This Medium post analyses the address Adam Ludwin of Chain gave at the Federal Reserve in Washington. Read his address before reading this. Прочитайте эту статью на русском языке.

Introduction

100 central bankers and regulators from around the world came to the Federal Reserve (the organization that inadvertently caused the creation of Bitcoin) in Washington D.C. for an event titled “Finance in Flux: The Technological Transformation of the Financial Sector”. It was jointly hosted by the IMF and World Bank, two organizations participating in the global fiat money Ponzi Scheme. Bitcoin is no longer regarded with any doubt by people at the top of democracy. Everyone who was saying that it works completely as described is now 100% vindicated, and all the people who said it did not work are humiliated. What these bankers are doing is reacting to this clear and present threat to their role as monetary intermediaries. Chain wants to be the vendor of choice for the software providing the middle man services to these central banks. Adam Ludwin made a sales pitch, without explicitly asking “who is going to write this software for you?”

As I have said before, you cannot have Blockchain without Bitcoin, and this article by professor Saifedean Ammous published in the prestigious American Banker expounds this fact nicely.

Actors who try and separate Blockchain from Bitcoin are inevitably software vendors desperately trying to sell their services, trying to separate the inseparable because they can’t come up with business models where they interact directly with Bitcoin. They also tend to be Statists with a fervent belief in the absolute authority of government and implicit legitimacy of the money it mandates everyone accept in payment.

These people have a problem explaining this software plainly, and sometimes they just make things up. Talking about “blockchain architectures” could actually be a codeword for “MySQL”. Everything that these vendors offer can be done in a MySQL database centrally controlled and secured with GPG. I have described how this would work in a previous essay. What these vendors are leveraging is computer illiteracy; its a safe bet that none of the attendees listening to this talk understood a single software concept that was presented to them; they were there merely to represent their organizations.

The perspective Adam gives in his talk is misleading and troubling. The true background story of Bitcoin is a deep dissatisfaction with the fiat currency system that steals money from the poor, fuels war and destroys economies. It is the State and its fraudulent money that was the sole driving force behind the creation of Bitcoin, and a search for a solution to the double spending problem had been ongoing for more than twenty years before Lehman Brothers collapsed; the idea that Bitcoin’s creation had anything to do with Lehman Brothers is goldfish memory in full effect.

Those who understand what money is fully expected collapses like Lehman Brothers, and the inevitable hyperinflation event that is coming to the US dollar. Economists from the Austrian School successfully predicted the housing collapse also:

These are the true origins of Bitcoin and everyone knows it. Bitcoin is a solution to the problem of the State having absolute control over the form and supply of money and the regulation of banks. That is why it is so powerful; it solves two difficult problems at once, and offers an unimaginable number of secondary uses that are tangential to the money use of Bitcoin.

The Federal Reserve “stimulus” programmes, secret bailouts and money creation that have destroyed the value of the US Dollar are well understood by anyone familiar with The Austrian Theory of Money and even Socialists understand that the Federal Reserve is acting against the interests of anyone that is forced to use its money:

This is the true perspective behind Bitcoin, not some sugar coated false history of why Satoshi Nakamoto created it. Bitcoin was created by Anarchists who understand Austrian Monetary Theory, who limited its supply deliberately because they understood that in order for money to be sound, its supply must be fixed. They understood that money should not be in the control of the State, but should be solely a product or service produced by the market. These facts are missing from Adam’s talk, and the omission is deliberate. He knows how to speak to these bankers, and he knows their severe limitations when it comes to computers and software. They work primarily on instinct and emotion in this area; any mention of the Austrian School, the reasons for the limited money supply, Anarchism, or the anti-Fed animus built in to Bitcoin (expressed by the image below)

IMAGE “ASCII Bernanke” Bitcoin’s creator knows what money is and what needs to be done about the inherent problems associated with fiat currency; destroy the Federal Reserve irrevocably and return the control of money production to individuals acting in concert voluntarily. This the only way the problem of inflation is going to be solved. That is what Bitcoin does. The portrait on the right is embedded in the Bitcoin Blockchain as a tribute to Federal Reserve Chairman Ben Bernanke, who destroyed the Federal Reserve Dollar in a Keynesian frenzy of money printing, defrauding millions of people.

would cause these people to reject the idea he is selling, no matter what it is worth or its capabilities. This is why, for many years, people simply did not accept that Bitcoin did what its proponents claimed it could do, despite the software being available and examinable. These people don’t understand anything connected with the computer world; they are leaves in the wind, where the wind is coming from a hand held blower, wielded by software vendors.

Evidence that Adam has dumbed down his talk to suit his audience’s capacity is found in his use of the phrase, “In an obscure corner of the Internet”. There are no “obscure corners of the Internet”. All parts of it are equally accessible to everyone. This is the sort of descriptive language that is needed to explain Bitcoin, but which simultaneously plagues it, because many of the speakers trying to contextualize it don’t have the eloquence to make a good job of clarifying and simplifying its true nature.

Its also interesting that the widely cited “Bitcoin White Paper” now universally held in the highest regard (even by people who know nothing about software, maths or economics) is entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”, but these crony capitalists choose to deliberately focus only on the means by which a P2P electronic cash system was achieved, not the idea of a new way of managing and accounting for tokens.

