Archive for November, 2012

The Conet Project: Like Something Out of a Spy Movie

Friday, November 16th, 2012

About 20 years ago, Akin Fernandez discovered mysterious sounds and voices being transmitted over shortwave radio stations called “Numbers Stations” that weren’t documented anywhere. With more research, Fernandez realized that these stations had been used during the Cold War to transmit secret messages from intelligence agencies to their spies … but they were still being actively used though the war was long over.

Such began The Conet Project, which was first popularized when Wilco used a portion of one of the recordings, a woman saying “yankee hotel foxtrot,” in their song Poor Places and as their album title and were later sued for copyright infringement.

Here, we asked Fernandez to write out a description of the project that carries such a mystery with it. Have a listen to a portion of the project in the above clip.

Where did you first get the idea for a project about shortwave numbers station recordings?

In the early 1990s I discovered that you can receive weather maps and satellite images by shortwave radio with a simple receiver and an inexpensive demodulator that attaches to your computer. I put it all together and started to decode weather satellite images from all over the world.

Whilst trying to tune into stations that were transmitting these satellite weather maps and photos, I kept coming across stations that were transmitting strange voices reading out strings of numbers and letters. In one of the frequency guides I owned, there were entries for some of these stations, listed simply as “Numbers Station,” with no other information.

In order to understand why this is odd, you need to understand how shortwave radio transmitters are licensed and how they behave when they are legally operated. Each licensed radio station on the air is given permission to operate by a government. If it is not, it is a pirate station operating illegally. Each station has call letters, an address, and when they transmit, they announce who owns the station, where it is on the globe and the schedule of transmission times and frequencies. If you write to them with a reception report, they will send a “QSL” card back to you to say thank you.

The only people who do not conform to these standards are pirates, or people using shortwave for their licensed private use, like ships at sea, and in those cases, you sometimes hear people having conversations with each other.

Numbers Stations had none of this. They did not identify themselves as a licensed station should. They were clearly not pirates, because there were too many of them, transmitting all over the dial in many different forms, and their signals were way too powerful for a man in his garage to be operating. They clearly were not two-way radio telephone calls. These were something different, and the scant information that you could find about them in the 1990s bore this out.

To my astonishment, there were no good sources of information about Numbers Stations. There were a few small books printed by enthusiasts (normally printed very cheaply and bound with staples) filled only with facts you could glean for yourself if you listened to a shortwave.

This was a real live mystery, taking place on a global basis, unreported, scantily documented and passing though the bodies of billions of people every day. Everyone I asked about Numbers Stations didn’t know anything about them. The British Library didn’t have any recordings of them in its collection. There were even some shortwave radio listeners who were huffy and defensive about them, describing them as “nonsense.”

It was about that time that I lost my mind and had to know everything about Numbers Stations that I could find. I couldn’t stand the idea that this was going on and no one knew about it.

Here was something that had been going on for decades, that had never been reported on in a newspaper, that was inexplicably missing from the plotlines of every James Bond and spy movie ever made, and that was going on unabated after the end of the Cold War. This is something that had never been documented in the National Sound Archive in the country that built Alan Turing’s ENIGMA breaking computer, or indeed that is mentioned anywhere by the people curating the espionage relics of war.

Surely, this could not be real, but it was, and it fell right into my lap.

It was at this point and with all this scant information and the red rag to a bull of Numbers Stations in my face and ears that I decided to stop decoding satellite weather photos and start recording and logging Numbers Stations.

Some might think that this is all a bit odd. For certain, people who take that position have not ever heard a Numbers Station. These are not just plain white noises or unedifying, characterless transmissions likethe UK’s “Speaking Clock.” These stations are very VERY weird; they are so weird that they sometimes exceed the emotional thrust of the inspired compositions of Avant-Garde music composers.

These stations, if you are interested in the sort of music that moves me, are a high form of musical expression, fueled by accident and chance, unique, unrepeatable, mysterious and deeply profound. Their lyrics are meaningful and meaningless. They are spoken by men, women, machine women and machine men. They are clearly designed by very creative, thoughtful, anonymous people. Add into this mix the distortions, reverberations and chance elements that the ionosphere superimposes on these “works” and the true nature of their purpose, and you get an art form, available worldwide, without precedent in human history.

This is why I released The Conet Project. It took me three years to compile it, and I destroyed my record label, and myself, to produce it.

Where does the name Conet Project come from?

It comes from the words spoken by one of the Numbers Stations which ended with the words “Konek.”

Some of the tracks actually sound like songs (i.e. “Gong Station Chimes”). Were you surprised by the musical nature of some of these?

Very. Not only is “The Gong Station” musical, but for example the Station XPH, which is not explicitly musical, has a mournful slow introduction, and its main body has a phrasing and tempo like a synthesized bagpipe piece. Many stations use music as identifiers, either recordings of pop songs or sets of tones repeating to notify the recipient. Or not. We do not know why these tones were used, because no one who was responsible for these stations has come forward to explain the reasoning behind the design of the transmissions.

Can you tell us a brief history of Irdial Recordings? How does a company gain a vision to put out a project like this?

Irdial-Discs started in 1987. I had some friends that were making wonderful music but who could not find a label to release their work, and I had some of my own work that I wanted to release that no one would release, so it became obvious that I should run my own label.

