“The solution of every problem is another problem.”
– Johann Wolfgang von Goethe
The subject of Bitcoin came up a few weeks ago in the strangest of places. I’d traveled from Brooklyn with friends to lead kirtan on Martha’s Vineyard, and after a day’s drive and three hours of singing, a dozen of us, the band and some close acquaintances, were hanging out in our hosts’ kitchen, devouring home made pasta, salad, sweets and tea. It was around midnight, we were energized by the kirtan and the food and the companionship, and there was a cacophony of nondescript, enthusiastic conversation filling the kitchen and spilling out into the adjacent family room. I was paired up with a friend who had traveled from out of state to sing with us, and we discussed past adventures in Rishikesh, a popular pilgrimage city on the Ganga in North India. Specifically, we were talking about about a particular teacher who had resided there before his passing in 2008, a teacher I had long admired by the name of Swami Chidhananda. My friend, as well as her mom, had taken mantra initiation from Him years before, and I listened with some degree of envy as she described her experiences with him, her eyes welling with tears as she recounted certain individual moments and his generosity of spirit. I had been in Rishikesh in 2004 and hoped to meet Swami Chidhananda during my stay there, but fell ill and the chance eluded me. To this day, it’s one of the few missed connections in my life that I’ve regretted. This man was, by all accounts, a Saint, renowned for his wisdom and kindness, and the opportunity to be in the presence of such a human does not come around very often. I expressed this to my friend, who responded by pulling out a small, wallet-sized photo of Chidhananda, in the same way a parent might reticently reveal a photo of their son or daughter. She handed me the picture to examine.
He was thin, had a shaved head, a quiet beatific smile, and was wrapped in an ochre shawl, the traditional color renunciates wear in India. Having spent time with brahmacharis in Kerala when I was younger, I once had imagined becoming a monk and living a simple, happy, spiritual life, free from worldly attachments. I studied the photo with reverential admiration, not only for the Swami, but for my friend’s devotion to him. It brought back memories of India, of my own teacher, of easier, perhaps more idealistic times, when suddenly, from over my shoulder, like a terrible alarm clock going off, I heard the word, “bitcoin.” The word wasn’t intended for me, it was the subject of an entirely other conversation between two entirely other people, but now my attention to my friend and to her story was lost. I had become a dog who’d just seen a squirrel run by. This word, “bitcoin” has become a trigger for me and I could not un-hear it.
I smiled and handed the photo back to my friend, then did my best to tune into two conversations, the one I was presently engaged in with her and the one happening just over my shoulder. My friend continued on about Swami Chidhananda and his ashram in Rishikesh, while the conversation behind us went something like this:
“What is bitcoin, anyways? How does it work?”
“I don’t know, but doesn’t one bitcoin cost, like, fifteen thousand dollars?”
*****
I first heard of bitcoin a couple of years ago, when a friend of mine whom I’d met on tour in Northern California, a very gifted, tech savvy friend, initiated me over dinner in Palo Alto. He asked if I’d known what Bitcoin was, then shared the story of Satoshi Nakamoto and the creation of the world’s first cryptocurrency. He was an evangelist of sorts, a true believer in what he understood Bitcoin’s cathartic potential to be; that is to say, a means to completely transform the world’s flawed economic systems; and he was working for a startup cryptocurrency investment firm in San Francisco. He was extremely intelligent, and while I was captivated by his enthusiasm for this radical new blockchain technology he kept referring to and what I now understand to be the slightly watered down version of Austrian economics he was espousing, I understood very little of what he was on to in that moment.
We agreed to keep in touch, and after the tour, we connected on Facebook, where he often posted about Bitcoin. His posts were informed and eloquent and painted bitcoin, cryptocurrency and blockchain as revolutionary and disruptive technologies. Above all else, he encouraged people to get involved by learning about the tech and investing. I followed up by finding a couple articles online, but quickly got lost in the science behind it all. So, with only a superficial, rudimentary understanding of bitcoin and having no real money to play around with, I let the whole thing go pretty quickly.
A year or so went by, as did life, and between recording, touring, being a father, scraping out a living working overnights, writing, reading comic books, raising a cat, and everything else, I hadn’t really even thought about bitcoin. My West Coast pal continued to advocate for cryptocurrency in his social media posts, but I had effectively stopped paying attention. Bitcoin had momentarily entered my consciousness as a cool and somewhat abstract idea, a revolutionary concept that I didn’t quite understand, then quietly disappeared into a sea of distractions.
And then, December of 2017 came, and suddenly Bitcoin reappeared as the focus of conversations happening just over my shoulder everywhere I seemed to go.
