Author: Marcus

Marcus has worked for the better part of the past two decades as an IT Systems Administrator. Throughout his life he's been fascinated by finance and hopes the creation of cryptocurrency heralds a new era where banks, governments and centralized institutions lose their strangle-hold upon the citizenry's financial health and welfare.
Experian’s bogus “dark web surveillance” is bogus

Experian’s bogus “dark web surveillance” is bogus

So in my normal day to day living I’m not exposed to very many commercials at all, but this past Saturday night in a friendly get-together I happened to notice a commercial I’d never seen before.  Experian, a credit and identity theft protection service, was advertising that part of their package is they engage in surveillance of the dark web for their customers benefit, to help ensure their customers’ credit/identity details aren’t being sold or posted on the dark web.

This “dark web surveillance” they claim to utilize is, at the very least, being presented in a less-than-honest fashion and worst case may just be an outright lie on their part. I’ll show you the reasons why they stink of deceitfulness and let you decide.

The first thing to look at here is the size of the dark web, no one is exactly sure just how big it is but looking at all online services together (both the surface/clear web where we use Google, Facebook, etc everyday as well as the more esoteric dark web (aka the hidden services) where we can find online black-markets for illegal drugs, weapons, software and stolen credit cards/identities being trafficked 24/7/365 internationally) a common estimate is that the surface web makes up only about 3% of the total, leaving the remaining 97% as dark web territory. That’s A LOT of space to try monitoring. I’m pretty sure they’re completely incapable of monitoring something that size competently.

Just for kicks, let’s give them the benefit of the doubt and pretend Experian is somehow the equivalent of Google but on the dark web. We’re pretending they’ve somehow managed to index the vast majority of the dark web, which is considerably larger than the surface web that Google strives to keep indexed and catalogued and requires multiple very large, dedicated data centers to manage.  I don’t even have to fact-check this: Experian DOES NOT have/own/operate infrastructure that gets anywhere close to competing with Google’s. Let’s pretend though that somehow they’re beating Google at Google’s own game and are capable of monitoring most of the dark web with a fair measure of capability.

If monitoring the entire dark web were even possible, here’s the next big problem. Stealing individuals’ identities and credit details is a business unto itself. The people who steal the most credit cards and identities are the people who make it their full time job. These thieves are the most probable cause for most stolen identities and credit cards. These thieves rarely, probably never, use any of the identities or credit that they steal for themselves, instead they’ll sell it on one of the dark web black-markets for their customers’ use. Since the majority of credit and identity fraud passes through these dark web black-markets at some point, this is almost certainly where some Experian marketing doofus with a little too much moxy and not enough brains came up with “dark web surveillance” as a marketing gimmick.  Since the thieves make money selling the information, they aren’t going to be posting the info up on a public page, they’re only going to private message the stolen info to the buyer.

Even monitoring the entire dark web, the only way Experian could ever possibly know that your personal info was stolen and sold on the dark web would be if they were the ones who bought your stolen info from the thief. I doubt they have enough of a revenue stream to buy up all of the identity/credit thieves’ available stock on anything approaching a semi-regular basis.  It’s an amusing idea: if they purchase stolen personal/financial details from the thieves then they’d be secretly enabling or promoting the threat that they’re asserting they can help their subscribers to minimize.  I don’t really think they go on there and buy stolen information, it seems to me that if they understood the dark web they’d realize how idiotic their surveillance claim is and this makes me doubt they’ve ever really used it.  Of course, maybe they have and they just figure their prospective customers don’t have a clue about it so they can get away with it.

So to recap:

-Experian (along with pretty much everyone else) is largely incapable of monitoring something as large as the dark web in any capacity that gets even halfway to “effective” or “thorough”.

-Even if Experian could monitor the dark web effectively, about 99% of the time they would still have zero insight what identities had been stolen unless they were the ones that bought this stolen information.

I don’t work for Experian and never have, it’s certainly possible they may have something resembling a web crawler that’s aimlessly sorting through the tremendous jungle that is the dark web. While the sales and marketing teams clearly love touting the virtues of what they’ve christened “dark web surveillance”, I’d be shocked into speechlessness to ever learn if the guy that actually manages that technology felt it could ever have any usefulness outside of being a cheap marketing gimmick.