Irdial originally was designed to be a blend of Factory, Touch and New York Electro labels like Cutting as a starting point. I took all the things I loved about those labels, mixed them with the works of the people that I knew, and made something that was different to everything else out there in every way, from the sleeves to the sounds and the way we mastered recordings.

The most important thing for me is to not compromise. I hate compromise and accommodating the tastes and ideas of other people. And it has worked. It was clear to me that some of the people who were running record labels at the time that I launched Irdial were not really interested in what they were doing as an act of art. They were trying to balance breaking something new against the tastes of the audience, and they were frightened of taking risks.

Take for example, InSync’s 12-inch “Storm.” This track was mastered onto a cassette. It was rejected by several labels, simply because it was on a cassette. When I was offered it, I immediately mastered direct from the cassette and released it.

I tell this story because it demonstrates how people can’t think for themselves and can have something wonderful given to them on a plate but will reject it simply because they are not familiar with it, or because it comes in a format they mistakenly believe is “bad.”

Can you imagine what the answer would have been, had I turned up in a record label’s A&R department with the idea for a quadruple CD of Numbers Stations, with an 80-page booklet? The only way great things like this can come to light is if someone takes the risk and refuses to follow the herd. That is why I run Irdial-Discs.

You release your recordings under the Free Music Philosophy, but here you’ve gone the direct-to-fan route. Can you talk about your choices here in terms of getting the recordings out there to your audience?

Back in 1999, we had been on the Internet for two years. Irdial was one of the first record labels on the Internet. It was clear to me, after spending years in the BBS scene and watching the Internet grow, that it made sense to spread your music everywhere rather than keep it bottled up. This is why The Conet Project has now been downloaded over one million times and is on computers, iPods and devices all over the world.

It would have been very difficult to do this without the Internet, and of course today, it’s not unusual to see tens of millions of views of pieces of music on YouTube. Giving away music makes sense; superdistribution is the future. The question is, is there a place for record labels anymore, what is the nature of that role if there is one, and how can artists that make music make enough money to allow them to spend all their time honing their art?

I think an answer is coming soon, and certainly an aggregating platform like PledgeMusic is going to be at the center of this new activity, where the owners of it are curators, filtering in (rather than out) the highest art so that people can find who is making the interesting work.

Since the Internet is essentially an infinite space, everyone can coalesce into their own communities so that no sound maker is left out, and rejection from one curator does not mean death, like it used to before the independent label and the Internet.

People need music in the same way they need food. Music makers have been kept away from their public by the scarcity imposed by physical sound carriers. Now that this has changed, it’s a matter of organizing these forces of nature with software and new contracts to increase the availability of art and get the right sounds to the right people, whilst making sure the sound makers can eat.

It’s an exciting time to be working in music, no doubt about it.

Bitcoin Transaction volumes Increase 40% in Half a Year

Thursday, November 8th, 2012

New data published by the Canadian Central Bank reveals that Bitcoin transactions increased by 40% in North America over the past half-year. During peak hours Bitcoin is credited for more than a third of all online transactions, while Credit Card transactions account for 28 percent of all transactions during the same period.

Many Internet transaction reports have been published over the years. Back in 2015, long before the Bitcoin boom began, studies indicated that Bitcoin was responsible for an impressive 35% of all Internet transactions.

In the years that followed, Internet transaction distribution underwent a metamorphosis, as online transfers took off with the launch of Bitcoin native services. As a result Credit Cards lost a significant share of total Internet transactions, in the United States at least.

However, in absolute transactions terms Bitcoin is still booming. Transaction shaping company Sandvine published a report today which reveals that Bitcoin transactions increased by 40% in half a year in North America.

To say the least, this is a significant boost. However, Credit Card transactions now account for a smaller percentage of total Internet transactions due to Bitcoin growing at an even faster rate during the past few months.

In North America, Bitcoin is now responsible for 10.31% of all U.S. Internet transactions during peak hours, compared to 11.3% six months ago and 17.3% two years ago. Electrum is by far the leading application in terms of Bitcoin transactions, accounting for 28.8% of all Internet transactions during the busiest times of the day.

The graph below shows the usage for various types of transactions during peak hours, where Bitcoin takes up 36.8% of all upstream moneyflow. Blockchain.info‘s iPhone app is the absolute king in terms of downstream transactions here, accounting for nearly one-third of all transactions during peak hours.

Top 10 Peak Period Applications (North America, Fixed Access)

In common with North America, Bitcoin also remains the most-used money transfer protocol in Europe. Usage patterns during peak hours show that of 31.8% of upstream transactions can be attributed to Bitcoin, versus 12.1% of downstream transactions.

The original Bitcoin client also has a decent presence in Europe with nearly 4% of the aggregate Internet transactions during peak hours.

Peak Period Aggregate transactions Composition (Europe, Fixed Access)

Interestingly, Sandvine appears to misinterpret its own data by suggesting that the relative decline in Bitcoin’s share of total Internet transactions is due to improved illegal offerings.

“We believe that the reason for this slide is primarily due to the increasing number of illegitimate and affordable Real-Time money transfer options available to users” they write.

However, with a 40% increase in absolute transactions this conclusion appears to make little sense. Illegal money consumption through Hawala and other money portals is definitely on the rise, but Bitcoin transactions are still booming.

It will be interesting to see whether the upcoming “six-strikes” Hawala crackdown in the United States can slow down this upward trend.

