchain?

Nakamoto Satoshi’s initial description of the framework needed to facilitate the movement of online payments between two willing participants without an intermediary has become known as blockchain.

In its most simple form blockchain is a decentralized ledger. The implications of blockchain however, are far greater than the simplicity its name implies.

Blockchain facilitates the digital transference of value itself. Sally Rivers, Financial Times technology writer describes the relationship between blockchain and digital currencies like Bitcoin: “[Blockchain] is to Bitcoin, what the internet is to email.”

In the same way the internet facilitates the digital transfer of information, blockchain facilitates the digital transfer of value.

Industries in which blockchain technology is being rapidly explored and deployed include the capital markets, financial services, payments and remittances, derivatives, identity and reputation management, governance, sharing economy, supply chain, auditing, stock trading, internet of things, insurance, healthcare, and others.

A Few Takeaways

Digital currencies and Blockchain technology are truly reshaping the world economy. We may, however, be too close to their inception to accurately assess their importance or ultimate impact.

A few key thoughts from this post:


  • Bitcoin was founded in 2008 and launched in 2009. Bringing with it digital currencies and the underlying technology, blockchain.
  • There are thousands of new digital currencies of which Bitcoin ($30bil) and Ethereum ($16bil) are the largest in terms of market value.
  • These currencies are created through a process of digital mining akin to mining for gold.
  • Many of these currencies are traded on exchanges like stocks, and used for the purchase of good and services.
  • Ethereum recognized blockchains can be used for more than digital currencies, and introduced smart contracts.
  • Blockchain is to Bitcoin, as the internet is to email.

One of the best and most insightful presentations on Blockchain is a 30-minute video created by Farzam Ehsani, Blockchain Lead at the Rand Merchant Bank in South Africa. I highly recommend it to everyone.

Referring to the unfoldment of this new technological development, in a polite and slightly prophetic tone Mr. Ehsani shared in his closing statement, “We are on that journey, and there’s no turning back.”

It is indeed true. We are on a new digital journey, and no, there is no turning back!

If you have any comments or suggestions about interesting topics related to blockchain technology, reach out to me on Twitter!

Reprinted from Tradecraft.


Billy Silva


Billy Silva works in business and development and sales at Tradecraft.

This article was originally published on FEE.org. Read the original article.