*****
Bitcoin Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
– Satoshi Nakamoto
Bitcoin: A Peer-to-Peer Electronic Cash System
By its simplest definition, Bitcoin is digital money that can be stored online or offline in electronic wallets and can be exchanged between peers, just like cash. It was created by a person, or perhaps a group of people, under the alias, Satoshi Nakamoto, likely as a response to the financial crisis of 2008, with the intention of providing ordinary people a viable alternative to bank and government controlled fiat currencies.
While Bitcoin is similar to cash in its functionality, the philosophical tenets that drive the science behind it stand in stark and profound contrast to the principles behind the current debt-based fractional reserve economic system we’ve inherited.
For starters, we should understand that our present financial systems are entirely dependent on huge centralized entities, banks and the governments who regulate them, and these centralized entities wield a tremendous and perhaps disproportionate amount of power over small individual entities, like you and me. Banks have the ability to create money in the form of debt, and this ability also gives them the power to control where where newly created money is allocated within the economy.
“When banks extend loans to their customers, they create money by crediting their customers’ accounts.”
– Sir Mervyn King, Governor of the Bank of England 2003-2013
So, if an ordinary person approaches a bank for a loan to buy something; an education, a house, a boat, a new bowling ball; and if the bank approves that person’s request, a credit is applied to their bank account. The money hadn’t existed until that moment. It wasn’t moved from one vault to another, or debited from a reserve account and deposited into another. The money has been created in the form of a loan, from nothing, and then the consumer is charged with paying back that loan, plus interest.
Banks also play a powerful role in consumer transactions. For example, if I want to send $5 to my daughter electronically, I can use an app on my phone, such as PayPal or Venmo. That app then communicates with my bank or credit card company, which then records the transaction on its ledger, crediting my daughter with $5 and debiting it from my own account. Normally, these transactions are pretty straightforward and easy, though depending on who or where one is sending money to, there could be fees or delays on a particular transaction, or in some extreme cases, the transaction could even be put on hold or stopped.
Bitcoin, on the other hand, is a decentralized currency, which means there is no central administrator or bank that controls it. There is no CEO of bitcoin, no board of directors. It exists and is transacted on the bitcoin network, which is a blockchain network, the world’s first.
What’s blockchain? Without getting overly technical, a blockchain is essentially an immutable, decentralized ledger that is stored on a network of computers. The blockchain prevents double-spending, and its decentralized nature gives it security.
“A blockchain, as the name implies, is a chain of digital “blocks” that contain records of transactions. Each block is connected to all the blocks before and after it. This makes it difficult to tamper with a single record because a hacker would need to change the block containing that record as well as those linked to it to avoid detection. This alone might not seem like much of a deterrence, but blockchain has some other inherent characteristics that provide additional means of security.
The records on a blockchain are secured through cryptography. Network participants have their own private keys that are assigned to the transactions they make and act as a personal digital signature. If a record is altered, the signature will become invalid and the peer network will know right away that something has happened. Early notification is crucial to preventing further damage.
Unfortunately for those ambitious hackers, blockchains are decentralized and distributed across peer-to-peer networks that are continually updated and kept in sync. Because they aren’t contained in a central location, blockchains don’t have a single point of failure and cannot be changed from a single computer. It would require massive amounts of computing power to access every instance (or at least a 51 percent majority) of a certain blockchain and alter them all at the same time. There has been some debate about whether this means smaller blockchain networks could be vulnerable to attack, but a verdict hasn’t been reached. In any case, the bigger your network is, the more tamper-resistant your blockchain will be.”
– Curtis Miles, Blockchain Unleashed: IBM Blockchain Blog
So, Bitcoin is held and transacted on the immutable Bitcoin blockchain network, without the need for a 3rd party intermediary, such as a bank or credit card company. This gives it some inherent practical and philosophical value, but what else?
While fiat currencies are inherently inflationary, much of Bitcoin’s intrinsic value comes from its built-in deflationary properties. There is a finite amount of Bitcoin that will ever exist, 21 million bitcoins to be precise. Of those, about 17 million are currently available, while the remaining bitcoins have yet to be “mined”. Of the 17 million currently available, it’s estimated that about 30% of those have been lost forever. While Bitcoins can be divided almost infinitely into smaller units, referred to as “Satoshis”, to the extent that one could possess just a few Satoshis, or a dollar’s worth of bitcoin, there will never be more than 21 million total Bitcoin in existence. This scarcity gives it value, similar to gold, and is a hedge against inflation and, in extreme cases such as the current economic situations in Zimbabwe and Venezuela, against hyperinflation.