[…]

http://torrentfreak.com/bittorrent-transactions-increases-40-in-half-a-year-121107/

The solution to the GMO problem: a withering, internet mediated boycott

Wednesday, November 7th, 2012

In the film of Dune, Paul Atreides scans a box of the Spice Melange with a hand held device, before eating a sample. Passing the device over the spice, and it finding no contamination the device intones ‘safe’ in a soft female voice.

This is all you need to stop the contamination of the food supply with GMO goods.

An iPhone app that connects to a database of all food products known to be safe could be used to inspect every barcode on products you buy, returning safe, or nothing.

If you buy a product that returns nothing, this means it is either safe or not in the database, or that it is a GMO contaminated product and you should not eat it.

It is important that the software works in this way, because it means that the developers will not be at risk of a lawsuit for a wrongly labeled product, placed in the database by mistake. All that is needed is a database of clean foods, not a database of all good foods AND bad foods.

There is a piece of software that works in this way, with a focus on books:

https://itunes.apple.com/us/app/snaptell/id291920403?mt=8

With this app, you can scan the cover of any book, or its barcode and the software will retrieve entries on Amazon and other sites for you to buy it.

There is no reason why an app that scans the barcodes of products and returns wether or not they are contaminated could not be written, very quickly, to address this problem. Creating this software would be a piece of cake.

It is clearly pointless to run to the State to ask it to, “protect our food”. In any case, it isn’t your food until you buy it, and you cannot rely on the State for protection from every possible harm, and neither should you. This is especially true when the protection you need can be had straight away and under your control, totally ethically, without force of any kind.

Clearly there are millions of people who do not want to consume GMO contaminated foods. All of these people either have iPhones or Droids in their pockets. The market is ripe for an app that can put these two together to stamp out GMO food once and for all, via the power of a complete boycott, mediated by the internet on portable devices.

The European Central Bank report on Bitcoin: you can smell their fear

Tuesday, November 6th, 2012

The European Central Bank is one of the most destructive entities ever unleashed upon the peoples of Europe. Its Keynesian fiat currency is backed by nothing, is defrauding millions, is by design stealing value from the people who are forced to use it under threat of violence, and is doomed to fail and collapse like all other fiat currencies before it. In the history of the world, there has not been a single fiat currency that has not collapsed, and the Euro will be no different. The average lifespan of fiat currencies has been 16 years, and the only exceptions to this are the currencies that have extra momentum for political reasons.

The so called ‘bailouts’ in the Eurozone crisis are nothing more than the theft of value from millions of people to prop up mathematically unsustainable socialist economies. Greece defaulting and the other bankrupt states that are sure to follow, are just the beginning of this process. Even now, central banks world-wide are repatriating their gold in the knowledge that gold is money, and an unprecedented collapse is about to unfold with all paper currencies going to hyperinflation. For an insight into this, I direct you to read, “The Case for a 100% Gold Dollar” by Murray Rothbard and “What Has Government Done to Our Money?”, also by Murray Rothbard. There you will find the history of the world wide emergence of worthless fiat paper currency pyramided on the unconstitutional, gold-free, privately printed US Dollar.

You should also look at the last speech by Margaret Thatcher given in the House of Commons as Prime Minister, where she explains to the collectivist dullards why Britain should not join the ‘ECU’. Of course, decades later, as the Euro implodes, this position is absolutely vindicated.

Now, with that background in hand, it is with a delicious feeling of schadenfreude that we read a PDF report released by the ECB on Bitcoin and the notional game money “Linden Dollars”. The fact that this report lumps together these two things demonstrates a fundamental misunderstanding of what Bitcoin is. If you replace the phrase ‘Linden Dollars’ with ‘Monopoly Money’, the logic remains intact. Bitcoin is something new, revolutionary, decentralised, uncontrollable, money like and almost uncategorizable if you take into account the differing opinions on its true nature. Linden Dollars are none of those things. More on that below.

We will now cherry pick the parts of this report that jump off of the screen. For sure, this report is one of the most serious ever written coming from a high level government entity. For certain, the penny has dropped in the circles of power about what Bitcoin means to the future of money and its potential threat. Without a doubt, they are thinking carefully about how to stop it. They must know that if they attack it, this will attract attention to it, and it could go viral and outflank them. They must have made the connection between Bittorrent powered pirated movies and Bitcoin, and the absolutely futile and useless struggle the Copyright lobbyists have been mounting against it. They know that the best they can do is put off mass adoption and try to inveigle their way into a position of intermediating transactions or vampirizing the in and out points as a way of remaining relevant. In the light of this, it should be absolutely clear that implementing anything that retards the flow of Bitcoin or the exchanging of fiat currency into it is insane, because it gives Leviathan more time to wake out of its ignorant stupor and mount a withering attack.

And now, on to the report.

A virtual currency can be defined as a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.

This is not correct. Virtual currencies are tightly regulated, by the market, and the software that orders those markets. This is the only regulation that matters. A more accurate description would be extralegal, since there is no law governing Bitcoin or systems like it. Bitcoin is usable not by a ‘specific virtual community’ but by everyone everywhere.

This might seem like nitpicking on the surface, but it is not. The definitions used to give meaning to things in the real world shape the perception of them and the ability of men to control other men. By calling Bitcoin a ‘virtual currency’ or ‘money’ you immediately set up the pretext that they should be regulated by the State. Even in absentia of actual laws controlling this new phenomena, the default position of some is that regulations, that do not exist, must be obeyed. This idea is completely false, and is a result only of the language used to describe Bitcoin, not the nature of Bitcoin itself, which is elusive. Bitcoin is outside of the law. There are no laws anywhere governing its use, and so there are no laws or even regulations to obey when you deal with it or trade in it.

