Bitcoin and Crypto Taxes

ETHE & GBTC (Grayscale) Frequently Asked Questions

It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions.
The goal is simply to have a thread we can link to anyone with questions on Grayscale and its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread. My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers.
Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect
Everything below will be in reference to ETHE but will apply to GBTC as well. If those two segregate in any way, I will note that accordingly.
What is Grayscale? 
Grayscale is the company that created the ETHE product. Their website is https://grayscale.co/
What is ETHE? 
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF? 
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed? 
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created? 
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor.
Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”)
Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product? 
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow? 
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there.
As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however.
Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH? 
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares? 
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure? 
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset.
Source: ETHE’s informational page on Grayscale’s website - Located Here
Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE? 
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC.
ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here
For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing? 
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC.
As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on.
Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain? 
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good.
Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon.
Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel? 
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.)
That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely.
IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]… 
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0? 
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015.
Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?” 
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance.
As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium? 
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:

Are there any other differences between ETHE and GBTC? 
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc? 
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing.
For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH? 
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund.
In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale? 
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know.
Per user Over-analyser (in comments below):
Coinshares (Formerly XBT provider) are the only similar product I know of. BTC, ETH, XRP and LTC as Exchange Traded Notes (ETN).
It looks like they are fully backed with the underlying crypto (no premium).
https://coinshares.com/etps/xbt-provideinvestor-resources/daily-hedging-position
Denominated in SEK and EUR. Certainly available in some UK pensions (SIPP).
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE? 
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.

submitted by Bob-Rossi to ethfinance [link] [comments]

Investment growth comparison

I thought I'll do research on investment options with the current market. Thought I'll share it here it's the very basic but enough. Does anyone know of another type of investment that is common in the UK and the interest/yield?

Savings 0.1 to 1% (safe, instant access)
Income Bonds 1.16% (safe)
ISA 0.5 to 1.5% (safe)
Lifetime ISA (safe, but can't withdraw until your 50 or buying a house that worth 450k or less)
Fixed-term ISA/Bonds (safe but can’t withdraw money for a fixed term i.e 1-3 years)
NS&I Premium Bonds (very safe, expect an average interest of 0 to 1.4%. also have a chance of winning a million per month if you have a sizeable amount saved and are lucky
Stock and share ISA (min 5 years to make a return, comes with risk)
Workplace pension
Commodity
Buy to let (comes with risks: no payment, void period, big damages, taxes etc...)
Note:
Others investments not considered:
submitted by abfn479 to UKPersonalFinance [link] [comments]

What is money?

Hey all, this might be a bit outside of the "Bitcoin" realm, but I wanted to create a sounding board to help me grasp what money is, how it relates to economies, and where Bitcoin can come in. I'm just writing out my thoughts, and I'm open to comments and opinions or corrections :). Hopefully this can be helpful to others too.
Note, that I live in the UK and I feel like a lot of information talks about the dollar, and I never know if it applies the same to my currency. I will give examples in dollars, but they should apply to any world currency (eg. GBP) to the best of my understanding.
I saw a link recently on this subreddit to this site: https://modernmoneybasics.com/. If I were to summarise what I learnt, it is a mental model that frames fiat currency in an interesting way, but I wouldn't be surprised if it did contain some misinformation. -- It claims that the model applies to any fiat currency.
OK. Pretend that all of a countries money = 1. If you own $100, you own a fraction of the countries money, so if there is $10,000 in the world you own 0.001 of all dollars. So naturally, if more money is printed, you start to own a smaller fraction of that money.
The Modern Money Theory (MMT) gives me the impression that money is basically a tool owned by the countries government (owned by someone who isn't the general public). Money is not an asset, it is a liability (hence why it loses value over time). People pay taxes and the Government will try to redistribute the wealth by investing in projects like The Army, Green Energy, etc.
This is supposed to be distributed in ways that help the country's economy, ensuring that the country is productive and is exporting things to other countries. When deemed necessary, more money can be printed to help redistribute wealth to the areas that the Government wants to invest in. I think that the more successful your economy, the more your money is worth.
This means one thing to me; PEOPLE DO NOT OWN/HAVE MONEY. Don't save fiat; it is a tool to help the economy, not a thing of value that you should store. I feel like saving actually keeps money from circulating in the economy and probably works towards needing to print money. Instead, buy assets; you put money back into the economy, and you get to hold onto your wealth. What can you invest in? Ok, that's not such an easy question to answer. Maybe buy gold (or *ahem* Bitcoin), or invest in yourself to make something valuable and ultimately start your own business.
MMT says that fiat has value because people pay taxes in fiat. Ultimately, we work, and earn in order to pay taxes (income, VAT, road tax, etc.). We spend in fiat, because the person accepting fiat will need to pay taxes and the next person will do the same, so now the whole country values your fiat currency.
Because of this, you need liquidity, you need to have some money to spend on groceries and living, and you need some money for a rainy day lest you end up in an emergency situation with not enough time to handle it with money. -- I think the more something costs, the more time you typically will have to pay it, so there might even be a formula you could create or use that helps you decide what to keep as cash, and what to spend.
So long story short, money is a token that represents a tiny fraction of your countries economy. It is also something that the government can manipulate and move around as it pleases in the same way a business invests in departments for its company. We are all just a cog in the machine that is our country's economy.
One thing I have not talked about, is the role of banks and credit and interest. I haven't expanded my thoughts in that area yet, but I feel like that they serve a different purpose.
Where does Bitcoin fit in? Well, just like gold, it is a potential asset. It has an interesting property though; it has liquidity. This give it the potential to be used for local trades, meaning that people can save their wealth and use it for local transactions too. It is global, so it also has the ability to be used for global transactions too. For now, it is an asset for saving your wealth; I think that as more people use it and favour it as a storage mechanism, more people will start to accept it for small trades too. Hey, maybe if there's a tool to easily calculate taxes from Bitcoin trades, that could help with adoption.
What would happen to fiat currency if everyone collected fiat for the sake of paying taxes, but used conversion tools to allow them to keep the majority of their wealth in Bitcoin while knowing the appropriate taxes to pay? Honestly, I fall short here, because at that point, you can no longer measure a country's economy by its currency. This is where I need to maybe learn how countries that do not have their own currency measure their economy.
I suppose governments, or ourselves, will have to invent new ways to measure and manage our economies, and I imagine i will be a much more transparent. I think it is an important question to answer as Bitcoin would shift wealth from being country wealth, to individual wealth (for everyone, not just those with enough income and education to invest in assets).
submitted by tookthisusersoucant to Bitcoin [link] [comments]

LeanFIRE and Goal Oriented Investing: 10 Mistakes you should avoid

Dear All -
After my earlier post regarding COVID-19 and 10 rules to deploy savings that generated lots of questions and interest I would like to share my thoughts about Goal Oriented Investing. While it's a 101 it may nevertheless be helpful to highlight especially in this market environment. I wasn't able to put graphs and videos here so you may find the full version here. Looking forward to hearing your feedback.

1. Not clearly defining your goals. Define your objectives and think in terms of sub-portfolios

Define your short and long term goals. Allocate to asset classes based on your time horizon (e.g. short term goals need to be carefully managed with a defensive portfolio since the short term volatility of high risk assets like stocks can hurt you). Be sure to have a reserve fund of liquid short-term investments and cash so you can cover emergencies and upcoming large expenses without having to sell your investments during down markets.

2. Not being patient and overreacting. Good things come to those who wait

Returns tend to smooth out over the long term. There is a myth about a Fidelity study that analysed all its performing accounts and realised that best performance came out of portfolios of people who either forgot about their accounts or were dead. You can understand why people believe these findings although the study never took place (look at the chart here - 1 to 20 year rolling performance again!). Logging into your brokepension plan account every day may not be helpful. You may tend to react – do not rush investment decisions.

3. Oveunderestimating your risk tolerance

Take a risk tolerance assessment if necessary to understand your risk profile. Your risk tolerance is important to tweak the asset allocation of your goal sub-portfolio. It is determined by: the degree of flexibility you have with regard to your financial goal, and your personal comfort level with volatility in your portfolio.

4. Aiming at influencing things outside of your control. Focus of what’s in your control

This is the Stoic part of the 10 recommendations (if you also happen to adhere to this philosophy get the Stoic newsletter I never stopped reading for the past 5 years). One of the eye-openers that you learn while studying for the gruelling (Chartered Financial Analyst ‘CFA’) Charter is that research estimates that asset allocation (not stock selection!) drives up to c. 90% of overall portfolio performance. You control asset allocation and rebalancing. You do control your spending and savings that will grow over time – don’t waste most of your time on researching individual stocks (read: Are you more qualified than a professional analyst).

5. Not acquiring enough education and taking excessive idiosyncratic risks

Some of the most trending Google searches during this COVID-19 pandemic include ‘best stocks to buy now’, ‘how to invest in oil stocks’, ‘best stock for 2020’ or ‘best investments for 2020’ etc. In fact the phrase ‘how to buy a stock’ surged to record highs. This also relates to FOMO which I have described here and chasing upward trends in a bear market. Acquiring Investment Knowledge is key as it is ultimately your decisions that will determine whether your hard-earned savings generate long term returns. Do your homework. Understand investment risks. Research fundamentals. Take a bit more time if needed – the market is efficient and is pricing in information relatively quickly – you have no edge in acting quickly.

6. Being overly conservative over the long run

Think of your goals as liabilities that you need to match with your investments. The power of compounding means that you need a much lower amount today to meet a higher amount expenditure in the future. Einstein said compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it. If you have high needs with long time horizon you need to take calculated risks. Invest too defensively (e.g. low allocation to Equities) and it may not match your long term objective. Buffett’s exceptional investment returns are also due to his time horizon.

7. Holding excessive cash. Not taking risks involves high opportunity costs

Believe it or not but a lot of bankers working for the top names tend to hold cash and under-invest. By holding cash you are not only missing out on compounding interest but also paying more taxes! Inflation is an indirect tax that works by destroying savings in exchange for gov’t financing. It gets worse – as central banks print an unprecedented amount of money – most standard measurements of inflation, such as the consumer price index (CPI), do not account for the disproportional effects of quantitative easing which is rising asset prices (monetary inflation). Even when you hear about deflation it’s often very misleading. This bear market may be a good opportunity to gradually deploy cash for long term returns if you haven’t already.
As an example – the ‘headline’ inflation in the UK (2.9%) that over 10 years increased prices by 29.29% vs. London Property Prices that increased over twice as much. The same applies to other real assets, like company valuations (stocks) or gold.

8. Not considering diversification

Yes, bonds are not as sexy as stocks since your returns may not be as spectacular in the short term but these are excellent diversifiers that may be sometimes better suited depending on your investment objective and time horizon. Other currencies or hard metals/BTC may be good as well. As an example YTD performance (as of March 9th when I did the analysis) was -14.2% for stocks, +6.1% for bonds and +10.7% for Gold.

9. Letting your emotions rule

This is difficult to implement since we tend to have emotional biases. If you do decide to have a small part of your goal-oriented strategic asset allocation dedicated to tactical asset allocation, sector or stock selection emotions could drive investment decisions based on loss aversion or overconfidence (e.g. confusing brains with a bull market). If it’s e.g. the latter try to stay humble/rational and ask yourself if you really have an edge before making a decision.