How Bitcoin Mining Works
Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn’t have a central government.
With Bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.
Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
Source: https://www.bitcoinmining.com/
*****
There are some very bright people who believe that cryptocurrencies such as Bitcoin and Ethereum have the potential to benefit poor people all over the world, particularly in countries that suffer from poverty and hyperinflation, where people are unbanked, lack jobs and have little money. By 2020, it is estimated that there will be 2.87 billion smartphone users all over the world. Cryptocurrency and mobile phones can bring the poor access to markets and sorely needed capital. It’s happening already. The app, M-Pesa, a microfinancing service, for example, allows many underserved African communities to deposit and exchange money. A company called Micromoney has helped unbanked people in Myanmar, Cambodia, Thailand and Indonesia to obtain low cost loans. The United Nations’ World Food Program has started to use Ethereum to send funds to refugees in Jordan.
All of this is extraordinarily encouraging, and while I’m not sure that Bitcoin can potentially level the playing field for everyone, it seems important that people have options available to them outside of traditional banking systems, institutions that have historically exhibited troublesome and destructively immoral behavior. Just check out Ryan Cooper’s “A brief history of crime, corruption, and malfeasance at American banks” for a short laundry list of very recent examples of American financial institutional corruption. These are gangsters we’re talking about, plain and simple.
“I know very well what you’re talking about. You’re talking about something you can’t get your fingers on, and it’s galling you. That’s what you’re talking about, I know…Well, I’ve said too much. I…You’re the Board here. You do what you want with this thing. Just one more thing, though. This town needs this measly one-horse institution if only to have some place where people can come without crawling to Potter.”
– Jimmy Stewart as George Bailey, It’s a Wonderful Life
*****
While a kind of idealism brought Bitcoin into existence, greed has brought Bitcoin to the edge of the mainstream. The esoteric technology, still in its relative infancy and not quite ready for prime time, suddenly arrived on the periphery of popular consciousness in late 2017, the result of sudden and extraordinarily wild price increases. The disruptive technology that I’d been unable to wrap my head around a year earlier, had suddenly grabbed the attention of people everywhere, including my colleagues at work. There was a buzz about cryptos being a generationally significant technology, something that would change the world in the same way the internet had. And while few people seemed to have a complete grasp of what cryptocurrencies were or how they might positively change things, many were excited by the potential of investing in them. When I finally found a co-worker who had done some research, a tech support guy who was generally well-read on fringe and cutting edge science, from magnetic universe theory to artificial intelligence and everything in between, I asked him about Bitcoin. He answered, “The problem with Bitcoin is that no one really knows what one is worth.”
Soon after our conversation, I did a little bit of my own research, then jumped into the crypto space by depositing a tiny bit of money onto Coinbase. Motivated by the crazy dream of turning $100 into a billion dollars, I quickly learned that my tech-minded friend, my only friend with a robot vacuum cleaner, was correct.
After transferring the money and investing a small amount in Bitcoin and Ethereum, I ended up spending weeks checking my phone every five minutes, watching the value go up, down, sideways, and back again. It was a wild and largely unprofitable ride.
*****
“The three vices – lust, greed and anger, are the gateway to hell. They destroy the spiritual nature of a man. They have to be given up.”
– Swami Chidhananda
From the moment I first heard about Bitcoin in Palo Alto, CA to that moment when I brought the subject up with my buddy at work, a time span of about 18 months, the price of a single bitcoin had risen from about $450 to about $20,000. It is commonly known that the first real-world purchase involving Bitcoin occurred in the Spring of 2010, when some guy named Laszlo Hanyecz bought two pizzas in Jacksonville, Florida for 10,000 BTC, which by today’s exchange rate, would be about $65 million dollars. The project is still in its relative infancy, as are all cryptocurrencies, and as such, there is wildly varying speculation on what it’s ultimate worth might be. People are hungry for money, and the speculative aspect of the space has brought in waves of retail investors, institutional investors, prognosticators, crypto youtube celebrities, shillers, bloggers, scammers, crypto psychics, doomsayers and self-proclaimed pundits. I’ve seen 2 year predictions for bitcoin prices that have ranged from $1 per coin to $1,000,000 per coin and above, and one thing I’ve learned for certain in this journey through the fledgling crypto space; while there are a few proponents of blockchain who are extraordinarily knowledgeable about the tech, its potential benefits for humanity and where all this is functionally headed, no one knows anything about where the price might go, though most people who are invested in crypto believe it will ultimately make them filthy rich.
