The Armchair Trader continues its series on gold investment in partnership with E.B. Tucker
Last week E.B. Tucker explained how investors can get exposure to gold on the ground floor without the mess and hassle of actually digging the stuff out of the ground by buying shares in gold royalty companies.
This week we go down the rabbit hole and look at the origins of Bitcoin and its supporting blockchain technology; how what creator Satoshi Nakamoto explained was a regulation-free, democratic financial system that broke away from the centrally controlled market, could in fact be a deep-state plant to control every person on the planet. E.B. Tucker then makes the case that gold is the ultimate untraceable currency, but the window of opportunity to get into gold as a currency is rapidly closing.
You can find this and other insights into the gold market by buying a copy of E.B. Tucker’s book ‘Why Gold? Why Now?: The War Against Your Wealth and How to Win’.
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FedCoin
Total control is the ultimate desire of any government. When the US runs into a crisis too big to fix, it will be a necessity.
And that day isn’t far off. In fact, the technology to do this has already been developed, and is live and millions of people are unwittingly using it every day.
This technology will give the government instant access to every asset you own, is impervious to hackers, counterfeiters, tax dodgers – financial transgressions of any type are impossible.
It’s not science fiction, its science fact. And the deep state could have planned its implementation decades ago, sowed the seeds in the private sector and just let speculators pick up the ball, run with it and pass it around like a virus.
Once the system was perfected, there would be no more need for the useful idiots that are speculators, the Government’s perfect tool for total control of the financial system – and every person who has a dollar in their pocket – would be in place.
The mysterious Mr. Nakamoto
In August 2008, the website Bitcoin.org was anonymously registered. Two months later, a whitepaper: ‘Bitcoin: A peer-to-peervelectronic cash system’ appeared on site.
The paper’s author was Satoshi Nakomoto. Fourteen years later no one knows who Nakomoto is.
The paper was brilliant. It explains that the traditional financial system relies on intermediaries to process payments. Whether a bank, title company, or credit card issuer, every payment sent from one person to another passes through a third party.
Fundamentally the whole system relies on trust. The banks created trust between two people who did not know each other, and for only a small fee the bank would act as an honest broker. Satoshi said the advent of the internet age reduced the usefulness of these third parties. They were a burden. In the 2008 crisis they caused financial distrust instead of solving it. Curiously, he posted the paper at the very beginning of the crisis, so he either wrote quickly or had incredible instincts.
In light of this old cumbersome system that failed us, Satoshi outlined a means of transacting between individuals without using a third party. Instead of leaning on those third parties for trust, his system used mathematics.
Better still, instead of relying on a central authority to issue his proposed digital currency, users of the currency create it by performing calculations on an open network. The coins were rewards. He called them Bitcoins. Bitcoins are rewarded to users whose computers connect to the network to help solve cryptographic math problems that become progressively more difficult. That means it takes more and more computing power over time making rewards more valuable. There would be a finite limit of Bitcoins available as a reward, 21 million to be exact.
Opportunity knocks
Initially Bitcoins could be picked up for less than USD1. I know this because way back in 2009 I met with a friend who suggested we use a bunch of old computers he had to mine Bitcoin. As St.Louis Rams wide receiver, Eddie Kennison once said: “When opportunity presents itself, don’t be afraid to go after it.” Oh well! I was never a Rams fan.
My friend was a proper cheapskate, I told him it was a dumb idea and that I was going to invest in single family homes, gold, and gold stocks, and wasn’t interested in much else. Sometimes other people have the good ideas as you can see in the chart below.
From that point on Bitcoin frenzy began, but I continued to invest in gold. After all gold has been a measure of value from the beginning of human civilization. I understood the history of gold and its usefulness in times of monetary turbulence. I understood gold, something I couldn’t say wholeheartedly about Bitcoin and blockchain.
The frenzy reached all levels of society. Another friend of mine was a Vancouver-based billionaire who I met for dinner back in 2017. I nearly choked on my entrée when he told me his entire net worth was in Bitcoin. I told him that he should diversify at least half of his wealth into other assets. He categorically refused saying: “We’re going to change the world.”
I wished him luck, but I’d argue the utopian, democratic dream that Nakamoto espoused in 2008 is nothing more than a mirage. And here’s where we come back to totalitarianism.
The bad guys always win
Governments jealously guard their right to create currency, a mandate supported by law and when needed violence. They don’t like competition.
What interested me from day one with Bitcoin was the mathematical framework for distributing payments of all types. Nakamoto called the technology blockchain. He referred to the blocks as equations solved that generated a coin as reward.