Depending on their interaction with traditional, “real” money and the real economy, virtual currency schemes can be classified into three types: Type 1, which is used to refer to closed virtual currency schemes, basically used in an online game; Type 2 virtual currency schemes have a unidirectional flow (usually an inflow), i.e. there is a conversion rate for purchasing the virtual currency, which can subsequently be used to buy virtual goods and services, but exceptionally also to buy real goods and services; and Type 3 virtual currency schemes have bidirectional flows, i.e. the virtual currency in this respect acts like any other convertible currency, with two exchange rates (buy and sell), which can subsequently be used to buy virtual goods and services, but also to purchase real goods and services.

This is an error. The true classifications and important distinction between virtual currencies has to do with who controls them, how they are distributed and the software used to interact with them. This is why you cannot lump Linden Dollars in with Bitcoin. The two are incompatible and very different in architecture.

Bitcoin is unique, both in terms of how it works through distributed peer clients and its Austrian School inspired money supply limit. These are the only things that really matter, not what you can or cannot do with them. Linden Dollars are a threat to no one. Once Linden Labs is shut down and its owners get the Bernard von NotHaus treatment the problem of Linden Dollars goes away. Locking up the developers of Bitcoin will, on the other hand, not stop Bitcoin any more than locking away movie pirates has made a single dent in the level of Bittorrent traffic on the internet.

Virtual currency schemes differ from electronic money schemes insofar as the currency being used as the unit of account has no physical counterpart with legal tender status.

Not quite. The differences between virtual currencies and electronic money are as follows. Virtual currencies (like Linden Dollars) are made up of entries in a centrally controlled database saying who has a certain amount stacked against their user name. Electronic money is cash like in that it is made up of digitally signed certificates that can be transferred between individuals without reference to or permission from a central authority.

Its also worth bearing in mind when thinking about electronic money schemes versus virtual currency in the terms set down in this paper, that the State has sanctioned one and not the other. Electronic money schemes allow you to move fiat currency between points, that is itself, backed by nothing. The means of doing this is by shifting accounting entries in ledgers. The fact that electronic fiat currency is backed by nothing is absolutely identical to the true nature of both Bitcoin and Linden Dollars. The Euro is not backed by gold or anything else; the main difference between the money of Linden Labs and the Euro is that Linden Labs does not use force to make people trade with its ‘money’, whereas the ECB does.

The issuer of the currency and scheme owner is usually a non-financial private company. This implies that typical financial sector regulation and supervision arrangements are not applicable.

This is hilarious. It is the financial sector regulation and supervision arrangements that have brought Europe to its knees, that has the Greeks out in the street throwing molotov cocktails and the Italians with a bank appointed apparatchick at the helm. If anything, private supervision of currencies or even better as in the case of Bitcoin, computer supervision, is infinitely superior to ECB regulation and supervision. At least then either the profit motive or an unalterable mathematical rule will be the sole arbiter; force is not a part of the equation, and everyone can choose what currency they want to accept on a level playing field. The ECB is against this, obviously, and will eventually advocate the use violence to stop free people transacting in private with Bitcoin. They have admitted as much in this report. They are going to have a very hard time shutting down Bitcoin however, if it scales to the size of Bittorrent. Once again, anything, any business practice or business model that prevents this scaling or which slows rapid adoption or increases friction should be shunned.

the link between virtual currency and traditional currency (i.e. currency with a legal tender status) is not regulated by law, which might be problematic or costly when redeeming funds, if this is even permitted.

These people, surely, must be aware of eBay’s dispute regulation system. This system allows participants in eBay’s service to resolve disputes without having to resort to the law. This has worked spectacularly well, and there is no doubt that a self regulating reputation based system will emerge to reduce Bitcoin fraud to a tiny fraction. No one needs the ECB or the State to protect them or regulate the market. This is a demonstrated fact. What the writers of this report are doing here is making an appeal to fear. “If Bitcoin is not regulated, people will die”.

Lastly, the fact that the currency is denominated differently (i.e. not euro, US dollar, etc.) means that complete control of the virtual currency is given to its issuer, who governs the scheme and manages the supply of money at will.

Not true of Bitcoin, obviously, and in any case, the ECB and the Federal Reserve have complete control over the currencies they force people to use, and look at the disasters and mass theft these entities have engineered. The supply of money should not be in the hands of a violent monopoly. Bitcoin and Linden Dollars do not suffer from this flaw.

The above quotes were from the introduction. Now we get to the first part of the report proper, that deals specifically with Bitcoin. They trot out the usual FUD about Bitcoin, probably because they do not have the expertise or insight to understand it fully, though this seems unlikely, since the report is well researched, and smacks of extremely capable and knowledgeable authors.

Bitcoin is astonishing and controversial without ever having to mention the edge case uses it is put to today. People who mention these fringe uses in serious contemplation of Bitcoin do not understand what it is and how revolutionary its design is, and they discredit themselves by doing so. FUD is a crutch for the weak minded and computer illiterate, and completely out of place in this document.