10. Forgetting to rebalance

Some advisors recommend that investors rebalance their portfolios on a regular time interval while others recommend rebalancing only when the relative weight of an asset class deviates from the target allocation (glide path investments). Either way, this is something that needs to be observed on a regular basis. I aim to discuss glide path investments in future posts.
With all charts: https://bankeronwheels.com/how-do-i-start-investing-start-learning-how-to-invest-in-stocks-and-bonds-by-avoiding-these-10-common-investing-mistakes/
Stay well!
submitted by bankeronwheels to leanfire [link] [comments]

PyCryptax - Open Source UK Income and Capital Gains Tax Calculator

I've made a calculator for UK income and capital gains for help with Bitcoin and other cryptoasset transactions. It is available on github and is completely free and open source: https://github.com/MatthewLM/PyCryptax
You have to provide prices and transactional data in CSV files. Prices can be downloaded from various sources such as cryptodatadownload.com. Details on how to use it are in the README.
PyCryptax uses same-day; 30-day bed and breakfasting; and section 104 holdings rules to calculate capital gains which is a massive headache to do manually for more than a few transactions.
I've tested it on Linux but I see no reason why it should not work on Mac or Windows. You will need to use Python 3 to install and run the software which must be done on the command line.
There is another project known as BittyTax which is worth checking out too. I've not used it myself but it appears to have some more advanced functions. PyCryptax uses a different input data format which is designed to be simple and separates out income, price and capital gain data. Hopefully both of the projects can be helpful in their own way. BittyTax uses the AGPLv3 licence, whereas PyCryptax uses the MIT licence.
Please let me know if you come across any issues. You may post an issue on github here.
Do not rely on this software for accuracy. Anything provided by this software does not constitute advice in any form. The software is provided "as is", without warranty of any kind. Use at your own risk. See the LICENSE file for more details.
submitted by TingleWizard to BitcoinUK [link] [comments]

Order of events for paying CGT and purchasing a property?

Hi All,
For better or for worse, it seems not much has changed over the last few years with regards to tax on cryptocurrencies in the UK.
I've decided to cash out my bitcoins and once covid is in a more controlled state and it is safer to go out, I think I will buy a property. I will need a mortgage to support me though as I didn't have enough bitcoins to cover the property range I'm aiming to buy.
I sold some bitcoins in the 2019-2020 tax year and I've sold some bitcoins this year. I work in a full time job which means my income tax is automatically deducted via PAYE.
Based on my understanding:
  1. I need to pay CGT which firstly involves registering by 5 October 2020 for Self Assessment.
  2. I then have until 31 Jan 2021 to both report and pay the CGT I owe for the 2019-2020 tax year which covers any bitcoins that I sold during 6 April 2019 to 5 April 2020.
  3. Any CGT I owe for bitcoins I sold after 5 April 2020 would then need to be reported and paid by 31 Jan 2022.
Can I confirm this initial bit is correct?
Now my next question is, I understand right now after cashing off my bitcoins, I don't actually have to pay the CGT right away - is this correct?
As part of buying a property, I imagine there will be legal fees payable to the solicitor, optional surveyor fees (for peace and mind) as well as stamp duty. My understanding is that these are all have to paid straight away so can I in theory pay all of these, pay the deposit, leaving me with not enough money to cover the CGT payable but then simply use what I earn in my salary to pay the CGT?
Basically I want to take out as small of a mortgage as possible so I'd rather pay what I owe for the 2019-2020 CGT later after earning it through my salary as opposed to paying it sooner by taking out a larger mortgage. Given we have effectively 8 months worth of salary payments until 31 Jan 2021, that's not a small sum. By the same logic, I assume I don't even need to worry about having a single penny for the 2020-2021 CGT that I already owe until next year as I have until 31 Jan 2022 to pay it back?
Obviously this is more risky as I recognise I will be paying for mortgage payments, my regular ongoing utilities and bills etc but if I calculate things properly and have an emergency fund then this should be okay?
Thanks in advance!
submitted by Ulti00 to BitcoinUK [link] [comments]

Personal wallet transfer fees in relation to UK tax on cryptos

Reading UK's official guidance on cryptoassets, I understand that pretty much anything that you do with your cryptos is classified as a disposal:
Individuals need to calculate their gain or loss when they dispose of their cryptoassets to find out whether they need to pay Capital Gains Tax. A ‘disposal’ is a broad concept and includes:
As per the third item, should I also consider the transaction fees I pay for transferring cryptos from one of my wallets to another as disposals? The blockchain deducts the fee from my Bitcoin/ Ethereum balances.
submitted by PaulRBerg to UKPersonalFinance [link] [comments]

PyCryptax - Open Source UK Income and Capital Gains Tax Calculator

I've made a calculator for UK income and capital gains that can help with Bitcoin transactions. It is available on github and is completely free and open source: https://github.com/MatthewLM/PyCryptax
You have to provide prices and transactional data in CSV files. Prices can be downloaded from various sources such as cryptodatadownload.com. Details on how to use it are in the README.
PyCryptax uses same-day; 30-day bed and breakfasting; and section 104 holdings rules to calculate capital gains which is a massive headache to do manually for more than a few transactions.
I've tested it on Linux but I see no reason why it should not work on Mac or Windows. You will need to use Python 3 to install and run the software which must be done on the command line.
There is another project known as BittyTax which is worth checking out too. I've not used it myself but it appears to have some more advanced functions. PyCryptax uses a different input data format which is designed to be simple and separates out income, price and capital gain data. Hopefully both of the projects can be helpful in their own way. BittyTax uses the AGPLv3 licence, whereas PyCryptax uses the MIT licence.
Please let me know if you come across any issues. You may post an issue on github here.
Do not rely on this software for accuracy. Anything provided by this software does not constitute advice in any form. The software is provided "as is", without warranty of any kind. Use at your own risk. See the LICENSE file for more details.
submitted by TingleWizard to Bitcoin [link] [comments]

Koinly Launches Cryptocurrency Tax Calculator for UK Traders

With clear tax guidelines and cryptocurrency regulations, UK's tax authority, the HMRC, has made it abundantly clear that Bitcoin is not exempt from taxes - as many may believe.
Koinly is a fast growing crypto tax startup that promises to help bitcoin investors prepare their crypto tax reports in a fast and efficient manner. By linking exchange accounts and public wallet addresses with Koinly, investors can get a detailed capital gains report within a matter of minutes.
"UK's capital gains system is one of the most complex and with the thousands of transactions that crypto investors can quickly rake up - there is simply no way to manually do all the calculations. Our aim with Koinly is to make it easy for both crypto traders and accountants to generate their capital gains tax forms," said Robin Singh, founder of Koinly.
Taxes are an integral part of any financial system and it is a good sign that tax authorities are coming out with clear guidance around cryptocurrencies instead of blanket banning them. However, added tax liabilities may become a deterrent to the mainstream adoption of Bitcoin so tax solutions such as Koinly are likely to play a crucial role in overcoming this.
The platform currently supports some 400 crypto exchanges and wallets as well as 6000 cryptocurrencies. It also comes with tax-planning features that can help investors preview and plan their trades in a tax-efficient manner. Some other features:
- Income reports for Mining, Staking and DeFi interest. - Capital gains summary form that can be submitted to the HMRC - Full support for crypto taxes in UK including Share Pooling
submitted by robinyoz to BitcoinUK [link] [comments]

Weekly FIREUK Blog posts

UK FI blogger posts from the last 7 days
Reddit app allows sideways navigation to view across the table
FI Blogger Last Posted Latest Post Posts This Week
The Escape Artist Fri, 14 Feb 2020 The Compound Advantages of Hard Choices 2
7 Circles Fri, 14 Feb 2020 The Most Important Thing 2 – Risk and Cycles 4
South Wales FI Fri, 14 Feb 2020 What is a financial bridge- and do I need one? 2
fiukmoney.co.uk Fri, 14 Feb 2020 Net Worth update of 21 year old on the path to FIRE 2
Gentleman's Family Finances Fri, 14 Feb 2020 Child Benefit Sadface: the perils of BIK 2
Monevator Fri, 14 Feb 2020 Weekend reading: Many shall be restored that now are fallen and many shall fall that now are in honour 3
Skint Dad Fri, 14 Feb 2020 Wilko Half Price Pick and Mix (February 2020) 7
The Young Money Blog Fri, 14 Feb 2020 Two bits of personal news from Young Money Blog! 6
The Frugal Cottage Fri, 14 Feb 2020 Life Update #27 2
FIREMusings Thu, 13 Feb 2020 SIPP vs ISA – The Tax hit and benefit of deliberate drawout 1
Money-Side Up Thu, 13 Feb 2020 Productivity Hacks To Help You Save Money And Live Better: Feeling Heavy? 1
Banker on FIRE Thu, 13 Feb 2020 What Your Employer Doesn’t Want You To Know: Loyalty Doesn’t Pay 2
Pursue FIRE Wed, 12 Feb 2020 Each Way Betting Home Page 2
The Humble Penny Wed, 12 Feb 2020 Why Your Lack of Consistency Is Keeping You Poor 1
MoneyGrower Wed, 12 Feb 2020 Have A Little Patience – Blue Chip Stock Investing 1
The Mini Millionaire Wed, 12 Feb 2020 How To Get A Makro Card Without Being A Business 2
Finumus Wed, 12 Feb 2020 What if my broker goes bust? 1
theFIREstarter Wed, 12 Feb 2020 resigned to my fate 1
The FI Fox Tue, 11 Feb 2020 Let's talk about Bitcoin (Part 2) 1
The FIRE Shrink Tue, 11 Feb 2020 The Financial Dashboard – January 2020 1
{ in·deed·a·bly } Tue, 11 Feb 2020 Not very sporting 2
Having Fun Cracking Retirement Tue, 11 Feb 2020 The 2010’s – What A Decade 1
TuppennysFIREplace Tue, 11 Feb 2020 How To Successfully Live On One Income (With 30+ Helpful Tips) 5
Foxy Monkey Tue, 11 Feb 2020 Why you Should Invest Even If you Have No Money 1
Monethalia Tue, 11 Feb 2020 How to calculate your FIRE number 1
Money Bulldog Tue, 11 Feb 2020 Shawbrook Bank Savings Review 1
Inspiring Life Design Tue, 11 Feb 2020 How Did I Get On With My January Goals? 1
Hustle Escape Mon, 10 Feb 2020 The Frequently Ignored Productivity Benefits of Walking 1
Disease called Debt Mon, 10 Feb 2020 Loans with no Credit in South Carolina for your Emergency Situation 1
Much More With Less Mon, 10 Feb 2020 Five frugal things to start February 1
One Million Journey Sun, 09 Feb 2020 Hola Dividend Portfolio 1
FIRE v London Sat, 08 Feb 2020 Fighting complexity 1
Frugal Brits Sat, 08 Feb 2020 A small 20 minute investment in a hobby has sparked my interest in passive income 2
Money Mage Sat, 08 Feb 2020 January 2020 Savings Report 1
Full list of blogs included in checker - here
submitted by reckless-saving to FIREUK [link] [comments]

GOAL-ORIENTED Investing: 10 Mistakes you should avoid

"Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn't, pays it"- Albert Einstein
[As first seen on: https://bankeronwheels.com/]

1. Not clearly defining your goals. Define your objectives and think in terms of sub-portfolios

Define your short and long term goals. Allocate to asset classes based on your time horizon (e.g. short term goals need to be carefully managed with a defensive portfolio since the short term volatility of high risk assets like stocks can hurt you). Be sure to have a reserve fund of liquid short-term investments and cash so you can cover emergencies and upcoming large expenses without having to sell your investments during down markets, as illustrated below:

2. Not being patient and overreacting. Good things come to those who wait

Returns tend to smooth out over the long term. There is a myth about a Fidelity study that analysed all its performing accounts and realised that best performance came out of portfolios of people who either forgot about their accounts or were dead. You can understand why people believe these findings although the study never took place (look at the above chart’s 1 to 20 year rolling performance again!). Logging into your brokepension plan account every day may not be helpful. You may tend to react – do not rush investment decisions.

