by Joseph P. Farrell, Giza Death Star:
It’s rare – very rare – that I have anything good to say about the Bank of International Settlements, the central banksters’ central racketeeri… er…. the central banksters’ central bank. After all, what possible good can come out of an institution which is the brainchild of Montague Norman (head of the Bank of England in the inter-war period), Benjamin Strong (of the New York Federal Reserve, which, let it be recalled, is neither Federal nor a reserve), and Hjalmar Horace Greeley Schacht, about whose wheelings and dealings enough is known? But, just in case you’ve forgotten, dear old Hjalmar was the Reichsbank president who pops up at the oddest moments and oddest places, bless his heart. He was a financial advisor to Aristotle Onassis and Adolf Hitler(what a resume!); he was a key member of the group of
Nazis …er… CIA operatives that suddenly appeared in Egypt after the overthrow of King Farouk, along with other Nazi…er… CIA luminaries like Otto Skorzeny and journalists like von Leers (of Goebbels’ old Propaganda Ministry, and, who, let it be noted, was a convert to Islam and who, go figure, translated the notorious Protocols of Zion into Arabic, and who, funny thing, ended up in Moscow working for Pravda or Tass or whatever, during the bad old bolshevist days of the Soviet Union); and all of them were sent to Egypt as a West German “delegation” by good old Konrad Adenauer. Schacht pops up again in Indonesia during the Suharto business in the late 1960s, and rumor has it he was talking about gold and bearer bonds, but that’s unsubstantiated, though I wouldn’t for a moment put it past him.
The Bank of International Settelements was largely Schacht’s idea, and one of his ideas about his idea was that the Bank should be “sovereign,” which, sure enough, it is. And its sovereign headquarters happen to be just a little north of another strange sovereign entity, CERN. Handy that, and I’m quite sure it’s all coincidental.
But every now and then the BIS does something rational, and when it does, I’m right there giving it half a cheer and a one-handed clap, and this occasion – which G.L.R. spotted and shared – is no different:
Recently I’ve been suggesting that crypto-currencies are anything but safe, and a spate of recent hacking activities seems to bear this out. But at a deeper level, I’ve been concerned that these systems could be a funding mechanism for all sorts of covert operations, from those of governments, to those of “non-state actors”, and this also was born out by subsequent stories that some groups are indeed speculating in them (or hacking into them) for expressly that purpose. The BIS report addresses some of these concerns, and I want to draw attention to some paragraphs that give attention to the how’s and why’s of distributed ledgers and blockchain, which is about as good a summary as one will find:
The technological challenge in digital peer-to-peer exchange is the so-called “double-spending problem”. Any digital form of money is easily replicable and can thus be fraudulently spent more than once. Digital information can be reproduced more easily than physical banknotes. For digital money, solving the double-spending problem requires, at a minimum, that someone keep a record of all transactions. Prior to cryptocurrencies, the only solution was to have a centralised agent do this and verify all transactions.Cryptocurrencies overcome the double-spending problem via decentralised record-keeping through what is known as a distributed ledger. The ledger can be regarded as a file (think of a Microsoft Excel worksheet) that starts with an initial distribution of cryptocurrency and records the history of all subsequent transactions. An up-to-date copy of the entire ledger is stored by each user (this is what makes it “distributed”). With a distributed ledger, peer-to-peer exchange of digital money is feasible: each user can directly verify in their copy of the ledger whether a transfer took place and that there was no attempt to double-spend. 14While all cryptocurrencies rely on a distributed ledger, they differ in terms of how the ledger is updated. One can distinguish two broad classes, with substantial differences in their operational setup (Graph V.2).…In a much more radical departure from the prevailing institution-based setup, a second class of cryptocurrencies promises to generate trust in a fully decentralised setting using “permissionless” DLT. The ledger recording transactions can only be changed by a consensus of the participants in the currency: while anybody can participate, nobody has a special key to change the ledger. The concept of permissionless cryptocurrencies was laid out for the case of Bitcoin 16 in a white paper by an anonymous programmer (or group of programmers) under the pseudonym Satoshi Nakamoto, who proposed a currency based on a specific type of distributed ledger, the “blockchain”. The blockchain is a distributedledger that is updated in groups of transactions called blocks. Blocks are then chained sequentially via the use of cryptography to form the blockchain. This concept has been adapted to countless other cryptocurrencies. 17Blockchain-based permissionless cryptocurrencies have two groups of participants: “miners” who act as bookkeepers and “users” who want to transact in the cryptocurrency. At face value, the idea underlying these cryptocurrencies is simple: instead of a bank centrally recording transactions (Graph V.3, left-hand panel), the ledger is updated by a miner and the update is subsequently stored by all users and miners (right-hand panel).
With these key ingredients, it is costly – though not impossible – for any individual to forge a cryptocurrency. To successfully double-spend, a counterfeiter would have to spend their cryptocurrency with a merchant and secretly produce a forged blockchain in which this transaction was not recorded. Upon receipt of the merchandise, the counterfeiter would then release the forged blockchain, ie reverse the payment. But this forged blockchain would only emerge as the commonly accepted chain if it were longer than the blockchain the rest of the network of miners had produced in the meantime. A successful double-spend attack thus requires a substantial share of the mining community’s computing power. Conversely,in the words of the original Bitcoin white paper, a cryptocurrency can overcome the double-spending problem in a decentralised way only if “honest nodes control a majority of [computing] power”. 21 (For the original references in the report, see the PDF file linked above)
A first key regulatory challenge is anti-money laundering (AML) and combating the financing of terrorism (CFT). The question is whether, and to what extent, the rise of cryptocurrencies has allowed some AML/CFT measures, such as know-your- customer standards, to be evaded. Because cryptocurrencies are anonymous, it is hard to quantify the extent to which they are being used to avoid capital controls or taxes, or to engage in illegal transactions more generally. But events such as Bitcoin’s strong market reaction to the shutdown of Silk Road, a major marketplace for illegal drugs, suggest that a non-negligible fraction of the demand for cryptocurrencies derives from illicit activity….
While cryptocurrencies do not work as money, the underlying technology may have promise in other fields. A notable example is in low-volume cross-border payment services.(Emphasis added)