These blocks, once solved, formed a brick trail of sorts documenting each transaction. There was no need for a central overseer as long as there were a sufficient number of computers hooked to the network. This ‘distributed’ the power to control his digital currency across many users – the exact opposite of a central authority.
When someone wanted to sell a Bitcoin, the process made a lot of sense. There were two things required for a valid transaction. Nakamoto called them ‘keys’. One was public and one private – a bit like a bank safety deposit box where the manager holds one key and you hold the other, and you must use them simultaneously to gain access. Bitcoin transactions require the seller’s personal encryption key and the public access key.
From the early days this seemed like an obvious way to upend the traditional financial system. Real estate transactions, share ownership, dividend processing doesn’t work with blockchain – they need a third-party financial intermediary. Blockchain allows users to transact one-on-one, without government or the finance sector peering over their shoulders taking notes on ownership, assets and net wealth.
This is anathema to the status quo, and we all know the status quo is what keeps governments in power and bankers in clover.
Imitation is the best form of flattery
What ensued was speculative frenzy in Bitcoin, and this attracted imitators like wasps to a picnic on a summer day.
Thousand of new ‘coins’ emerged as wide-boys tried to cash in on the craziness. You can buy pizza and play pachinko with specific digital tokens now. It’s tulip bulb like mania.
But all the while the government and deep state sat in the background watching and waiting. This was a money revolution – and governments don’t generally like revolutionaries.
To me, something is a bit fishy about Nakamoto. At Bitcoin’s peak its originator was worth over USD19bn. But he hasn’t touched his nest egg. He was there, but then disappeared like smoke on a windy day. I mean he could be a trappist monk, whiling out his days in poverty and seclusion, but this seems unlikely.
Analysis of his activity has shown he only accessed the network between 2008 and 2010, about 500 times in total. He was never active on the US Eastern Seaboard between 0000h and 0600h. Although Satoshi Nakamoto is a Japanese name, analysis of his 2008 whitepaper show it was written in American English with phraseology and slang borrowed from British English, which is not how an ESOL would write.
Does he exist? Is he a pseudonymous person or persons? Whatever, he fired the starting gun on what has become a practical, useful and efficient digital currency.
But if it wasn’t Mr. Nakomoto, who created Bitcoin? Some suspect that a shadowy government agency initiated the project and let the private marketplace perfect a digital currency that will in the end give it total control.
Ultimate control
Ok. I’m not wearing a tin-foil hat as I’m writing this.
I was talking to a friend that operates in government circles. He received an email, which he sent onto me, from an acquaintance that had gone to work with a Central Bank on its ‘crypto project. The contact was ex-special forces and worked in military intelligence. This contact was a bona fide person, not just an adventurer. The contents of this email was astonishing. In it, the contact said: “we love crypto…the government loves crypto…” and the government of this country was finalizing its programme to create a national crypto currency.
The government would ‘subcontract’ private sector miners to create the currency, but would set the equations so it would retain control of supply. The new currency would report every transaction to government and the tax office. The next stage would be to ban all physical currency and then outlaw all other crypto coins. The system would be able to track any other crypto transactions and wrest ultimate control over the entire financial system.
Now this country in question wasn’t the US or UK. But can you imagine what could be possible if the biggest economies deployed their resources in a similar project? The spook’s comment “we love crypto” is very important. It’s not like governments love Bitcoin or whatever-coin, they see value in the blockchain – the means of production.
Bitcoin broke central control, but the engine behind it is another form of central control. The ownership of blockchain is the key here. Speculators and the private sector were the guinea pigs, who took blockchain, tested it out and developed applications. It’s getting close to perfect, and that’s when governments will act.
We’re already seeing a war on cash, with negative stories starting and now intensifying since the pandemic. Governments hate cash, as it is anonymous, and the financial system is starting to align with a programme of de-anonymisation. Have you tried paying for items over the value of USD1,000 in cash today – panic sets in on the shop floor!
We’re all being conditioned to accept the digital dollar and ultimately FedCoin will be the solution. Then we will all be back in chains.
However, the end is not yet nigh! You can still get your hands on an untraceable, portable, impossible-to-destroy physical currency – gold! But you’d better get in quick, as if FedCoin comes, the government will know the location and value of every bar or coin you own.
E.B. Tucker sits on the Board of Directors at Metalla Royalty & Streaming and Nova Royalty Corporation and is director of Midas Capital Partners.