3. Oveunderestimating your risk tolerance

Take a risk tolerance assessment if necessary to understand your risk profile. Your risk tolerance is important to tweak the asset allocation of your goal sub-portfolio. It is determined by: the degree of flexibility you have with regard to your financial goal, and your personal comfort level with volatility in your portfolio.

4. Aiming at influencing things outside of your control. Focus of what’s in your control

This is the Stoic part of the 10 recommendations (if you also happen to adhere to this philosophy get the newsletter I never stopped reading for the past 5 years). One of the eye-openers that you learn while studying for the gruelling (Chartered Financial Analyst ‘CFA’) Charter is that research estimates that asset allocation (not stock selection!) drives up to c. 90% of overall portfolio performance. You control asset allocation and rebalancing. You do control your spending and savings that will grow over time – don’t waste most of your time on researching individual stocks (read: Are you more qualified than a professional analyst?)

5. Not acquiring enough education and taking excessive idiosyncratic risks

Some of the most trending Google searches during this COVID-19 pandemic include ‘best stocks to buy now’, ‘how to invest in oil stocks’, ‘best stock for 2020’ or ‘best investments for 2020’ etc. In fact the phrase ‘how to buy a stock’ surged to record highs. This also relates to FOMO which I have described here and chasing upward trends in a bear market. Acquiring Investment Knowledge is key as it is ultimately your decisions that will determine whether your hard-earned savings generate long term returns. Do your homework. Understand investment risks. Research fundamentals. Take a bit more time if needed – the market is efficient and is pricing in information relatively quickly – you have no edge in acting quickly.

6. Being overly conservative over the long run

Think of your goals as liabilities that you need to match with your investments. The power of compounding means that you need a much lower amount today to meet a higher amount expenditure in the future. Einstein said compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it. If you have high needs with long time horizon you need to take calculated risks. Invest too defensively (e.g. low allocation to Equities) and it may not match your long term objective. Buffett’s exceptional investment returns are also due to his time horizon.

7. Holding excessive cash. Not taking risks involves high opportunity costs

Believe it or not but a lot of bankers tend to hold cash and under-invest. By holding cash you are not only missing out on compounding interest but also paying more taxes! Inflation is an indirect tax that works by destroying savings in exchange for gov’t financing. It gets worse – as central banks print an unprecedented amount of money – most standard measurements of inflation, such as the consumer price index (CPI), do not account for the disproportional effects of quantitative easing which is rising asset prices! Even when you hear about deflation it’s often misleading. This bear market may be a good opportunity to gradually deploy cash for long term returns if you haven’t already.
As an example, look below at the ‘headline’ inflation in the UK (2.9%) that over 10 years increased prices by 29.29% vs. London Property Prices that increased over twice as much!

8. Not considering diversification

Yes, bonds are not as sexy as stocks since your returns may not be as spectacular in the short term but these are excellent diversifiers that may be sometimes better suited depending on your investment objective and time horizon. Other currencies or hard metals/BTC may be good as well.

9. Letting your emotions rule

This is difficult to implement since we tend to have emotional biases. If you do decide to have a small part of your goal-oriented strategic asset allocation dedicated to tactical asset allocation, sector or stock selection emotions could drive investment decisions based on loss aversion or overconfidence (e.g. confusing brains with a bull market). If it’s e.g. the latter try to stay humble/rational and ask yourself if you really have an edge before making a decision.

10. Forgetting to rebalance

Some advisors recommend that investors rebalance their portfolios on a regular time interval while others recommend rebalancing only when the relative weight of an asset class deviates from the target allocation (glide path investments). Either way, this is something that needs to be observed on a regular basis. We will discuss glide path investments in future posts. Subscribe here to get notified.
[With charts and videos: https://bankeronwheels.com/how-do-i-start-investing-start-learning-how-to-invest-in-stocks-and-bonds-by-avoiding-these-10-common-investing-mistakes/ ]

submitted by bankeronwheels to InvestmentEducation [link] [comments]

Pooling with same-day and 30-day rule

I'm doing my calculations using bitcoin.tax.
I see that the default option is the Pooling with same-day and 30-day rule.
Is this what one would typically use for calculating the capital gains on a trade in the UK?
submitted by rektkid_ to BitcoinUK [link] [comments]

Recap release Coinbase Pro integration

https://twitter.com/recap_io/status/1164525372815347714
Recap (the UK focused crypto tax calculator with end-to-end encryption) just released Coinbase Pro API support, as requested by BitcoinUK members - let us know which exchange you would like next on the twitter link above! -George
submitted by recap-george to BitcoinUK [link] [comments]

An Anarchist Case Against Markets

I originally posted this to DebateAnarchism but thought it would be good for discussion here as well
This post was inspired by a debate I had on this sub with a Market Anarchist, which stopped advancing beyond a certain point due to several impasses that we could never get beyond. It became frustrating for both of us after a while because we kept talking past each other.
I wanted to make this post in an effort to clearly explain the following: 1) What I mean when I say that I am "against markets", 2) Why I am against markets, 3) What mechanisms I think can serve as effective replacements for markets, and 4) Responses to common criticisms.
(Disclaimer: I am only pointing out problems with markets pertinent to the target audience of this sub that supports them - Market Anarchists. There is no need to make criticisms of market features that Market Anarchists do not endorse in the first place. This post is not intended to be a general or all-inclusive criticism of markets, because Market Anarchists are anti-capitalists anyway.)
"Against Markets"
I don't seek to "ban" markets in an anarchist social context (obviously, because I'm an Anarchist), but I seek to make them obsolete. This is what I mean when I say that I am "against markets".
The Problems with Markets (as they pertain to Market Anarchism) (in no particular order)
The authors investigate how worker-owned and capitalist enterprises differ with respect to wages, employment, and capital in Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. Estimates calculated using a matched employer-worker panel data set for the years 1982–94 largely corroborate the implications of orthodox behavioral models of the two types of enterprise. Co-ops had 14% lower wages than capitalist enterprises, on average; more volatile wages; and less volatile employment. Given the quality of the data set analyzed, the authors argue, these results can be regarded as having broad generality
(Note: Regarding the point about "less volatile employment" in favor of coops...this study was done comparing between capitalist firms and worker coops. The wages were largely reflective of wages for union members because the wages in capitalist firms regardless of whether the workers were union members or not were based on regional collective bargaining by the unions. However, (unlike with the wages) the job security is not reflective of job security for union members. While we can see that union wages are higher than income for workers working in cooperatives, we cannot make a meaningful comparison based on this study between union job security and coop job security.)
If you want an efficient market system for coordinating production and distribution, you need a flexible labor market. Unfortunately, a more flexible ("freer") labor market leads to reduced labor share of income even under worker ownership (Self-Exploitation). On the other hand, workers forming cartels (monopolizing/oligopolizing access the labor in their field) that restrict labor markets is the only way to halt the trend of decreasing labor share of income - this is essentially what the function of labor unions is. So you need labor cartels to prevent Labor self-Exploitation (in the Marxist sense), while these labor cartels will themselves either be impossible to enforce in the absence of authority (because of the equivalent of Scabs) OR even if they can be enforced without authority they will undermine the efficiency of the markets in your society (because cartels screw up the function of prices in a market).
Alternatives
Based on what is written below regarding ECP and HKP, there is no longer a reason (with regard to rational economic calculation or information) to think that decentralized planning and gift economy dynamics would be unable to entirely replace the role of markets.
Answers to Common Criticisms/Objections
I've been told this recently in an argument with a Market Anarchist. However, he never was able to explain specifically how and why these differences would manifest and on what basis one could claim that it would alter my calculus and conclusions above.
In that case you've massively restricted the potential scale and scope in which markets can have a role in the functioning of your economy. I suppose that's fine, but in that case I would ask the question: Why retain them at all? Why not seek to replace them entirely?
To put it simply, ECP just says that you need a mechanism that allows you to compare multiple possible allocation pathways for resources in order to know which allocation pathway is the most efficient use of resources. And HKP basically says that those who do a particular kind of activity in the economy learn the information relevant to that activity as they perform it. Furthermore, this information is disparate and best able to be extracted by lots of people individually doing particular activities that they focus on.
There's nothing inherent about a large firm that prevents this from happening more so than an aggregate of small firms playing the same role in aggregate as the large firm does by itself. Large firms that are run bottom-up and allow their members autonomy (as was the case of with each of the collectives/syndicates in Catalonia, in contrast to large firms in capitalism) can discover and disseminate this information at least as well as an aggregate of small firms playing the same role as the large firm by itself. As support for my claim, I reference The Anarchist Collectives by Sam Dolgoff - a book that contains multiple empirical examples showing that collectivization of multiple separate firms (which had been engaging in exchange transactions with one another to form a supply chain prior to the Anarchist revolution in Spain) into singular firms of operation from start to finish across the entire supply chain, actually improved productivity, innovation within the production process, and distribution of end products. This actually addresses both HKP and ECP. As per Hume's Razor, we can therefore conclude that a reduction in the scope, role, and presence of intermediary exchange transactions/prices between steps in the supply chain neither results in reduced ability to acquire & disseminate information nor results in reduced economic efficiency. Furthermore (as per Hume's Razor), we can conclude that it is not the scope, role, or presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge. This is because (as per Hume's Razor) if it were true that prices/markets are necessary or superior to all other methods for efficient information discovery & dissemination as well as for rational economic calculation, it would not have been the case that we could have seen improvements in productivity, innovation, and distribution of end products in the aforementioned examples after substantially reducing (via collectivization/integration of various intermediary and competing firms) the role, scope, and presence of prices/markets within the economy.
The alternative explanation (one that is more credible after the application of Hume's Razor and keeping the aforementioned empirical examples in mind) is that optimally efficient information discovery & dissemination as well as rational economic calculation, are both possible in a non-market framework when individuals have autonomy and can freely associate/dissociate with others in the pursuit of their goals.
What's written above should be sufficient to address this objection as well. If it is not the scope, role, and presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge...then there is no basis upon which to argue there will necessarily be (from an information or rational economic calculation standpoint) more bureaucracy in aggregate in a society that has replaced markets, than there would be in a society that retains them.
However, there remains the objection that bureaucracy would exist to a larger extent due to the lack of competitive pressures against inefficiency. My response is to point out that empirical evidence from revolutionary Anarchist societies indicate strongly to the contrary. The role and presence of competition was greatly reduced while there was a simultaneous improvement in efficiency. As per Hume's Razor, we can therefore reject the notion that it is competition specifically that inherently prevents bureaucratic buildup in individual firms. It seems, from these empirical examples, that the best way to prevent bureaucracy is not through market competition between several small firms but through Anarchist praxis involving a lack of hierarchy and authority within large firms (recall that I often use the term "firm" to refer to collectives, syndicates, etc. for the purposes of this post), such that there is no ossified system of rank within the large firm. The absence of an ossified system of rank within firms is the true key to preventing the accumulation of bureaucracy within firms.
Note the three types of efficiency in the linked video - Allocative Efficiency, Productive Efficiency, and Dynamic Efficiency.
The evidence from Anarchist Spain during the Spanish Civil War (which I discussed above) indicates that Productive Efficiency and Allocative Efficiency was improved in various industries and communities where Anarchist collectivization took place. This trend only reversed and ended as the State undermined the Anarchists through various measures, such as cutting them off of currency that was needed to acquire resources from outside the Anarchist-controlled regions, using that leverage over currency to take over control of various industries away from the Anarchists, etc... Thus far, the market anarchists I have discussed this issue with have agreed on this point.
Where I have faced disagreement from market anarchists is on the issue of Dynamic Efficiency aka "Innovative Efficiency". Those whom I have discussed this with argue that markets optimize dynamic efficiency better than any other alternative.
My response is as follows... Evidence indeed does not support the commonly held view that (within a market economy) larger firms have greater dynamic efficiency. However, it does show that investment into R&D (especially by small firms) in market settings is substantially impacted by whether or not there are Intellectual Property Rights.
For me, this raises a natural question: In an Anarchist social context where there are no intellectual property rights, would a framework of cooperation/collectivization into larger firms be more dynamically efficient than competition between smaller firms? Let's look at the following...
(1) Evidence shows that, in general, Intellectual Property Rights have a substantial net negative impact on innovative efficiency:
To summarize, although only tentative conclusions can be drawn given the small number of empirical studies, the body of available empirical evidence suggests that patents may substantively hinder both subsequent scientific research and subsequent product development. Across a relatively heterogeneous set of technologies within the life sciences, and examining various forms of intellectual property rights, the available empirical evidence suggests that property rights hinder cumulative innovation—with declines on the order of 30 percent. Clearly much more work is needed in order to examine the extent to which these patterns generalize to other technologies and other forms of intellectual property, but the best available evidence suggests that mechanisms that reward innovation in a way that places the technologies in the public domain—such as patent buyouts—may have substantial benefits in terms of encouraging cumulative innovation, at least in some contexts.
(2) Evidence shows that firms - in the context of a market economy - invest less in R&D without the presence of Intellectual Property Rights of some form.
So to summarize, IP generally has a substantial net negative impact on dynamic efficiency but in the context of a market economy IP is necessary to incentivize firms to invest adequately into R&D.
Based on this we can argue that in an Anarchist social context, a non-market framework (involving decentralized planning and gift economy dynamics) of cooperation/collectivization into larger firms is likely to be more dynamically efficient than a market framework of competition between multiple smaller firms. This means that replacing markets with cooperative/collectivized dynamics will likely improve dynamic efficiency - the opposite of what the market anarchists I have discussed this issue with claim.
I have had a discussion with a market anarchist who argued that certain kinds of tasks will not be adequately completed without monetary incentive - particularly tasks that are unpleasant or those which people do not enjoy.
However, this ignores the historical and contemporary evidence of Anarchists accomplishing these tasks without monetary incentive - see below:
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc53
https://theanarchistlibrary.org/library/sam-dolgoff-editor-the-anarchist-collectives#toc57
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc24
(A) First, here is the simplified logic behind why I find Marx's Law of Value Compelling as compared to Subjective Value Theory:
(i) The function of markets is to optimize supply and demand so that resources are allocated efficiently. An efficient allocation of resources enables future reproduction and growth of an economy. When the market suddenly undoes the very allocation of supply to fulfill demand that it had previously built up such that the economy subsequently shrinks, the previous build up can be thought of as a market failure. Hence the process by which prices plummet (along with all the subsequent effects) until the market can reorient to start growing the economy again, can be accurately called "correction". Given that prices can be incorrect such that they require "correction", price and value cannot be the same thing.
(ii) A bubble bursts in the economy when previously inflated prices are corrected. (Note that "correction" is not my own term, but a term frequently used to describe such phenomena in economics.)
(iii) The only way to make sense of this is that prices originally (prior to the bubble bursting) deviated from values too much.
(iv) If it is the case that prices can deviate too much from values while prices are derived from the interplay of various actors' marginal utilities, value cannot be subjective. There must be an objective substance of value around which prices can deviate (to an extent).
(v) Therefore, STV is invalid as a theory of value.
(vi) Having accepted this logic, it follows that we require an objective theory of value as opposed to a subjective theory of value. Now the question becomes: What should this objective theory of value be?
(vii) An objective theory of value must express value as being comprised of some definable substance(s).
(viii) Given that we have established value as something objective rather than subjective, it must be possible for commodities to be exchanged in such a way that there is equal Value on both sides of an exchange.
(ix) In order for things to have equal value, the substance of value must be some characteristic that all commodities share but also separates them from non-commodities.
(x) The only such characteristic is that they can all be produced by simple/"unskilled" human labor.
(xi) Therefore, expressing the value of a commodity must be done in units of simple/"unskilled" human labor.
(B) Furthermore, it has come to my attention that some market anarchists find Marx's Law of Value uncompelling as a result of the Transformation Problem. My response is to look into TSSI, which has made it clear that the Transformation Problem is a non-issue.
The reason this is important is that if you agree with Marx's Law of Value, then you necessarily would find worker cooperatives and market socialism of any variety (including market anarchism) highly problematic due to Self-Exploitation.
submitted by PerfectSociety to CapitalismVSocialism [link] [comments]