Bitcoin’s biggest flaw

Bitcoin’s biggest flaw

I love Bitcoin and there’s no denying that its arrival has changed everything, but I’d be lying to you if I said it’s perfect.  It has some flaws, in this article I’m going to illustrate for you what I consider its main flaw: by default all completed Bitcoin transactions, from the very first one up until the present, are publicly available information since its blockchain is a public “ledger.”

If you read my earlier article you might recall that I had said Bitcoin was private, which is true but only to a certain point.  Once you have someone’s public/receive address for their Bitcoin wallet you can use the blockchain explorer (https://blockexplorer.com) to see the total amount of Bitcoin ever sent to that address, as well as the current available Bitcoin balance, if there is any.

Here’s a real world example of the problem I’m describing.  Currently thepiratebay.org has published this Bitcoin address on their main page so people can send them donations in Bitcoin: 129TQVAroeehD9fZpzK51NdZGQT4TqifbG

Now if you search for that address on https://blockexplorer.com it’ll take you to this page: https://blockexplorer.com/address/129TQVAroeehD9fZpzK51NdZGQT4TqifbG

Now you can see every deposit ever made to that address, its date and time, and same for every withdrawal as well.  So at this moment thepiratebay.org has just over a quarter of a BTC sitting in their donation wallet while just under an even dozen BTC total has been donated to their address.

That’s a pretty obnoxious amount of info to have, isn’t it?  The address itself is nameless, just a bunch of random alpha numeric, but once you know who or what an address belongs to then the public blockchain offers too much information in my opinion. I know I wouldn’t want everyone I send Bitcoin to or receive Bitcoin from (especially as adoption increases and those who you give to and recieve from are from IRL instead of from online) to be able to access any personal financial data with that much accuracy and depth.

Of course being Bitcoin means it (hopefully) isn’t the full story as far as our complete finances go, but it’s still more information than you’d want out there if you’re using Bitcoin on a daily basis.

If you’re aware of the coming of a possible Bitcoin hard-fork and wondering why this article isn’t about that, it’s because even after the hard-fork is over and done with this will still be a significant problem for Bitcoin.

 

If buying a hotdog at a ballgame means the vendor can see your account balance, Bitcoin isn’t going to work for everyone.

Ethereum is overpriced garbage

Ethereum is overpriced garbage

There’s been a lot of buzz about a cryptocurrency called Ethereum (ETH) potentially replacing Bitcoin. While Ethereum may indeed soon temporarily overtake Bitcoin in terms of market capitalization, it will never replace Bitcoin.

If you’re an Ethereum fanboy or even just considering “investing” in this presently overpriced (ETH is $270 currently) garbage then please stick around and allow me to illuminate you.

-Market capitalization-

For starters, should Ethereum’s market capitalization ever surpass Bitcoin’s this would NOT mean that the Ethereum price would come anywhere near the Bitcoin price. Observe:

In the screenshot just above it’s all spelled out: supply * price = market cap.

So for Bitcoin: 16,422,412 BTC * $2,421.06 = $39.76 billion market cap.

And Ethereum: 92,956,716 ETH * $269.60 = ~$25 billion market cap.

So here’s what Ethereum’s price per ETH would be with a $45 billion market cap, a market cap slightly larger than BTC’s: $484.10.

So for ETH to be the same price as BTC is right now, Ethereum would need a market cap of $225 billion. I’m not saying that a market cap that high is impossible for ETH to ever reach, but I really doubt it ever climbs half that high for reasons that I’m about to explain.

By the way, did you know that technically Ethereum isn’t even a currency? It’s just a token used to run various computations on a decentralized virtual machine. If BTC is digital cash, ETH is digital “gas”.

-Ethereum is ultimately irrelevant-

So ETH’s current market cap of $25 billion means that collectively the human race has $25 billion set aside purely to run these scripts called “smart contracts” on this special decentralized virtual computer. If decentralized virtual computing is what gets you excited, just go build yourself a server cluster. Can you imagine the totally sweet server cluster that could be powered, maintained, and connected through hundreds of separate locations around the globe for $25 billion? Ethereum’s more realistic market cap should be something around $1 billion but honestly even $1 billion feels too generous. Too generous because I have yet to encounter a single real world use for Ethereum smart contracts that regular scripting/programing and cluster hosting is unable do MUCH better already. A single cluster hosted across multiple locations would provide perpetual uptime. Rather than be limited to “smart contracts” that must be written in Ethereum’s home grown scripting language called “solidity” you can write your code in whatever language you please. Compile yourself a true decentralized app, not a bunch of scripts written in pseudo-javascript that the ETH crowd tries to pass off as the same thing.