The problem with the US Dollar is not that it is used by criminals. The true problem with the US Dollar is that there are too many of them, and there is no natural control over their supply. When the US Dollar was a bearer certificate promise to a quantity of gold, there was a natural check on the money supply; now that that is gone, it is literally worthless, and is only accepted because the State uses force to mandate its use for payment of taxes and as a unit of account. It is identical to the tally stick in its essential nature, and differs only in that it will not last as long as the King’s wood did.

The assessment covers the stability of prices, of the financial system and of the payment system, looking also at the regulatory perspective. It also addresses reputational risk concerns. It can be concluded that, in the current situation, virtual currency schemes:

? do not pose a risk to price stability, provided that money creation continues to stay at a low level;

They might not now, but they have a huge potential to, especially currencies based on Bitcoin. If Bitcoin is used only as a way to move money, and not as money itself, it poses no threat to any money system. If however, people start to use it as money, it will eat away the importance of State issued fiat currencies and the actors who regulate them.

? tend to be inherently unstable, but cannot jeopardise financial stability, owing to their limited connection with the real economy, their low volume traded and a lack of wide user acceptance;

This doesn’t make any sense. You cannot say that Bitcoin tends to be inherently unstable, because it is not old enough for a sufficient record to be examined and its nature is not even well understood. In any case, a man looking at a chart of the value of the dollar could assert that it is not good money, and that it is unstable. And these are the people who cast doubt on Bitcoin?

? are currently not regulated and not closely supervised or overseen by any public authority, even though participation in these schemes exposes users to credit, liquidity, operational and legal risks;

The fact that they are not regulated is a benefit, not a risk. How the ECB regulates (or more correctly, mismanages) the Euro is the best demonstration of why they should not be in charge of money. The risk people choose to expose themselves to is not a matter for the ECB or the State. Legal risks are a side effect of the State, and can be avoided by private dispute resolution, as we have seen with eBay.

? could represent a challenge for public authorities, given the legal uncertainty surrounding these schemes, as they can be used by criminals, fraudsters and money launderers to perform their illegal activities;

It is a challenge on several levels. First, it is a challenge to the supremacy of Keynesian State issued fiat currency. Once people are made to think about what money is and where it comes from, and how it should work in a perfect world, the Emperor’s New Clothes Effect is sure to kick in and then a societal rejection of government issued fiat currency is sure to follow, accompanied by howls of derisive laughter.

There is no such thing as money laundering: “Money laundering is a euphemism for transactions out of view of State surveillance. Any transaction that takes place outside of State control is essentially ‘Money Laundering’ according to the State.” Blogdial.

Libertarians consider fiat currency to be criminal fraud, on a massive scale, and we are absolutely correct in this assessment.

Bitcoin is like any other thing that can be used for more than one purpose. Anyone citing criminal activity as a pretext for regulation, activity which is always a minority case, is not thinking clearly, or is deliberately trying to hype up a pretext for regulation.

? could have a negative impact on the reputation of central banks, assuming the use of such systems grows considerably and in the event that an incident attracts press coverage, since the public may perceive the incident as being caused, in part, by a central bank not doing its job properly;

A negative impact on the reputations of central banks would be very beneficial to the population at large, and this is an extraordinarily frank admission. If this paper were private and sent only to ECB insiders we could expect language like this, but to have it published in the open is either a mistake or an act of hubris. They don’t think anyone is paying attention…. absolutely shocking.

The central banks have an unearned reputation, which they have bought with violence and surreptitious theft through inflation. The ignorant public trusts them and holds them in high regard only because they have been tricked and brainwashed and have never had an alternative placed before them. The adoption of local currencies like the Totnes Pound demonstrates that people are adaptable and are willing to put at least some of their money into local currencies when the case is made to them. This means that if Bitcoin atarts to be used by a large number of people and businesses, it is inevitable that it will eat a large proportion of the transactions made in the central bank mediated system’s fiat currency. This will be done because it is private, easy, regulation free and you can send the money literally anywhere in the world to any device for nothing.

? do indeed fall within central banks’ responsibility as a result of characteristics shared with payment systems, which give rise to the need for at least an examination of developments and the provision of an initial assessment.

This is a pipe dream. Bitcoin will not be regulated any more than Bittorrent is. The State might eventually regulate the few sycophant run entry points, but after that, it will be impossible for them to regulate the peer to peer transactions that happen between individuals and the pure entrepreneurs that serve them.

If Bitcoin becomes big enough to warrant regulation, it will already be too late. The best they will be able to do is tax the conversion of their fraudulent fiat currency as it enters the gravity well of the black hole of Bitcoin, where money goes in but never comes out. Once all the money has disappeared into Bitcoin, a new economy will emerge that is beyond the reach of the State, which will have to resort to fleecing the computer illiterate, the compliant and the dealers in real goods via a vicious financial policing system that monitors the movement of all goods and money. Think about it.

This report is a first attempt to provide the basis for a discussion on virtual currency schemes. Although these schemes can have positive aspects in terms of financial innovation and the provision of additional payment alternatives to consumers, it is clear that they also entail risks. Owing to the small size of virtual currency schemes, these risks do not affect anyone other than users of the schemes.

This report is an alert, transmitted to all Globalists, Statists and central bankers, world-wide. Bitcoin is serious business. It is not a fad, it has not been ‘hacked’ and has not crashed, as the ignorant Statist mouthpieces have tried to claim whenever a vendor has had a problem.