r/Bitcoin recap - August 2019

Hi Bitcoiners!
I’m back with the 32nd monthly Bitcoin news recap.
For those unfamiliar, each day I pick out the most popularelevant/interesting stories in Bitcoin and save them. At the end of the month I release them in one batch, to give you an overview of what happened in bitcoin over the past month.
You can see recaps of the previous months on Bitcoinsnippets.com
A recap of Bitcoin in August 2019
Adoption
Development * Bitcoin Core Developer Andrew Chow is straming his code tests on Twitch (7 Aug)
Security
Mining
Business
Education
Regulation & Politics
Archeology (Financial Incumbents)
Price & Trading
Fun & Other
submitted by SamWouters to Bitcoin [link] [comments]

Mechtant mondays - Jagoda

Welcome back to Merchant mondays

Merchant mondays is the moment to show your appreciation for the businesses that lead the way in the adoption of cryptocurrencies. Instead of paying with fiat for your next purchase, use this Monday initiative to pay with VTC instead.

This monday I want to highlight Jagoda! Check out some games you can buy with Vertcoin from their website.

On an nice sidenote. I am under the impression that work on the integration of VTC with BTCpayserver is in its final phase (if not complete already). I want to thank everyone who worked on it! Let's use this to get VTC accepted in many new stores!

Debit cards

With UQUID, buying online and sending money to friends is made easier and safer than ever: all you need is an email address. Your money is protected, no personal information is revealed, and you can retrieve the details of every payment at any moment.

Charity

Helperbit is a free and transparent way to support a charity project. You can donate to charity in Vertcoin and give something back to the world.

Education

LearnCrypto offers training about Crypto trading.The team at LearnCrypto.io has dedicated thousands of hours to educating the public and our students in all areas of Cryptocurrencies.

Food

PexPeppers is specialized in "finest chili sauces, jellies, salts, seeds & more." Based in Pueblo, Colorado, USA PexPeppers is selling all over the world.

Garden & Agriculture

Royal Queen Seeds is amongst the fastest growing cannabis seed companies in Europe. After building up many years of experience in growing cannabis seeds in the Netherlands, we decided to launch our own line of cannabis seeds and are now able to offer you quality feminized, autoflowering and medical seeds at a good price.

Gift Cards

Coincards provides Giftcards and was created in July of 2014.
Crypto De Change provides Gift Cards and Silver Buillons since July 2013.
Giftoff is a "digital gift card retailer with the largest range on offer in Europe. Since 2014 we’ve been enabling digital currency users to shop with major retailers like Amazon.co.uk, Steam and Marks & Spencer. We stock over 70 gift cards and accept over 40 digital currencies as well as UK credit and debit cards."
The Sheldon Store is a online store where you can buy giftcards with Cryptocurrencies. You can buy Amazon, iTunes, Google Play, PlayStation, Uber, Netflix (and many more) gift cards. The Sheldon store team consists of cryptocurrency enthusiasts working together, driven by a single goal; to create a world where everyday people earn, spend and invest cryptocurrency like they would any other fiat currency in their everyday life.

Goods/Merchandise

Astronaut Apparel makes every effort to operate in a transparent and ethical manner. We will be integrating blockchain features to help with supply chain management, so that you can see exactly where your apparel was made.
Barter4Crypto is a platform where users can offer and pay each other in cryptocurrencies for services and products.
Bullcrypto is a brand new apparel shop that sells everything from tshirts to hats or from mugs to posters!
An online marketplace (similar to Ebay) with buyer and seller protection. This platform allows you to buy and sell products for Crypto with escrow possibilities for Vertcoin.
Cyroline is on "the tireless hunt for the special in the fashion world, the perfect fusion of individual styles, quality and sustainability." In physical stores you can pay with Vertcoin in Germany: Lübeck, Berlin, Hamburg, Cologne, Stuttgart.
C&P provides crypto related fashion and is "shipping worldwide with live rates and tracking."
Crypto Compound provides "cryptothemed items" like fashion, mugs & more.
Cryptoble provides "apparel and more". Here are crypto related shirts & mugs.
A webshop selling Crypto mugs (obviously) and some other cool items such as Tshirts and Drones.
Epic Pants is an online retailer who sells products in the categories hardware, apparel, styles, gear, fun, music and art.
GeekBox "offers a wide variety of services including but not limited to basic computer setup, repair, virus removal, server setup, network setup, consulting, purchasing, cloud computing advice, gaming system and electronic repair." As a nice special GeekBox IT provides a Vertcoin Tshirt.
Hipptee provides a range of different cryptocurrency tshirts.
Hodler Tees is a cryptocurrency centered tshirt company based in Frisco Texas! (USA) We sell all things crypto related from hats to tshirts and even posters!
KPV provides Vaporizers, "electronic devices that help you vaporize your material into vapor for cleaner inhalation. People looking to quit smoking cigarettes are the main reason behind vapes."
Founded in 2018, their mission is to promote cryptocurrencies in popular culture with high-quality crypto apparel.
LP is an online store and community. We service the world, no order is too small or too large.
Luma Cards is selling greeting cards for all kinds of occasions. You can now buy high-quality art-based greeting cards with Vertcoin.
"At Nakamoto Clothing, we're passionate about designing and curating a selection of apparel to help grow this movement of change. And we're electrified AF!", international shipping.
Quinsolo proudly accepts decentralized cryptocurrency payments for their crypto themed products.
Online marketplace selling crypto embroided polo shirts
Spreadshirt provides shirts and more. Based in Greensburg, USA, the owner comes from the Netherlands.
Teepublic provides apparel, home goods, shirts, stickers, mugs & more.
The Chopmaster is a woodworker that sells a variety of wooden accessories.
RB gives "independent artists a meaningful new way to sell their creations. Today, we connect over 400k artists and designers across the planet with millions of passionate fans." RB provides a huge asortiment of designed products like bags, wall art, home decor, apparel, stationary & more.
WikiLeaks is a multinational media organization and associated library. It was founded by its publisher Julian Assange in 2006. The shop provides shirts, posters and asseccoires.
Zazzle is a "marketplace, you'll find customizable products, art and createyourown products just waiting for you. We're PhD's, professional artists, manufacturing gurus, patent holders, inventors, musicians, and more. Everything we do is an expression of love." As a nice special Z provides Vertcoin shirts.

Medical

Acupuncture in Massachusetts

Multimedia Services

RDS is Central Virginia’s drone service specialists. From preparation to content delivery, we perform all work to perfection. We can act as both an aerial film consultant or as the remote pilot in charge on your next projects.
Calvin West is a music producer and lyric video artist. Currently based in Spain but with project all around the world. You get a discount if you pay with Vertcoin. Take a look at his projects!

Professional (law) Services

Burrell Law "Our New York Citybased attorneys provide a broad range of transactional legal services" Every large business was once a small business. We are here to help you find a solution for your legal needs.
Bitcoin Tax is "calculating capital gains/losses for any cryptocurrency. Do you know the costbasis of every coin you own? Are you tracking the profits and new basis when you spend or sell? Can you work out the best way to identify your trades to optimize your taxes? Let us do it for you."
The Crypto Lawyers "we are a team of U.S. qualified lawyers dedicated to helping individuals, businesses, and organizations navigate the legal intricacies of cryptocurrency and blockchain technology. We commit ourselves to strategically and aggressively represent our clients in their transactional and litigation matters."