So if anyone reading this has any suspected real world uses for ETH/smart contracts that might outdo technologies that already exist and are prevalent, I’d love for you to share it with me in the comments below. I honestly can’t think of a single one right now, can you?

ETH fanboys will almost always answer the “what’s a real world function/use that ETH smart contracts can fulfill better than other existing technologies?” question by giving the obvious “it’s still the very early days” as a deflecting non-answer but seriously IF NONE OF US ARE ABLE TO FIND A SINGLE TASK THAT ETHEREUM COULD POTENTIALLY DO BETTER THAN WHAT’S ALREADY OUT THERE THEN ETHEREUM IS ULTIMATELY IRRELEVANT.

I totally get that turning a blockchain into a decentralized virtual computer is completely amazing because I’m in full agreement: it is amazing. No sarcasm, from the first time I read about it and even to this day I feel a bit of amazement at just how wild that concept is. Problem is there doesn’t seem to be any real world utility for it that isn’t already being fulfilled by more powerful/flexible/cheap/readily available technologies that’ve been around longer. It’s like the blockchain equivalent of “cool trick bro.” It really is a cool trick, really truly, too bad its also almost completely impotent when lined up with any similar technology solutions.

So if you love ETH and find yourself fighting the good voice of reason here then comfort yourself from these painful points by knowing that I have little doubt ETH will continue to increase in value a while longer (people are stupid after all), so please enjoy the ride while you can. Once some of those heavy ETH holders understand some of the simple points I’m making here (which will be inevitable once all the hype and press dies down and people actually start looking at it more closely), the ETH bubble is going to pop and pop hard. It’s inevitable because ETH revolutionizes nothing, there’s nothing truly helpful being added to the world by its use or creation.

Is Bitcoin real money?

Is Bitcoin real money?

I’ve been asked this question so often that I’m compelled to include it here: is Bitcoin real money?

Here’s my short answer: yes. You can cash Bitcoin (BTC) out for USD or other fiat currencies easily, there are a number of online exchanges that can be used or there may even be a Bitcoin ATM in your area. There’s also a growing body of merchants that accept BTC directly as payment, just google ‘who accepts bitcoin payment’ and you’ll be treated to lists of vendors that see its value.

So that’s my short answer, but let’s take a deeper look at the question and explore a deeper answer.

Real money.

Just what do you consider real money? US Dollars, perhaps? Isn’t the question about BTC’s “real money” status more a question of where does Bitcoin’s value come from?

So let’s look at that. But first it might be helpful to take a look at what came before, like where does the US Dollar’s value come from? The US Dollar used to be backed by gold, this was called the gold standard, up until the 1970’s when it was decided that there’d be no more gold standard. Today the USD is backed by debt, essentially.

Moving back from USD for just a moment, let’s look at gold- where the USD used to pull its value from. I know some people, acquaintances, who buy up gold and keep it stashed just in case of some sort of cataclysmic event. If civilization as we know it were to suddenly collapse, as in suddenly the biggest and most immediate concern for 98% of us has become where our next meal is coming from or finding a source of clean water, I can’t see gold having any value in this hypothetical world- especially if re-establishing civilization wasn’t anywhere on the horizon. In a purely utilitarian philosophy/society, gold is almost worthless. You can’t eat gold, gold won’t keep you warm at night, you can’t use it as a fertilizer or a fuel, you wouldn’t even be able to make decent weapons or tools out of it because it’s too damn soft. Things that would be valuable would be antibiotics/medical supplies, tools, weapons, fuel, blankets, etc.

But in our world today, gold has quite a bit of value. Why? Why does the USD have any value?

Both these things have value simply because we’re all in agreement that they have value. Perception creating reality. Same way a king has power over a nation. If one day everyone in a kingdom decided that they’d no longer obey the king – as in all the king’s personal guards and servants to the military to the commoners, everyone – the king would no longer be a king, would they?

Bit of a philosophical tangent just then, so back to the subject at hand: Bitcoin. Where does its value come from?

There are three big things to consider in a currency regarding its value. They are supply, liquidity and adoption.