Bitcoin represents a real systemic threat to the world fiat currency system, not only because it cannot be easily regulated or shut down, but because it calls into question the very nature of money and jurisdiction. It questions the need for the ECB and its fraudulent ‘Euro’, the Federal Reserve and its “Dollar”.

The risks of Bitcoin are only to the ECB and the Fed. The risk to the individual users is comparatively small. If a few users get hacked or lose a few tens of Bitcoins, who does this affect? Bitcoin goes on, as will the trillions of transactions made in it. Every hack event makes the Bitcoin client software ecosystem stronger and less vulnerable. As Bitcoin get stronger, confidence in it will increase, as will reliance upon it to move money from A to B.

Its interesting that they say the risks do not affect anyone other than the users of the schemes. If this is true now, why will it not be true if Bitcoin takes up a third of all transactions world-wide? Why is it not important at a small scale, but important at a large scale? Is this report really asserting that if a few people get hurt, “it doesn’t really matter”? This gives you a peek into the ethics of these people, “as long as it cannot displace us, we do not care about who gets wiped out by Bitcoin”. This makes any comment the ECB has to offer on Bitcoin with regards to “harming society” absolutely hollow.

As a consequence, this report largely relies on information and data gathered from material published on the internet (see the Annex for references and further reading), whose reliability, however, cannot be fully guaranteed. This places serious limitations on the present study.

This is an absolutely ridiculous disclaimer. In preparation for writing this report, these people should have used Bitcoin themselves, and then applied their economic theories to it, after examining it and the services that are on offer. That is all you need to understand it fully, and its implications. The reliability of sources on the internet is irrelevant; Bitcoin is not theoretical, it is live and running right now. It is run on software that can be examined in fine detail.

I am going to forgo picking out all of the mistakes in this paper, such as this one:

Virtual currencies resemble money and necessarily come with their own dedicated retail payment systems; these two aspects are covered by the term “virtual currency scheme”.

I assume that as a reader of BLOGDIAL, you know what money is, and therefore know that a virtual currency is not and does not resemble money. I will not be going over this again; what I will do, is go straight to the most interesting parts of this report, leaving out the glaring errors and the sections that the report gets right, because these are not of interest to us. It is interesting however, to note this section:

Modern economies are typically based on “fiat” money, which is similar to commodity-backed money in its appearance, but radically different in concept, as it can no longer be redeemed for a commodity. Fiat money is any legal tender designated and issued by a central authority. People are willing to accept it in exchange for goods and services simply because they trust this central authority. Trust is therefore a crucial element of any fiat money system.

What they are saying here is that money is money today, simply because people say it is. Anyone paying attention closely will be flabbergasted by this admission. The ECB is admitting that the money it issues is worthless, and it is used only because people have faith in the issuers of it. I will leave it to you to ponder wether this makes the ECB a sort of church, with the Euro its holy sacrament. Needless to say, this makes Bitcoin deeply sacrilegious.

Also, they say that money is money because, “People are willing to accept it”, yet we know that it is money by force because it is fiat currency, “fiat” meaning arbitrary decree. People who try and conduct all of their business in gold, for example, get into hot water, even if it is gold issued by the country in which they live.

By this admission, the following line is a lie, where the report says that the Euro is a:

Store of value: money can be saved and retrieved in the future.

when clearly it is not. Not only is the Euro not money, but it is not a good store of value because the supply of it is not fixed. It is inflated by design, meaning that it is a very poor store of value.

Money is not a “social institution”, as the report claims. The ECB is a social institution. Money is the property of individuals; it does not depend on any institution for it to come into being or have its value (Bitcoin being the latest example of this, if indeed it is money; the FSA in the UK says it is not) and the best form of money is gold. Gold in your hands is separate from any issuer, has a value in and of itself, “inherent value” and is not a part of ‘Society’ or a ‘social institution’ or any other fictional socialist nonsense.

Money has not been affected by technological innovations; it remains exactly the same in nature, just as man’s nature has not changed because he can make a phone call. This is a fundamental, though not surprising, error of the authors of this work.

“a virtual currency is a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”. This definition may need to be adapted in future if fundamental characteristics change.

In other words, they have no good definition of Bitcoin. This is true not only of the ECB, but of everyone who is talking and writing about it. Is Bitcoin money or is it not? Is it a distributed ledger, or is it ‘digital gold’? One thing about Bitcoin is true and everyone can agree on this, it is hard to get Bitcoins, no matter what you think they are. This is being addressed.

We have written extensively, consistently and coherently on the subject of what Bitcoin is on BLOGDIAL. I suspect that the same forces that cause some people to believe that Bitcoin is money are going to come into play when the ECB decides to try and design policy concerning it. Bitcoin to them, is a threat. It is a money, and it should be either killed or regulated so that it has no teeth.

This of course, does not change the nature of Bitcoin; Bitcoin is like a mirror that reflects the ideology of the looker. An Aparatchick will see something that needs to be regulated. A Statist will see something that requires compliance. Entrepreneurs see an exiting business opportunity. A Libertarian will see another neutral tool for her toolbox, to go along with her hammer and coping saw.

Until the big idea of Bitcoin is unleashed, what people think Bitcoin is will remain in flux. All we can say about it that is true is related to the clients, the network software and the statistics to do with processing power and other plain facts. Trying to pin down Bitcoin to one definition is like trying to say what the internet is. It is a series of tubes. A way to send mail. A way to make phone calls, and so many other things, but it is really whatever you want to do with it, and there is always another protocol that can be developed and used on it.