Printing

"Catdi is a commercial printing company with additional specialization in web design. Offering costeffective commercial printing, direct mail, graphic design and web solutions to small businesses. Proudly Serving Houston and surrounding communities for over 10 years."

Technology & Internet

AirVPN is a VPN based on OpenVPN and operated by activists and hacktivists in defence of net neutrality, privacy and against censorship.
With Crpto.space, you can get all the information you spend time checking, instantly every time you open a browser on your desktop or mobile device. Premium package includes the vertcoin homepage and wallpapers.
Jagoda (strawberry) is a videogames platform aiming to distribute digital services for cryptocurrencies that show a direct interest in social activism on different layers.
Evolution Host is a hosting provider where you can pay with Vertcoin. They offer VPS hosting, IRC hosting and game servers on several locations around the world with highend hardware.
"FastTech is the technocentric destination for all your geeky needs and more. FastTech is committed to become the most loved and trusted electronics marketplace by offering superior shopping experience, timely shipping, and stellar customer service."
The first GPS tracking company to accept cryptocurrency as payment. Easy to install and easy to use with options for just about any type of vehicle or trailer.

Video Games

Cavemen Studios is a developer of video games. "Having over a century of combined experience on how video games tick, we've finally decided it's time to start creating our own products."
"Keys4Coins is one of the first pc game stores who only accept cryptocurrency as payment. Our store is simple to use and you can shop anonymously. Only an email is required so you can receive the license."
"Our aim is to provide the fastest, easiest place to buy Xbox Live Gold subscriptions with cryptocurrencies"

Wallets & miscellaneous

Designed Vertcoin public and private wallets that can be used as paper wallets or given as gifts.
LaserLightning provides one etched wooden Vertcoin with the Vertcoin logo burned into one side, and your custom QR code on the back. These coins are approx 1.5 inches in diameter.

(NSFW) Adult shops

Toys4Sex is Australia's Online Adult store retailer intended for men and women. Toys4Sex comes with a specially selected range of products that has made its mark within the Australian adult market place.
submitted by thatmanontheright to vertcoin [link] [comments]

An Anarchist Case Against Markets

This post was inspired by a debate I had on this sub with a Market Anarchist, which stopped advancing beyond a certain point due to several impasses that we could never get beyond. It became frustrating for both of us after a while because we kept talking past each other.
I wanted to make this post in an effort to clearly explain the following: 1) What I mean when I say that I am "against markets", 2) Why I am against markets, 3) What mechanisms I think can serve as effective replacements for markets, and 4) Responses to common criticisms.
(Disclaimer: I am only pointing out problems with markets pertinent to the target audience of this sub that supports them - Market Anarchists. There is no need to make criticisms of market features that Market Anarchists do not endorse in the first place. This post is not intended to be a general or all-inclusive criticism of markets, because Market Anarchists are anti-capitalists anyway.)
"Against Markets"
I don't seek to "ban" markets in an anarchist social context (obviously, because I'm an Anarchist), but I seek to make them obsolete. This is what I mean when I say that I am "against markets".
The Problems with Markets (as they pertain to Market Anarchism) (in no particular order)
The authors investigate how worker-owned and capitalist enterprises differ with respect to wages, employment, and capital in Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. Estimates calculated using a matched employer-worker panel data set for the years 1982–94 largely corroborate the implications of orthodox behavioral models of the two types of enterprise. Co-ops had 14% lower wages than capitalist enterprises, on average; more volatile wages; and less volatile employment. Given the quality of the data set analyzed, the authors argue, these results can be regarded as having broad generality
(Note: Regarding the point about "less volatile employment" in favor of coops...this study was done comparing between capitalist firms and worker coops. The wages were largely reflective of wages for union members because the wages in capitalist firms regardless of whether the workers were union members or not were based on regional collective bargaining by the unions. However, (unlike with the wages) the job security is not reflective of job security for union members. While we can see that union wages are higher than income for workers working in cooperatives, we cannot make a meaningful comparison based on this study between union job security and coop job security.)
If you want an efficient market system for coordinating production and distribution, you need a flexible labor market. Unfortunately, a more flexible ("freer") labor market leads to reduced labor share of income even under worker ownership (Self-Exploitation). On the other hand, workers forming cartels (monopolizing/oligopolizing access the labor in their field) that restrict labor markets is the only way to halt the trend of decreasing labor share of income - this is essentially what the function of labor unions is. So you need labor cartels to prevent Labor self-Exploitation (in the Marxist sense), while these labor cartels will themselves either be impossible to enforce in the absence of authority (because of the equivalent of Scabs) OR even if they can be enforced without authority they will undermine the efficiency of the markets in your society (because cartels screw up the function of prices in a market).
Alternatives
Based on what is written below regarding ECP and HKP, there is no longer a reason (with regard to rational economic calculation or information) to think that decentralized planning and gift economy dynamics would be unable to entirely replace the role of markets.
Answers to Common Criticisms/Objections
I've been told this recently in an argument with a Market Anarchist. However, he never was able to explain specifically how and why these differences would manifest and on what basis one could claim that it would alter my calculus and conclusions above.
In that case you've massively restricted the potential scale and scope in which markets can have a role in the functioning of your economy. I suppose that's fine, but in that case I would ask the question: Why retain them at all? Why not seek to replace them entirely?
To put it simply, ECP just says that you need a mechanism that allows you to compare multiple possible allocation pathways for resources in order to know which allocation pathway is the most efficient use of resources. And HKP basically says that those who do a particular kind of activity in the economy learn the information relevant to that activity as they perform it. Furthermore, this information is disparate and best able to be extracted by lots of people individually doing particular activities that they focus on.
There's nothing inherent about a large firm that prevents this from happening more so than an aggregate of small firms playing the same role in aggregate as the large firm does by itself. Large firms that are run bottom-up and allow their members autonomy (as was the case of with each of the collectives/syndicates in Catalonia, in contrast to large firms in capitalism) can discover and disseminate this information at least as well as an aggregate of small firms playing the same role as the large firm by itself. As support for my claim, I reference The Anarchist Collectives by Sam Dolgoff - a book that contains multiple empirical examples showing that collectivization of multiple separate firms (which had been engaging in exchange transactions with one another to form a supply chain prior to the Anarchist revolution in Spain) into singular firms of operation from start to finish across the entire supply chain, actually improved productivity, innovation within the production process, and distribution of end products. This actually addresses both HKP and ECP. As per Hume's Razor, we can therefore conclude that a reduction in the scope, role, and presence of intermediary exchange transactions/prices between steps in the supply chain neither results in reduced ability to acquire & disseminate information nor results in reduced economic efficiency. Furthermore (as per Hume's Razor), we can conclude that it is not the scope, role, or presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge. This is because (as per Hume's Razor) if it were true that prices/markets are necessary or superior to all other methods for efficient information discovery & dissemination as well as for rational economic calculation, it would not have been the case that we could have seen improvements in productivity, innovation, and distribution of end products in the aforementioned examples after substantially reducing (via collectivization/integration of various intermediary and competing firms) the role, scope, and presence of prices/markets within the economy.
The alternative explanation (one that is more credible after the application of Hume's Razor and keeping the aforementioned empirical examples in mind) is that optimally efficient information discovery & dissemination as well as rational economic calculation, are both possible in a non-market framework when individuals have autonomy and can freely associate/dissociate with others in the pursuit of their goals.
What's written above should be sufficient to address this objection as well. If it is not the scope, role, and presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge...then there is no basis upon which to argue there will necessarily be (from an information or rational economic calculation standpoint) more bureaucracy in aggregate in a society that has replaced markets, than there would be in a society that retains them.
However, there remains the objection that bureaucracy would exist to a larger extent due to the lack of competitive pressures against inefficiency. My response is to point out that empirical evidence from revolutionary Anarchist societies indicate strongly to the contrary. The role and presence of competition was greatly reduced while there was a simultaneous improvement in efficiency. As per Hume's Razor, we can therefore reject the notion that it is competition specifically that inherently prevents bureaucratic buildup in individual firms. It seems, from these empirical examples, that the best way to prevent bureaucracy is not through market competition between several small firms but through Anarchist praxis involving a lack of hierarchy and authority within large firms (recall that I often use the term "firm" to refer to collectives, syndicates, etc. for the purposes of this post), such that there is no ossified system of rank within the large firm. The absence of an ossified system of rank within firms is the true key to preventing the accumulation of bureaucracy within firms.
Note the three types of efficiency in the linked video - Allocative Efficiency, Productive Efficiency, and Dynamic Efficiency.
The evidence from Anarchist Spain during the Spanish Civil War (which I discussed above) indicates that Productive Efficiency and Allocative Efficiency was improved in various industries and communities where Anarchist collectivization took place. This trend only reversed and ended as the State undermined the Anarchists through various measures, such as cutting them off of currency that was needed to acquire resources from outside the Anarchist-controlled regions, using that leverage over currency to take over control of various industries away from the Anarchists, etc... Thus far, the market anarchists I have discussed this issue with have agreed on this point.
Where I have faced disagreement from market anarchists is on the issue of Dynamic Efficiency aka "Innovative Efficiency". Those whom I have discussed this with argue that markets optimize dynamic efficiency better than any other alternative.
My response is as follows... Evidence indeed does not support the commonly held view that (within a market economy) larger firms have greater dynamic efficiency. However, it does show that investment into R&D (especially by small firms) in market settings is substantially impacted by whether or not there are Intellectual Property Rights.
For me, this raises a natural question: In an Anarchist social context where there are no intellectual property rights, would a framework of cooperation/collectivization into larger firms be more dynamically efficient than competition between smaller firms? Let's look at the following...
(1) Evidence shows that, in general, Intellectual Property Rights have a substantial net negative impact on innovative efficiency:
To summarize, although only tentative conclusions can be drawn given the small number of empirical studies, the body of available empirical evidence suggests that patents may substantively hinder both subsequent scientific research and subsequent product development. Across a relatively heterogeneous set of technologies within the life sciences, and examining various forms of intellectual property rights, the available empirical evidence suggests that property rights hinder cumulative innovation—with declines on the order of 30 percent. Clearly much more work is needed in order to examine the extent to which these patterns generalize to other technologies and other forms of intellectual property, but the best available evidence suggests that mechanisms that reward innovation in a way that places the technologies in the public domain—such as patent buyouts—may have substantial benefits in terms of encouraging cumulative innovation, at least in some contexts.
(2) Evidence shows that firms - in the context of a market economy - invest less in R&D without the presence of Intellectual Property Rights of some form.
So to summarize, IP generally has a substantial net negative impact on dynamic efficiency but in the context of a market economy IP is necessary to incentivize firms to invest adequately into R&D.
Based on this we can argue that in an Anarchist social context, a non-market framework (involving decentralized planning and gift economy dynamics) of cooperation/collectivization into larger firms is likely to be more dynamically efficient than a market framework of competition between multiple smaller firms. This means that replacing markets with cooperative/collectivized dynamics will likely improve dynamic efficiency - the opposite of what the market anarchists I have discussed this issue with claim.
I have had a discussion with a market anarchist who argued that certain kinds of tasks will not be adequately completed without monetary incentive - particularly tasks that are unpleasant or those which people do not enjoy.
However, this ignores the historical and contemporary evidence of Anarchists accomplishing these tasks without monetary incentive - see below:
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc53
https://theanarchistlibrary.org/library/sam-dolgoff-editor-the-anarchist-collectives#toc57
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc24
(A) First, here is the simplified logic behind why I find Marx's Law of Value Compelling as compared to Subjective Value Theory:
(i) The function of markets is to optimize supply and demand so that resources are allocated efficiently. An efficient allocation of resources enables future reproduction and growth of an economy. When the market suddenly undoes the very allocation of supply to fulfill demand that it had previously built up such that the economy subsequently shrinks, the previous build up can be thought of as a market failure. Hence the process by which prices plummet (along with all the subsequent effects) until the market can reorient to start growing the economy again, can be accurately called "correction". Given that prices can be incorrect such that they require "correction", price and value cannot be the same thing.
(ii) A bubble bursts in the economy when previously inflated prices are corrected. (Note that "correction" is not my own term, but a term frequently used to describe such phenomena in economics.)
(iii) The only way to make sense of this is that prices originally (prior to the bubble bursting) deviated from values too much.
(iv) If it is the case that prices can deviate too much from values while prices are derived from the interplay of various actors' marginal utilities, value cannot be subjective. There must be an objective substance of value around which prices can deviate (to an extent).
(v) Therefore, STV is invalid as a theory of value.
(vi) Having accepted this logic, it follows that we require an objective theory of value as opposed to a subjective theory of value. Now the question becomes: What should this objective theory of value be?
(vii) An objective theory of value must express value as being comprised of some definable substance(s).
(viii) Given that we have established value as something objective rather than subjective, it must be possible for commodities to be exchanged in such a way that there is equal Value on both sides of an exchange.
(ix) In order for things to have equal value, the substance of value must be some characteristic that all commodities share but also separates them from non-commodities.
(x) The only such characteristic is that they can all be produced by simple/"unskilled" human labor.
(xi) Therefore, expressing the value of a commodity must be done in units of simple/"unskilled" human labor.
(B) Furthermore, it has come to my attention that some market anarchists find Marx's Law of Value uncompelling as a result of the Transformation Problem. My response is to look into TSSI, which has made it clear that the Transformation Problem is a non-issue.
The reason this is important is that if you agree with Marx's Law of Value, then you necessarily would find worker cooperatives and market socialism of any variety (including market anarchism) highly problematic due to Self-Exploitation.
submitted by PerfectSociety to DebateAnarchism [link] [comments]