The Federal Reserve and central bankers believe that only they have the right to issue money. Bitcoin, explicitly created to issue a new form of money, cannot have its name or true purpose associated with Blockchain Vendors, because the threat to them is implicit in Bitcoin’s genesis and operation. More on this later.

The Bitcoin Whitepaper. A death notice to fiat money and central banks.

Ludwin says that the Bitcoin network has proven to be robust. Bitcoin has always been robust, was never a Ponzi Scheme, fraud, about to collapse, or any of the other lies spread about it by computer illiterates. Why exactly Ludwin asserts that it is resilient now, and why anyone should believe him over anyone else is not fleshed out in his talk. There is no more reason to think that Bitcoin does what its creators claim it can do now, than at any time during the vicious, brainless, evidence-less attacks on it by academics, journalists, economists and other assorted idiots.

This controversy that Ludwin mentions was a tissue of lies from the beginning. Unfortunately, we must all deal with a world populated by types who cannot and who refuse to think, and this talk at the Federal Reserve and their inadvertent anointing of Bitcoin will greatly strengthen the perception of Bitcoin globally. This is the only thing we have to be thankful for from this meeting. Now, no one will be able to lie about Bitcoin in any serious publication. The same software that the Blockchain not Bitcoin vendors are trying to sell powers Bitcoin. If the latter works, the former must work, and anyway, “The Federal Reserve said it works”.

On top of this new faith in Bitcoin are the extensions and features Bitcoin that are being added by Bitcoin Core that increase its capabilities. It is impossible for any single government or corporation to out innovate an Open Source software project with many developers working on the same system. Linux is the living proof of this; no one can come close to the amount of genius being poured into Linux. That is why it is every where, in billions of devices, and increasingly on desktop computers. Bitcoin domination, even as a universal financial backbone, is inevitable and there is nothing anyone can do to stop it.

Bitcoin did not create a new asset class. Bitcoin is money, in the same way that fiat cash is used as money, or metal buttons stamped in Birmingham in the late 1700s were money.

Institutions are buying software from hungry vendors because they do not want to be left out of the latest innovations. The vendors sell them snake oil solutions to problems that they don’t have, and because they don’t have any understanding of computers, cryptography or economics, they buy these systems and pilot them so as to appear cutting edge.

As an example, there is no such thing as “digitizing existing asset classes”. Databases hold entries that are text. That is all that they do, and Bitcoin is nothing more than a write once read many database. What is happening now with the Blockchain not Bitcoin vendors is a direct mirror image of the Intranet fad that happened in the 1990s

The computer illiterates of that era, were sold the idea of private networks based on a series of false assumptions and an inability to understand what they were working with. Vendors set up a compelling story, and sold them expensive bespoke systems. The idea of an “Intranet” which sounds like “Internet” was an easy sell. Much less sexy is “Local Network” which is exactly what these Intranets are, and today they work on standard protocols, not bespoke systems. The Blockchain not Bitcoin people are creating the same worthless intermediary step to total Internet acceptance that the Intranet vendors did in the 1990s.

Of course, they are free to do this, but because the function of money is what Bitcoin is replacing, and because the Federal Reserve and the other central banks have the entire force of government behind them, this will not be like Intranet vs Internet and private protocols vs open protocols debate. If the central banks try and release their own cryptocurrency alt coin, they will anoint it and supercharge it with Legal Tender status. That means that it will be illegal for anyone to refuse to accept their alt coin for settlement of debts.

Essentially, they will move their Ponzi Scheme from one set of databases that they have exclusive access to, to another database they own where all market participants have direct access to the generated tokens. That is the only change that will happen; the fundamental and unethical nature of the money will remain unchanged. It will be imposed by force, and its supply will be managed by a secret process. It will be as unreliable as all fiat currency ever was. This is the very definition of lipstick on a pig.

All asset classes like shares, are already held in databases. What Ludwin is trying to sell in a “bait and switch” is a new form of database where he claims layers of trust are removed. The switch comes where layers of trust are re-inserted because what he is selling is a “permissioned” database requiring trusted parties.

Omitted from his model is that in Bitcoin, no one needs to be trusted; all Blockchain not Bitcoin vendors must break the trust model of Bitcoin to re-assert the control that the Federal Reserve and NASDAQ (for example) have over who gets to control the money supply and who authorizes shares to move respectively. There is no place in the Bitcoin world for the Federal Reserve; Bitcoin was designed to destroy it. This is the real reason these institutions are testing new networks.

Adam says that the blockchain is designed to issue and transfer Bitcoins. This is true, but Bitcoin can be used to transfer any good, tangible or intangible. How is this doable? Stocks and all other assets are serialized.

A bearer bond issued by the government of Ghana, with unique serial number 01AA637969

All stocks come with a serial number that is unique to the share. The same is true of bonds and even paper fiat money. It is trivial in software terms to attach a stock to a Bitcoin transaction; instead of having a printed serial number, a Bitcoin transaction can be assigned to the share. The people behind “Coloured Coins” have been working on precisely this way of representing and managing real world assets:

In other words, this problem has already been solved, where you have all the now admitted resilience and reliability of Bitcoin and the ability to “attach” real world certificates of ownership to entries in the Bitcoin database. There is no need whatsoever to create a bespoke, private, illegitimate Federal alt-coin, unless your aim is to sell software services, as Adam Ludwin does.