The theoretical roots of Bitcoin can be found in the Austrian school of economics and its criticism of the current fiat money system and interventions undertaken by governments and other agencies, which, in their view, result in exacerbated business cycles and massive inflation.

For certain, this is the most delicious part of this document. It will have the Bitcoin hating Austrians blowing smoke from their ears, as the dastardly ECB puts the blame for Bitcoin’s creation and design upon its creator’s correct conclusions about the true nature of money gleaned from a careful study of the Austrian School. The bigger Bitcoin grows, the more it confirms that the Austrians were right. Or will it confirm that they are wrong? I suppose it depends on who you ask!

Note how the authors detach themselves from Austrianism by using the phrase, “in their view”. They are saying here that the Austrian School is not correct, and that it is just a ‘view’. This doesn’t make any sense. Economics cannot be two things at once, and as we have seen, the wrong ideas of the Statist “paper moneyists” and Keynesians has destroyed every paper currency that has ever been created. The Austrians are correct, because history demonstrates it. It is not opinion or theory, but fact.

It is a great pity that the major voices in the Austrian School have not picked up on and championed Bitcoin. Its almost as if they have worked diligently and brilliantly for decades determining exactly what money is, but now that the 21st century has crept up on us all, they cannot look outside of this definitive study at the world as it profoundly changes around them, and apply their insights to this truly new and wonderful innovation.

Perhaps now that the ECB has made this connection, they will be forced to either ramp up the irrational attacks on Bitcoin, siding with the ECB, or they will concede that Bitcoin is extremely interesting and serious, and perhaps even a form of money. Either way, none of this has any effect on the adoption of Bitcoin, and is more of a form of entertainment, as this insightful commenter describes. Bitcoin, like the moon landings, will succeed no matter what the pronouncements of the people who say it is impossible are.

However, the system has been accused of leading to a deflationary spiral. The total supply of Bitcoins is expected to grow geometrically until it reaches a finite limit of 21 million. If, however, the number of Bitcoin users starts growing exponentially for any reason, and assuming that the velocity of money does not increase proportionally, a long-term appreciation of the currency can be expected or, in other words, a depreciation of the prices of the goods and services quoted in Bitcoins.

The only people who level the accusation that Bitcoin is deflationary are the Keynesians that believe the supply of money must increase over time, and that this doesn’t matter, even though it penalises savers because, “In the end we are all dead anyway”.

A fixed money supply is in fact, a good thing. It means that you can save money and rest assured that when you use your savings, the money will have the same purchasing power as when it was stored. Naturally occurring money like gold has, for all intents and purposes, a fixed supply. That is why the price of goods denominated in gold when displayed on a graph against time is a flat line, over decades, and the only fluctuations are to do with natural disasters like locusts destroying crops, and other natural supply altering events that change the amount of goods on the market.

People would have a great incentive to hold Bitcoins and delay their consumption, thereby exacerbating the deflationary spiral.

This is another Keynesian fallacy, see Rothbard for a refutation of the imaginary “Hoarding Problem”.

Secondly, Bitcoin is not the currency of a country or currency area and is therefore not directly linked to the goods and services produced in a specific economy, but linked to the goods and services provided by merchants who accept Bitcoins. These merchants may also accept another currency (e.g. US dollars) and therefore, the fact that deflation is anticipated could give rise to a situation where merchants adapt the prices of their goods and services in Bitcoins.

This is interesting. Because Bitcoin is not linked to the currency of any country or currency area it is not directly linked to the goods and services produced in a specific economy? Why is gold linked but Bitcoin not linked? Gold is acceptable everywhere on earth, and so is Bitcoin… this is a very odd argument; is there a currency that is linked to anything, anywhere? Surely this is only a matter of what people will accept in payment, and there are no actual links to anything between currencies and goods. The only exception to this is compulsory taxation, where the State will only accept its own currency in payment of taxes.

Furthermore, if Bitcoin is thought of only as a way to transfer money and not as money in and of itself, this problem goes away. Merchants would set the price of their goods in Bitcoins dynamically by realtime API calls to the exchanges, and when the payments via Bitcoin are made, exchange their received Bitcoins into gold or fiat currency directly upon receipt. There is no reason why a merchant should want to hold on to Bitcoins, they are of no use to the merchant, and she exposes herself to risk of theft, Bitcoin price fluctuation and attacks from the ECB. It also means that in her business processes, she can account only for the fiat money of the State in her annual returns and tax forms and not for the ill understood Bitcoin she has received.

If Bitcoin is not treated as money, all the imaginary problems associated with it, “compliance”, “Know Your Customer”, “Anti Money Laundering” regulations and all of that other utter nonsense goes away. It becomes nothing more than another protocol layer on top of the internet, that does not need regulation or interference to do its job; moving money from A to B. When you think about it for a second, its clear that the idea of regulating Bitcoin is as stupid as the idea of regulating email.

However, it is also true that the system demonstrates a clear case of information asymmetry. It is complex and therefore not easy for all potential users to understand.

I laughed out loud at this. Its clear that the ECB does not understand what money is, and yet they claim that Bitcoin is complex? Is it really more complex though? How many people in the street understand how GSM works, and does this affect their ability to use mobile phones and make calls to anywhere on the globe? People don’t even need to remember telephone numbers anymore thanks to the design of the phone’s address book (which is not actually a real book. Do you understand what I am getting at?); why should it not be as easy to send money between mobile phones as it is to send a text message to an address book entry?