It can also potentially make one come unhinged, as we live and move within a culture where unadulterated desire is not only encouraged, but indulged, a world where we carry personal computers in our pockets that are capable of immediately satisfying nearly any intellectual itch that might manifest. If we are interested in baseball, we can watch any game, grab any boxscore, look up any player who ever played, in about 5 seconds. If we are into movies, we can think of a film and have it up on our phones in about the same amount of time. The thought arrives, we grab our phones, do a quick search, and there it is. There is an amazing immediate and very temporary satisfaction in this, but it’s never ultimately enough. There is always that next thought, that next craving that starts us searching again. And with crypto markets, it’s far worse, because, to quote, Siddhartha Gautama Buddha, “There is no torrent like greed.” It will drive a person to obsession, this hunger for fast and easy wealth coupled with the immediate access to markets that all this technology makes possible.
Crypto exchanges, are global exchanges that run 24 hours a day, where one can buy or sell nearly any coin; Bitcoin, Ethereum, Litecoin, OmiseGo, and thousands of others; at any moment of the day or night, then watch the prices rise and fall, along with the value of their portfolios, instant by instant. It’s like riding the Cyclone at Coney Island with a drunk person at the controls, no seat restraints, and no potential for stopping. If you’re lucky enough to jump out unscathed, you’ll still be left reeling.
*****
I’ve had the good fortune to meet a great many people in this life, people from all sorts of places and all sorts of circumstances, and I’ve learned that, essentially, everyone is chasing the same elusive thing; happiness. We look for it everywhere outside of ourselves, in friends, partners, entertainment, pets, technology, material comfort, jobs, and wealth. And sometimes we are able to catch that feeling, for a little while. But it is never enough, and it is fleeting. Happiness doesn’t come from what we possess, it comes from inside.
During the past year, I’ve become a huge fan of Bitcoin, that great distraction, and a few other cryptocurrencies. I believe Bitcoin and blockchain technology are tools that have the potential to bring about tremendous positive economic and social change for people, but like any tool, it could also be used for compromised or even malicious purposes. While I have no idea where the prices of certain coins will end up, or whether it will bring about the huge transfer of wealth some people have been predicting, one thing I can say for certain is, any wealth that this technology brings is no guarantee of happiness. One can be poor and be happy. It’s our own unchecked desires that have the potential to undo us.
Swami Chidhananda, my frieind’s Guru, was born into a wealthy family in India, and yet despite the privilege of his birth right, chose to live his entire life as a renunciate, effectively taking vows of celibacy and poverty under his Guru, Swami Sivananda in 1936. He knew the happiness one received from material wealth was fool’s gold. He left His body a few months before bitcoin was introduced to the world in 2008.
I will leave you with some of his words here.
“This life here upon earth, has a great meaning and a deep significance. Without clearly knowing the significance, you cannot live this life in a correct and proper way. It is most necessary to know the great aim, purpose and goal of this your earthly life, if you have to give it the right direction; otherwise instead of moving towards this true goal, your life will lose its correct direction and become side-tracked in running after small and petty aims and purposes. This will result only in misery, restlessness and deep disappointment. There is no greater loss than such a fate. Man is born for the living of Divine Life here and the attainment of sublime, higher, spiritual, experiences here and hereafter. This is a grand divine plan for each and every one in the human family.”
“The notion of your petty personal identity is your greatest bondage and affliction. It is the root-cause of all human misery, discontentment, friction and conflict. The individual develops selfishness and pursues selfish activities—dishonesty, competition, corruption, exploitation, enmity, hatred, etc.,—and they arise out of egoistic approach to life and pursuit. This is foolish and blind. This is the greatest error of man. This is mankind’s principal blunder. Life is a great opportunity given to you to eliminate this individual ego-consciousness and destroy selfishness and attain experience of the higher divine aspect of your inner Being. Life is Sadhana. Living is a spiritual process. All actions—mental, verbal and physical—constitute Yajna. They should not be for mere selfish acquisition. This will only fatten your ego-sense and tighten your bondage to Samsara and sorrow. All life and activity is to be a self-offering or a giving of oneself for the service of and benefit and happiness of all beings. Paropakara is the Mula Mantra of this life. Yajna or self-giving is the fundamental principle behind this life. The more you give yourself, the more you will succeed in casting aside this illusory egoism and the petty selfishness. The more you do this, the greater will become your awareness of your higher divine nature. You will become spiritually aware of your true inner Self. The more your life becomes an active manifestation of dynamic expression of Yajna, Paropakara and Nisvartha Seva, the greater will be your conquest over sorrows and sufferings and your ascent into peace and higher bliss into life.”
Brooklyn Mellows 