World History Timeline of Events Leading up to Bitcoin - In the Making

A (live/editable) timeline of historical events directly or indirectly related to the creation of Bitcoin and Cryptocurrencies
*still workin' on this so check back later and more will be added, if you have any suggested dates/events feel free to lemme know...
This timeline includes dates pertaining to:
Ancient Bartering – first recorded in Egypt (resources, services...) – doesn’t scale
Tally sticks were used, making notches in bones or wood, as a form of money of account
9000-6000 BC Livestock considered the first form of currency
c3200 BC Clay tablets used in Uruk (Iraq) for accounting (believed to be the earliest form of writing)
3000 BC Grain is used as a currency, measured out in Shekels
3000 BC Banking developed in Mesopotamia
3000 BC? Punches used to stamp symbols on coins were a precursor to the printing press and modern coins
? BC Since ancient Persia and all the way up until the invention and expansion of the telegraph Homing Pigeons were used to carry messages
2000 BC Merchants in Assyria, India and Sumeria lent grain to farmers and traders as a precursor to banks
1700 BC In Babylon at the time of Hammurabi, in the 18th century BC, there are records of loans made by the priests of the temple.
1200 BC Shell money first used in China
1000-600 BC Crude metal coins first appear in China
640 BC Precious metal coins – Gold & Silver first used in ancient Lydia and coastal Greek cities featuring face to face heads of a bull and a lion – first official minted currency made from electrum, a mixture of gold and silver
600-500 BC Atbash Cipher
A substitution Cipher used by ancient Hebrew scholars mapping the alphabet in reverse, for example, in English an A would be a Z, B a Y etc.
400 BC Skytale used by Sparta
474 BC Hundreds of gold coins from this era were discovered in Rome in 2018
350 BC Greek hydraulic semaphore system, an optical communication system developed by Aeneas Tacticus.
c200 BC Polybius Square
??? Wealthy stored coins in temples, where priests also lent them out
??? Rome was the first to create banking institutions apart from temples
118 BC First banknote in the form of 1 foot sq pieces of white deerskin
100-1 AD Caesar Cipher
193 Aureus, a gold coin of ancient Rome, minted by Septimius Severus
324 Solidus, pure gold coin, minted under Constantine’s rule, lasted until the late 8th century
600s Paper currency first developed in Tang Dynasty China during the 7th century, although true paper money did not appear until the 11th century, during the Song Dynasty, 960–1279
c757–796 Silver pennies based on the Roman denarius became the staple coin of Mercia in Great Britain around the time of King Offa
806 First paper banknotes used in China but isn’t widely accepted in China until 960
1024 The first series of standard government notes were issued in 1024 with denominations like 1 guàn (貫, or 700 wén), 1 mín (緡, or 1000 wén), up to 10 guàn. In 1039 only banknotes of 5 guàn and 10 guàn were issued, and in 1068 a denomination of 1 guàn was introduced which became forty percent of all circulating Jiaozi banknotes.
1040 The first movable type printer was invented in China and made of porcelain
? Some of the earliest forms of long distance communication were drums used by Native Africans and smoke signals used by Native Americans and Chinese
1088 Movable type in Song Dynasty China
1120 By the 1120s the central government officially stepped in and produced their own state-issued paper money (using woodblock printing)
1150 The Knights Templar issued bank notes to pilgrims. Pilgrims deposited their valuables with a local Templar preceptory before embarking, received a document indicating the value of their deposit, then used that document upon arrival in the Holy Land to retrieve their funds in an amount of treasure of equal value.
1200s-1300s During the 13th century bankers from north Italy, collectively known as Lombards, gradually replace the Jews in their traditional role as money-lenders to the rich and powerful. – Florence, Venice and Genoa - The Bardi and Peruzzi Families dominated banking in 14th century Florence, establishing branches in many other parts of Europe
1200 By the time Marco Polo visited China they’d move from coins to paper money, who introduced the concept to Europe. An inscription warned, "All counterfeiters will be decapitated." Before the use of paper, the Chinese used coins that were circular, with a rectangular hole in the middle. Several coins could be strung together on a rope. Merchants in China, if they became rich enough, found that their strings of coins were too heavy to carry around easily. To solve this problem, coins were often left with a trustworthy person, and the merchant was given a slip of paper recording how much money they had with that person. Marco Polo's account of paper money during the Yuan Dynasty is the subject of a chapter of his book, The Travels of Marco Polo, titled "How the Great Kaan Causeth the Bark of Trees, Made Into Something Like Paper, to Pass for Money All Over his Country."
1252 Florin minted in Florence, becomes the hard currency of its day helping Florence thrive economically
1340 Double-entry bookkeeping - The clerk keeping the accounts for the Genoese firm of Massari painstakingly fills in the ledger for the year 1340.
1397 Medici Bank established
1450 Johannes Gutenberg builds the printing press – printed words no longer just for the rich
1455 Paper money disappears from China
1466 Polyalphabetic Cipher
1466 Rotating cipher disks – Vatican – greatest crypto invention in 1000 yrs – the first system to challenge frequency analysis
1466 First known mechanical cipher machine
1472 The oldest bank still in existence founded, Banca Monte dei Paschi di Siena, headquartered in Siena, Italy
1494 Double-entry bookkeeping system codified by Luca Pacioli
1535 Wampum, a form of currency used by Native Americans, a string of beads made from clamshells, is first document.
1553 Vigenere Cipher
1557 Phillip II of Spain managed to burden his kingdom with so much debt (as the result of several pointless wars) that he caused the world's first national bankruptcy — as well as the world's second, third and fourth, in rapid succession.
1577 Newspaper in Korea
1586 The Babington Plot
1590 Cabinet Noir was established in France. Its mission was to open, read and reseal letters, and great expertise was developed in the restoration of broken seals. In the knowledge that mail was being opened, correspondents began to develop systems to encrypt and decrypt their letters. The breaking of these codes gave birth to modern systematic scientific code breaking.
1600s Promissory banknotes began in London
1600s By the early 17th century banking begins also to exist in its modern sense - as a commercial service for customers rather than kings. – Late 17th century we see cheques slowly gains acceptance
The total of the money left on deposit by a bank's customers is a large sum, only a fraction of which is usually required for withdrawals. A proportion of the rest can be lent out at interest, bringing profit to the bank. When the customers later come to realize this hidden value of their unused funds, the bank's profit becomes the difference between the rates of interest paid to depositors and demanded from debtors.
The transformation from moneylenders into private banks is a gradual one during the 17th and 18th centuries. In England it is achieved by various families of goldsmiths who early in the period accept money on deposit purely for safe-keeping. Then they begin to lend some of it out. Finally, by the 18th century, they make banking their business in place of their original craft as goldsmiths.
1605 Newspaper in Straussburg
c1627 Great Cipher
1637 Wampum is declared as legal tender in the U.S. (where we got the slang word “clams” for money)
1656 Johan Palmstruch establishes the Stockholm Banco
1661 Paper Currency reappears in Europe, soon became common - The goldsmith-bankers of London began to give out the receipts as payable to the bearer of the document rather than the original depositor
1661 Palmstruch issues credit notes which can be exchanged, on presentation to his bank, for a stated number of silver coins
1666 Stockholms Banco, the predecessor to the Central Bank of Sweden issues the first paper money in Europe. Soon went bankrupt for printing too much money.
1667 He issues more notes than his bank can afford to redeem with silver and winds up in disgrace, facing a death penalty (commuted to imprisonment) for fraud.
1668 Bank of Sweden – today the 2nd oldest surviving bank
1694 First Central Bank established in the UK was the first bank to initiate the permanent issue of banknotes
Served as model for most modern central banks.
The modern banknote rests on the assumption that money is determined by a social and legal consensus. A gold coin's value is simply a reflection of the supply and demand mechanism of a society exchanging goods in a free market, as opposed to stemming from any intrinsic property of the metal. By the late 17th century, this new conceptual outlook helped to stimulate the issue of banknotes.
1700s Throughout the commercially energetic 18th century there are frequent further experiments with bank notes - deriving from a recognized need to expand the currency supply beyond the availability of precious metals.
1710 Physiocracy
1712 First commercial steam engine
1717 Master of the Royal Mint Sir Isaac Newton established a new mint ratio between silver and gold that had the effect of driving silver out of circulation (bimetalism) and putting Britain on a gold standard.
1735 Classical Economics – markets regulate themselves when free of intervention
1744 Mayer Amschel Rothschild, Founder of the Rothschild Banking Empire, is Born in Frankfurt, Germany
Mayer Amschel Rothschild extended his banking empire across Europe by carefully placing his five sons in key positions. They set up banks in Frankfurt, Vienna, London, Naples, and Paris. By the mid 1800’s they dominated the banking industry, lending to governments around the world and people such as the Vanderbilts, Carnegies, and Cecil Rhodes.
1745 There was a gradual move toward the issuance of fixed denomination notes in England standardized printed notes ranging from £20 to £1,000 were being printed.
1748 First recorded use of the word buck for a dollar, stemming from the Colonial period in America when buck skins were commonly traded
1757 Colonial Scrip Issued in US
1760s Mayer Amschel Rothschild establishes his banking business
1769 First steam powered car
1775-1938 US Diplomatic Codes & Ciphers by Ralph E Weber used – problems were security and distribution
1776 American Independence
1776 Adam Smith’s Invisible Hand theory helped bankers and money-lenders limit government interference in the banking sector
1781 The Bank of North America was a private bank first adopted created the US Nation's first de facto central bank. When shares in the bank were sold to the public, the Bank of North America became the country's first initial public offering. It lasted less than ten years.
1783 First steamboat
1791 Congress Creates the First US Bank – A Private Company, Partly Owned by Foreigners – to Handle the Financial Needs of the New Central Government. First Bank of the United States, a National bank, chartered for a term of twenty years, it was not renewed in 1811.
Previously, the 13 states had their own banks, currencies and financial institutions, which had an average lifespan of about 5 years.
1792 First optical telegraph invented where towers with telescopes were dispersed across France 12-25 km apart, relaying signals according to positions of arms extended from the top of the towers.
1795 Thomas Jefferson invents the Jefferson Disk Cipher or Wheel Cipher
1797 to 1821 Restriction Period by England of trading banknotes for silver during Napoleonic Wars
1797 Currency Crisis
Although the Bank was originally a private institution, by the end of the 18th century it was increasingly being regarded as a public authority with civic responsibility toward the upkeep of a healthy financial system.
1799 First paper machine
1800 Banque de France – France’s central bank opens to try to improve financing of the war
1800 Invention of the battery
1801 Rotchschild Dynasty begins in Frankfurt, Holy Roman Empire – established international banking family through his 5 sons who established themselves in London, Paris, Frankfurt, Vienna, and Naples
1804 Steam locomotive
1807 Internal combustion engine and automobile
1807 Robert Fulton expands water transportation and trade with the workable steamboat.
1809 Telegraphy
1811 First powered printing press, also first to use a cylinder