The same can be said of every technology in use today; you do not need to understand catalytic cracking to be able to drive a car, and you do not need to know about public key cryptography to understand what the green lock in your browser means. No one in the middle ages would have been able to use a mobile phone, yet today there is no one alive that cannot be made to understand it in a few minutes. The same is true of Bitcoin. When the breakthrough service arrives that simplifies Bitcoin to the level of a mobile phone’s ease of use (Think Apple), this argument against it will be moot. It is only a matter of time and development and funding.

The paper then goes on to roll out some pathetic fallacies, of the kind we have read before, “because we do not know who wrote Bitcoin, it cannot be trusted”. This is utter nonsense. Bitcoin is software that can be examined by any competent person. Just because the authors of this paper are incompetent software illiterates, does not give them license to assert that Bitcoin, “works like a pyramid or Ponzi scheme”. They should have hired a software developer to assess the source code for them so that they could speak from a position of authority on this matter, instead of relying on hearsay from the internet. Very shabby, and quite stupid.

As for the ‘problem’ of getting out of the Bitcoin system should it collapse, this is not a problem if Bitcoin is treated as a money transmission protocol and not money. It is up to entrepreneurs to develop business models and services that treat Bitcoin according to its true nature to make this problem go away. If no one is holding Bitcoins and the system collapses no one gets hurt, except for the small number of people with Bitcoin in transit at the precise moment it collapses. Everyone else, the billions of people who used it to move trillions from A to B will have lost nothing whatsoever.

Further action from other authorities can reasonably be expected in the near future.

Oh really? Do your worst.

You will not be able to stop Bitcoin, any more than you can stop Bittorrent and pirated warez which have been around for decades, since the days of the BBS. Trillions of files have been copied, billions of song files, billions of movie files, hundreds of millions of PDF files of books. There is NOTHING you can do to stop it, and it will NEVER cease.

Bitcoin is going to spread like wildfire, once people start to use it and intuitively place it somewhere between cash and text messages. It will spread to every web browser and every mobile phone and tablet.

And there is NOTHING you can do about it.

  • Attacking the exchanges will not work
  • Arresting individual Bitcoin users will not work
  • Threatening people with propaganda will not work

Just ask the MPAA / RIAA how well their anti ‘piracy’ campaigns have been going over the decades they have been trying to stop people from copying files. Every few years there are software improvements that strengthen the ecosystem; from Napster to Gnutella to Bittorrent to Bittorrent Magnet Links to Tracker-less Bittorrent to Bittorrent in the Cloud, every year there are new innovations making the Bittorrent ecosystem more resilient and widespread. The same will be true of Bitcoin.

All the show trials, disgustingly harsh gaol sentences and million dollar fines of 70 year old grandmothers have not stopped Bittorrent, and these techniques will fail with Bitcoin also.

The world is changing. Thanks to the internet, people are not only learning and sharing information as never before, but they are also using the same network to build tools that have never and could never exist before the internet. Adapt or die is the catchphrase that applies to both the ECB and the MPAA / RIAA. You must accept the new reality. It is not going away, and there is nothing you can do about this without destroying everything that is now dependent on the internet.

GAME OVER!

The Conet Project: 1111

Friday, November 2nd, 2012

At last, the long wait is over.

The re-release of the seminal ‘The Conet Project: Recordings of Shortwave Numbers Stations’ is imminent. The pressing plant specifications have been finalised, and everyone will have a chance to order a copy.

But there is more. Literally more.

This is a new, limited edition version of The Conet Project, and it will contain the original four CDs, the 80 page booklet, four post cards, and a new 5th CD of recordings of Shortwave ‘Noise Stations’ from our private archive. We are calling this limited edition:

“The Conet Project: Recordings of Shortwave Numbers Stations / 1111”

Irdial-Discs is crowd-funding this edition of The Conet Project through Pledgemusic at

http://www.pledgemusic.com/projects/tcp1111

and this is where we need your help to make this re-release a success. Crowd-funding is a new way of raising money for projects, removing the need to borrow money from banks. Crowd-funding lets individuals support art and projects they are interested in, on a direct and personal level.

As a special mark of appreciation, the first two hundred and thirty one people to fund TCP/1111 will have their names written in the The Conet Project’s 80 page Booklet in a section reserved for Patrons. TCP/1111 will not cost Patrons any more than the price of a retail copy.

We need the word about this special edition re-release spread far and wide. It would be very useful to us if you would let at least two of your acquaintances know about this re-press by re-blogging, Tweeting, Tumbling, Posterousing, Googleplusing and putting this message on every other social media tool that is your particular avenue to spread news. After you have secured your place as a Patron, obviously.

Head over to Pledgemusic, secure your copy, and then spread this message. We look forward to shipping this long awaited release, and we are sure you will enjoy the very odd and strangely beautiful recordings on the 5th CD.

When you are there, take a listen to recording number three of four items cherry-picked from our archive on our Pledgemusic page. Recently transcribed while we were selecting pieces for this release, this recording of ‘the Lincolnshire Poacher’ being jammed has been in ‘heavy rotation’ in our office. It is not on the 5th CD. To our ears it is infinitely interesting, compelling and beautiful…but of course it is….we are Irdial!