Supply is defined by how much of this currency exists, as in how rare or how common is it?

Liquidity can be explained by “how easy is it to chop this up into pieces and use those pieces as a medium of exchange?” So a house is not a very liquid asset, cash is a very liquid asset.

Adoption is simply asking “what are the chances this [random party/person] would be willing to receive this as payment?”

Let’s compare USD and Bitcoin and see where each falls on those three indicators.

In regards to supply: Bitcoin beats USD. Bitcoin, unlike USD, has a maximum supply of 21 million Bitcoins. It’s impossible for more than 21 million Bitcoins to ever be in circulation simultaneously. The US Federal Reserve controls the supply of USD, the Federal Reserve is a private bank and their meetings are closed. Cheng Siwei, the late Chinese politician, was in the news in recent years expressing Beijing’s alarm that the Federal Reserve had been ‘printing money’ to buy Treasury debt. A policy like this would create a sort of rebound inflation, surplus USD created to be spent internationally wouldn’t have the same immediate reaction on inflation that surplus USD used domestically would, but it would catch up once those international holders of that surplus USD decided to use it for payments to US merchants. Regardless if the Fed does print money like that or not, due to inflation your USD loses, on average, 2% of its value annually.

In regards to liquidity: Bitcoin again beats USD. Bitcoin/cryptocurrency is the most liquid asset that the world has ever seen. Bitcoin’s price right now is about $2350 per Bitcoin, this doesn’t mean that you need $2350 on hand today to own some Bitcoin, you can just buy $20 worth of Bitcoin if you want and get 0.008515 BTC at the $2350 trading price. One cent USD is 0.00000426 BTC. So if you sent someone 0.00000213 BTC right now then you’d be sending them half a cent USD. So it’s more liquid than USD.

In regards to adoption: USD beats Bitcoin, for now. Bitcoin has many advantages over USD and all other fiat currencies so as time goes on and more people around the world begin to understand and see these benefits Bitcoin’s adoption will continue to rise. More and more fiat currencies from around the world will continue to be exchanged for Bitcoins. Since there’s a maximum supply of 21 million Bitcoins for the entire world, Bitcoin’s price will inevitably continue to rise over the next decade.

What is Bitcoin?

What is Bitcoin?

Bitcoin can be a difficult subject even for technically-inclined individuals to fully wrap their minds around when first exposed to it. So I’m going to try to explain it here more simply than other explanations I’ve read online.

Bitcoin (BTC) is a currency like US Dollars (USD), Euros (EUR), Yen (JPY), etc. Unlike USD/EUR/JPY/etc however it isn’t a fiat currency, meaning it isn’t backed/issued by any government- it is a cryptocurrency or an encrypted currency and was the first cryptocurrency created. Being encrypted just means that it’s both secure and private (anonymous). It’s also purely digital, enabling payments across the globe 24/7/365, transfers completing their initial confirmation on average in about 10-15 minutes.

Although it has nothing to do with email, the simplest way to look at it is it’s almost like digital cash that can be “emailed” anonymously between people. Instead of an email account or a bank account doing the sending and receiving you have a Bitcoin wallet that stores, sends and receives payments. You can install a Bitcoin wallet on your home computer or smartphone.

Another important aspect of Bitcoin is that it is entirely decentralized, so there’s no single organization or individual that controls or supports it. One benefit to decentralization is that there’s no single point of failure, there’s no single server-farm or geographic point out there that if a sinkhole were to open up and swallow that would hurt this currency. One detriment to decentralization is that there is no customer service or support, so if by accident you sent, say, $1 million USD worth of Bitcoin to the wrong address you’d have no recourse to undo that transaction. You’d be screwed. Also, if you aren’t careful with your Bitcoin wallet details you run the risk of someone else gaining access to your Bitcoin wallet. If this occurs it’s a pretty safe bet that they’re going to dump your entire balance into their own wallet. Again, you’ll be screwed in this scenario.

Sending Bitcoin to a wrong address or having your Bitcoin wallet compromised are both unlikely scenarios. There’s some anecdotal evidence from around the web that each of these worst-case scenarios has occurred but their occurrence is pretty rare. Just be aware and be careful.

Again, this has just been a simplified overview of Bitcoin. In later posts we’ll go more in depth on the different aspects of Bitcoin and other cryptocurrencies.