1816 The Privately Owned Second Bank of the US was Chartered – It Served as the Main Depository for Government Revenue, Making it a Highly Profitable Bank – charter not renewed in 1836
1816 The first working telegraph was built using static electricity
1816 Gold becomes the official standard of value in England
1820 Industrial Revolution
c1820 Neoclassical Economics
1821 British gov introduces the gold standard - With governments issuing the bank notes, the inherent danger is no longer bankruptcy but inflation.
1822 Charles Babbage, considered the "father of the computer", begins building the first programmable mechanical computer.
1832 Andrew Jackson Campaigns Against the 2nd Bank of the US and Vetoes Bank Charter Renewal
Andrew Jackson was skeptical of the central banking system and believed it gave too few men too much power and caused inflation. He was also a proponent of gold and silver and an outspoken opponent of the 2nd National Bank. The Charter expired in 1836.
1833 President Jackson Issues Executive Order to Stop Depositing Government Funds Into Bank of US
By September 1833, government funds were being deposited into state chartered banks.
1833-1837 Manufactured “boom” created by central bankers – money supply Increases 84%, Spurred by the 2nd Bank of the US
The total money supply rose from $150 million to $267 million
1835 Jackson Escapes Assassination. Assassin misfired twice.
1837-1862 The “Free Banking Era” there was no formal central bank in the US, and banks issued their own notes again
1838 First Telegram sent using Morse Code across 3 km, in 1844 he sent a message across 71 km from Washington DC to Baltimore.
1843 Ada Lovelace published the first algorithm for computing
1844 Modern central bank of England established - meaning only the central bank of England could issue banknotes – prior to that commercial banks could issue their own and were the primary form of currency throughout England
the Bank of England was restricted to issue new banknotes only if they were 100% backed by gold or up to £14 million in government debt.
1848 Communist Manifesto
1850 The first undersea telegraphic communications cable connected France in England after latex produced from the sap of the Palaquium gutta tree in 1845 was proposed as insulation for the underwater cables.
1852 Many countries in Europe build telegram networks, however post remained the primary means of communication to distant countries.
1855 In England fully printed notes that did not require the name of the payee and the cashier's signature first appeared
1855 The printing telegraph made it possible for a machine with 26 alphabetic keys to print the messages automatically and was soon adopted worldwide.
1856 Belgian engineer Charles Bourseul proposed telephony
1856 The Atlantic Telegraph company was formed in London to stretch a commercial telegraph cable across the Atlantic Ocean, completed in 1866.
1860 The Pony Express was founded, able to deliver mail of wealthy individuals or government officials from coast to coast in 10 days.
1861 The East coast was connected to the West when Western Union completed the transcontinental telegraph line, putting an end to unprofitable The Pony Express.
1862-1863 First US banknotes - Lincoln Over Rules Debt-Based Money and Issues Greenbacks to Fund Civil War
Bankers would only lend the government money under certain conditions and at high interest rates, so Lincoln issued his own currency – “greenbacks” – through the US Treasury, and made them legal tender. His soldiers went on to win the war, followed by great economic expansion.
1863 to 1932 “National Banking Era” Commercial banks in the United States had legally issued banknotes before there was a national currency; however, these became subject to government authorization from 1863 to 1932
1864 Friedrich Wilhelm Raiffeisen founded the first rural credit union in Heddesdorf (now part of Neuwied) in Germany. By the time of Raiffeisen's death in 1888, credit unions had spread to Italy, France, the Netherlands, England, Austria, and other nations
1870 Long-distance telegraph lines connected Britain and India.
c1871 Marginalism - The doctrines of marginalism and the Marginal Revolution are often interpreted as a response to the rise of the worker's movement, Marxian economics and the earlier (Ricardian) socialist theories of the exploitation of labour.
1871 Carl Menger’s Principles of Economics – Austrian School
1872 Marx’s Das Capital
1872 Australia becomes the first nation to be connected to the rest of the world via submarine telegraph cables.
1876 Alexander Graham Bell patented the telephone, first called the electric speech machine – revolutionized communication
1877 Thomas Edison – Phonograph
1878 Western Union, the leading telegraph provider of the U.S., begins to lose out to the telephone technology of the National Bell Telephone Company.
1881 President James Garfield, Staunch Proponent of “Honest Money” Backed by Gold and Silver, was Assassinated
Garfield opposed fiat currency (money that was not backed by any physical object). He had the second shortest Presidency in history.
1882 First description of the one-time pad
1886 First gas powered car
1888 Ballpoint pen
1892 Cinematograph
1895 System of wireless communication using radio waves
1896 First successful intercontinental telegram
1898 Polyethylene
1899 Nickel-cadmium battery
1907 Banking Panic of 1907
The New York Stock Exchange dropped dramatically as everyone tried to get their money out of the banks at the same time across the nation. This banking panic spurred debate for banking reform. JP Morgan and others gathered to create an image of concern and stability in the face of the panic, which eventually led to the formation of the Federal Reserve. The founders of the Federal Reserve pretended like the bankers were opposed to the idea of its formation in order to mislead the public into believing that the Federal Reserve would help to regulate bankers when in fact it really gave even more power to private bankers, but in a less transparent way.
1908 St Mary’s Bank – first credit union in US
1908 JP Morgan Associate and Rockefeller Relative Nelson Aldrich Heads New National Monetary Commission
Senate Republican leader, Nelson Aldrich, heads the new National Monetary Commission that was created to study the cause of the banking panic. Aldrich had close ties with J.P. Morgan and his daughter married John D. Rockefeller.
1910 Bankers Meet Secretly on Jekyll Island to Draft Federal Reserve Banking Legislation
Over the course of a week, some of the nation’s most powerful bankers met secretly off the coast of Georgia, drafting a proposal for a private Central Banking system.
1913 Federal Reserve Act Passed
Two days before Christmas, while many members of Congress were away on vacation, the Federal Reserve Act was passed, creating the Central banking system we have today, originally with gold backed Federal Reserve Notes. It was based on the Aldrich plan drafted on Jekyll Island and gave private bankers supreme authority over the economy. They are now able to create money out of nothing (and loan it out at interest), make decisions without government approval, and control the amount of money in circulation.
1913 Income tax established -16th Amendment Ratified
Taxes ensured that citizens would cover the payment of debt due to the Central Bank, the Federal Reserve, which was also created in 1913.The 16th Amendment stated: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
1914 November, Federal Reserve Banks Open
JP Morgan and Co. Profits from Financing both sides of War and Purchasing Weapons
J.P. Morgan and Co. made a deal with the Bank of England to give them a monopoly on underwriting war bonds for the UK and France. They also invested in the suppliers of war equipment to Britain and France.
1914 WWI
1917 Teletype cipher
1917 The one-time pad
1917 Zimmerman Telegram intercepted and decoded by Room 40, the cryptanalysis department of the British Military during WWI.
1918 GB returns to gold standard post-war but it didn’t work out
1919 First rotor machine, an electro-mechanical stream ciphering and decrypting machine.
1919 Founding of The Cipher Bureau, Poland’s intelligence and cryptography agency.
1919-1929 The Black Chamber, a forerunner of the NSA, was the first U.S. cryptanalytic organization. Worked with the telegraph company Western Union to illegally acquire foreign communications of foreign embassies and representatives. It was shut down in 1929 as funding was removed after it was deemed unethical to intercept private domestic radio signals.
1920s Department stores, hotel chains and service staions begin offering customers charge cards
1921-1929 The “Roaring 20’s” – The Federal Reserve Floods the Economy with Cash and Credit
From 1921 to 1929 the Federal Reserve increased the money supply by $28 billion, almost a 62% increase over an eight-year period.[3] This artificially created another “boom”.
1927 Quartz clock
1928 First experimental Television broadcast in the US.
1929 Federal Reserve Contracts the Money Supply
In 1929, the Federal Reserve began to pull money out of circulation as loans were paid back. They created a “bust” which was inevitable after issuing so much credit in the years before. The Federal Reserve’s actions triggered the banking crisis, which led to the Great Depression.
1929 October 24, “Black Thursday”, Stock Market Crash
The most devastating stock market crash in history. Billions of dollars in value were consolidated into the private banker’s hands at the expense of everyone else.
1930s The Great Depression marked the end of the gold standard
1931 German Enigma machines attained and reconstructed.
1932 Turbo jet engine patented
1933 SEC founded - passed the Glass–Steagall Act, which separated investment banking and commercial banking. This was to avoid more risky investment banking activities from ever again causing commercial bank failures.
1933 FM Radio
1933 Germany begins Telex, a network of teleprinters sending and receiving text based messages. Post WWII Telex networks began to spread around the world.
1936 Austrian engineer Paul Eisler invented Printed circuit board
1936 Beginning of the Keynesian Revolution
1937 Typex, British encryption machines which were upgraded versions of Enigma machines.
1906 Teletypewriters
1927 Founding of highly secret and unofficial Signal Intelligence Service, SIS, the U.S. Army’s codebreaking division.
1937 Made illegal for Americans to own gold
1938 Z1 built by Konrad Zuse is the first freely programmable computer in the world.
1939 WWII – decline of the gold standard which greatly restricted policy making
1939-45 Codetalkers - The Navajo code is the only spoken military code never to have been deciphered - "Were it not for the Navajos, the Marines would never have taken Iwo Jima."—Howard Connor
1940 Modems
1942 Deciphering Japanese coded messages leads to a turning point victory for the U.S. in WWII.
1943 At Bletchley Park, Alan Turing and team build a specialized cipher-breaking machine called Heath Robinson.
1943 Colossus computer built in London to crack the German Lorenz cipher.
1944 Bretton Woods – convenient after the US had most of the gold
1945 Manhattan Project – Atom Bomb
1945 Transatlantic telephone cable
1945 Claude E. Shannon published "A mathematical theory of cryptography", commonly accepted as the starting point for development of modern cryptography.
C1946 Crypto Wars begin and last to this day
1946 Charg-it card created by John C Biggins
1948 Atomic clock
1948 Claude Shannon writes a paper that establishes the mathematical basis of information theory
1949 Info theorist Claude Shannon asks “What does an ideal cipher look like?” – one time pad – what if the keys are not truly random
1950 First credit card released by the Diners Club, able to be used in 20 restaurants in NYC
1951 NSA, National Security Agency founded and creates the KL-7, an off-line rotor encryption machine
1952 First thermonuclear weapon
1953 First videotape recorder
1953 Term “Hash” first used meaning to “chop” or “make a mess” out of something
1954 Atomic Energy Act (no mention of crypto)
1957 The NSA begins producing ROMOLUS encryption machines, soon to be used by NATO
1957 First PC – IBM
1957 First Satellite – Sputnik 1
1958 Western Union begins building a nationwide Telex network in the U.S.
1960s Machine readable codes were added to the bottom of cheques in MICR format, which speeded up the clearing and sorting process
1960s Financial organizations were beginning to require strong commercial encryption on the rapidly growing field of wired money transfer.
1961 Electronic clock
1963 June 4, Kennedy Issued an Executive Order (11110) that Authorized the US Treasury to Issue Silver Certificates, Threatening the Federal Reserve’s Monopoly on Money
This government issued currency would bypass the governments need to borrow from bankers at interest.
1963 Electronic calculator
1963 Nov. 22, Kennedy Assassinated
1963 Johnson Reverses Kennedy’s Banking Rule and Restores Power to the Federal Reserve
1964 8-Track
1964 LAN, Local Area Networks adapters
1965 Moore’s Law by CEO of Intel Gordon Moore observes that the number of components per integrated circuit doubles every year, and projected this rate of growth would continue for at least another decade. In 1975 he revised it to every two years.
1967 First ATM installed at Barclay’s Bank in London
1968 Cassette Player introduced
1969 First connections of ARPANET, predecessor of the internet, are made. started – SF, SB, UCLA, Utah (now Darpa) – made to stay ahead of the Soviets – there were other networks being built around the world but it was very hard to connect them – CERN in Europe
1970s Stagflation – unemployment + inflation, which Keynesian theory could not explain
1970s Business/commercial applications for Crypto emerge – prior to this time it was militarily used – ATMs 1st got people thinking about commercial applications of cryptography – data being sent over telephone lines
1970s The public developments of the 1970s broke the near monopoly on high quality cryptography held by government organizations.
Use of checks increased in 70s – bringing about ACH
One way functions...
A few companies began selling access to private networks – but weren’t allowed to connect to the internet – business and universities using Arpanet had no commercial traffic – internet was used for research, not for commerce or advertising
1970 Railroads threatened by the growing popularity of air travel. Penn Central Railroad declares bankruptcy resulting in a $3.2 billion bailout
1970 Conjugate coding used in an attempt to design “money physically impossible to counterfeit”
1971 The US officially removes the gold standard
1971 Email invented
1971 Email
1971 First microcomputer on a chip
1971 Lockheed Bailout - $1.4 billion – Lockheed was a major government defense contractor
1972 First programmable word processor
1972 First video game console
1973 SWIFT established
1973 Ethernet invented, standardized in ‘83
1973 Mobile phone
1973 First commercial GUI – Xerox Alto
1973 First touchscreen
1973 Emails made up more than ¾ of ARPANET’s packets – people had to keep a map of the network by their desk – so DNS was created
1974 A protocol for packet network intercommunication – TCP/IP – Cerf and Kahn
1974 Franklin National Bank Bailout - $1.5 billion (valued at that time) - At the time, it was the largest bank failure in US history
1975 New York City Bailout - $9.4 billion – NYC was overextended
1975 W DES - meant that commercial uses of high quality encryption would become common, and serious problems of export control began to arise.
1975 DES, Data Encryption Standard developed at IBM, seeking to develop secure electronic communications for banks and large financial organizations. DES was the first publicly accessible cipher to be 'blessed' by a national agency such as the NSA. Its release stimulated an explosion of public and academic interest in cryptography.
1975 Digital camera
1975 Altair 8800 sparks the microprocessor revolution
1976 Bretton Woods ratified (lasted 30 years) – by 80’s all nations were using floating currencies
1976 New Directions in Cryptography published by Diffie & Hellman – this terrified Fort Meade – previously this technique was classified, now it’s public
1976 Apple I Computer – Steve Wozniak
1976 Asymmetric key cryptosystem published by Whitfield Diffie and Martin Hellman.
1976 Hellman and Diffie publish New Directions in Cryptography, introducing a radically new method of distributing cryptographic keys, contributing much to solving key distribution one of the fundamental problems of cryptography. It brought about the almost immediate public development of asymmetric key algorithms. - where people can have 2 sets of keys, public and private
1977 Diffie & Hellman receive letter from NSA employee JA Meyer that they’re violating Federal Laws comparable to arms export – this raises the question, “Can the gov prevent academics from publishing on crypto?
1977 DES considered insecure
1977 First handheld electronic game
1977 RSA public key encryption invented
1978 McEliece Cryptosystem invented, first asymmetric encryption algorithm to use randomization in the encryption process
1980s Large data centers began being built to store files and give users a better faster experience – companies rented space from them - Data centers would not only store data but scour it to show people what they might want to see and in some cases, sell data
1980s Reaganomics and Thatcherism
1980 A decade of intense bank failures begins; the FDIC reports that 1,600 were either closed or received financial assistance from 1980 to 1994
1980 Chrysler Bailout – lost over $1 billion due to major hubris on the part of its executives - $1.5 billion one of the largest payouts ever made to a single corporation.
1980 Protocols for public key cryptosystems – Ralph Merkle
1980 Flash memory invented – public in ‘84
1981 “Untraceable Electronic Mail, Return Addresses and Digital Pseudonumns” – Chaum
1981 EFTPOS, Electronic funds transfer at point of sale is created
1981 IBM Personal Computer
1982 “The Ethics of Liberty” Murray Rothbard
1982 Commodore 64
1982 CD
1983 Satellite TV
1983 First built in hard drive
1983 C++
1983 Stereolithography
1983 Blind signatures for untraceable payments
Mid 1980s Use of ATMs becomes more widespread
1984 Continental Illinois National Bank and Trust bailed out due to overly aggressive lending styles and - the bank’s downfall could be directly traced to risk taking and a lack of due diligence on the part of bank officers - $9.5 billion in 2008 money
1984 Macintosh Computer - the first mass-market personal computer that featured a graphical user interface, built-in screen and mouse
1984 CD Rom
1985 Zero-Knowledge Proofs first proposed
1985 300,000 simultaneous telephone conversations over single optical fiber
1985 Elliptic Curve Cryptography
1987 ARPANET had connected over 20k guarded computers by this time
1988 First private networks email servers connected to NSFNET
1988 The Crypto Anarchists Manifesto – Timothy C May
1988 ISDN, Integrated Services Digital Network
1989 Savings & Loan Bailout - After the widespread failure of savings and loan institutions, President George H. W. Bush signed and Congress enacted the Financial Institutions Reform Recovery and Enforcement Act - This was a taxpayer bailout of about $200 billion
1989 First commercial emails sent
1989 Digicash - Chaum
1989 Tim Berners-Lee and Robert Cailliau built the prototype system which became the World Wide Web, WWW
1989 First ISPs – companies with no network of their own which connected people to a local network and to the internet - To connect to a network your computer placed a phone call through a modem which translated analog signals to digital signals – dial-up was used to connect computers as phone lines already had an extensive network across the U.S. – but phone lines weren’t designed for high pitched sounds that could change fast to transmit large amounts of data
1990s Cryptowars really heat up...
1990s Some countries started to change their laws to allow "truncation"
1990s Encryption export controls became a matter of public concern with the introduction of the personal computer. Phil Zimmermann's PGP cryptosystem and its distribution on the Internet in 1991 was the first major 'individual level' challenge to controls on export of cryptography. The growth of electronic commerce in the 1990s created additional pressure for reduced restrictions.[3] Shortly afterward, Netscape's SSL technology was widely adopted as a method for protecting credit card transactions using public key cryptography.
1990 NSFNET replaced Arpanet as backbone of the internet with more than 500k users
Early 90s Dial up provided through AOL and Compuserve
People were leery to use credit cards on the internet
1991 How to time-stamp a digital doc - Stornetta
1991 Phil Zimmermann releases the public key encryption program Pretty Good Privacy (PGP) along with its source code, which quickly appears on the Internet. He distributed a freeware version of PGP when he felt threatened by legislation then under consideration by the US Government that would require backdoors to be included in all cryptographic products developed within the US. Expanded the market to include anyone wanting to use cryptography on a personal computer (before only military, governments, large corporations)
1991 WWW (Tim Berners Lee) – made public in ‘93 – flatten the “tree” structure of the internet using hypertext – reason for HTTP//:WWW – LATER HTTPS for more security
1992 Erwise – first Internet Browser w a graphical Interface
1992 Congress passed a law allowing for commercial traffic on NSFNET
1992 Cpherpunks, Eric Hughes, Tim C May and John Gilmore – online privacy and safety from gov – cypherpunks write code so it can be spread and not shut down (in my earlier chapter)
1993 Mosaic – popularized surfing the web ‘til Netscape Navigator in ’94 – whose code was later used in Firefox
1993 A Cypherpunks Manifesto – Eric Hughes
1994 World’s first online cyberbank, First Virtual, opened for business
1994 Bluetooth
1994 First DVD player
1994 Stanford Federal Credit Union becomes the first financial institution to offer online internet banking services to all of its members in October 1994
1994 Internet only used by a few
1994 Cybercash
1994 Secure Sockets Layer (SSL) encryption protocol released by Netscape. Making financial transactions possible.
1994 One of the first online purchases was made, a Pizza Hut pepperoni pizza with mushrooms and extra cheese
1994 Cyphernomicon published – social implication where gov can’t do anything about it
1994-1999 Social Networking – GeoCities (combining creators and users) – had 19M users by ’99 – 3rd most popular after AOL and Yahoo – GeoCities purchased by Yahoo for $3.6B but took a hit after dotcom bubble popped and never recovered – GC shut down in ‘99
1995-2000 Dotcom bubble – Google, Amazon, Facebook: get over 600M visitors/year
1995 DVD
1995 MP3 term coined for MP3 files, the earlier development of which stretches back into the ‘70s, where MP files themselves where developed throughout the ‘90s
1995 NSFNET shut down and handed everything over to the ISPs
1995 NSA publishes the SHA1 hash algorithm as part of its Digital Signature Standard.
1996, 2000 President Bill Clinton signing the Executive order 13026 transferring the commercial encryption from the Munition List to the Commerce Control List. This order permitted the United States Department of Commerce to implement rules that greatly simplified the export of proprietary and open source software containing cryptography, which they did in 2000 - The successful cracking of DES likely helped gather both political and technical support for more advanced encryption in the hands of ordinary citizens - NSA considers AES strong enough to protect information classified at the Top Secret level
1996 e-gold
1997 WAP, Wireless Access Point
1997 NSA researchers published how to mint e cash
1997 Adam Back – HashCash – used PoW – coins could only be used once
1997 Nick Szabo – smart contracts “Formalizing and Securing Relationships on Public Networks”
1998 OSS, Open-source software Initiative Founded
1998 Wei Dai – B-money – decentralized database to record txs
1998 Bitgold
1998 First backdoor created by hackers from Cult of the Dead Cow
1998 Musk and Thiel founded PayPal
1998 Nick Szabo says crypto can protect land titles even if thugs take it by force – said it could be done with a timestamped database
1999 Much of the Glass-Steagal Act repealed - this saw US retail banks embark on big rounds of mergers and acquisitions and also engage in investment banking activities.
1999 Milton Friedman says, “I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash - a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A.”
1999 European banks began offering mobile banking with the first smartphones
1999 The Financial Services Modernization Act Allows Banks to Grow Even Larger
Many economists and politicians have recognized that this legislation played a key part in the subprime mortgage crisis of 2007.
1999-2001 Napster, P2P file sharing – was one of the fastest growing businesses in history – bankrupt for paying musicians for copyright infringement

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