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Mayonaise Once Cost a Nickle: Why We Have Inflation

My  mom likes to reminisce about  mayonnaise being a nickel.  She also talked about this when listening to the oldie’s station when the it played Elvis instead of the Red Hot Chile Peppers.  Now a jar of mayonnaise I have been replaced by plastic containers that cost $3.00 during the 4th of July sales.


Why Does This Happen?

The simple answer is Inflation, or a rise in prices.  I would say a gradually rise in prices, but that’s not always the case.  For example, Venezuela is said to have 1,000,000 percent annual inflation.  Other currencies have experienced hyperinflation as well such as the German money before world War 2 and I remember hearing stories of Zimbabweans people burin paper money to keep warm.  This begs the question?  Why do prices rise and why do some countries have prices that rise so dramatically?  The answer is not so simple because it involves macroeconomics and macro economics is political. There are many different schools of thought on macroeconomics just Ike there are many political parties, but most countries follow Keynesian economics.  This is the center left Democrats and center right Republicans of Macroeconomics.  I’m not an economist, but I enjoy about the subject.   We could dive deeper down into the subject and talk about different schools, but I’m just going to focus on two for simplicity.

  My high school economics teacher used to be a part owner of a bank.  At the time, Red Hot Chile Peppers were played on the Alternative rock station in stead of the oldies station and  if you and a few of your friends could come up with three million dollars, you could start a bank,  He and seven of his friends owned such a bank until it went under.  It was one of those too small to succeed banks.  He then explained how Fractional Reserve Banking worked.  I explain it a little differently than Mr. Silva, but I assure you I learned this from him When I was a young Red Hot Chile Peppers listening whippersnapper.

This is Bob

This is Bob.  Bob has a dollar, but in this world, dollars are not made of cotton and pictures of dead presidents embossed with spider webs.  In this example a dollar is represented by a cat.  New dollars will be referred to as kittens. 

This is one of my cryptokitties. I’ll write about these another day.

Just so we are clear, Bob has one cat. He wants to put that the bank, the bank of Bob or B. O. B.  To keep things simple, though, we will her for the refer to it as just “the bank”

So now the bank has Bob’s cat.  We’ll call this a savings account to keep things simple, of course, there are different types of accounts.  The bank must keep Bob’s cat in the bank, so he is able to withdraw it.  it will pay Bob 0.01 cats every year he has it in the bank. (a whisker) For keeping this cat safe, the bank gets more than a whisker.   It gets to extract that cats extra nine lives.  I assure you that Bob’s cat is safe in the bank.  They just took that vacuum machine they have in the drive-through window and sucked out all of its nine lives.  It then takes these nine cats costs and makes 9 kittens or new money.  Now they can’t just take these kittens and make it rain pussy cats on the general public.  They throw these kittens to people who use credit cards, buy homes, or start new businesses.  

Now Alice takes a loan out for 3 of these credit kitties. She builds a construction business.  She does well and pays the bank back 4 cats. (The bank charges interest.  The bank also loans 3 Cats to Carl an 3 cats to Dick.  Carl paid back five cats, but Dick is a deadbeat doesn’t pay back his loan.  The bank reports dick to the kitty credit bureau and they give him a kibble score off 300, raise Carl’s kibble score to 650 and keep Alice’s kibble score at 850.   Now the other banks now Alice is low risk, Carl is moderate risk, and Dick disputes his credit score because he said the kitty credit bureau was hacked and he didn’t  actually take out the loan.  It was a mess and I don’t know if he’s telling the truth, but he can’t get credit anymore.  Regardless of what happened to Dick, those kitty’s that were lent to him are dead.  (Don’t worry, no actual cats were harmed in the writing of this blog.)

Here’s where everybody stands.  Alice has a business, Cal has his car, these new cats and Dick is bankrupt.  Bob still has his dollar and a whisker. The bank now has 9 cats in its coffers This is the new monetary supply.  These extra cats are an increase in the money supply.  In reality it is not cats, but dollars. This is how fractional reserve banking works. There are a lot more bankruptcies I’m sure, but this is ow money is printed by the banks these days.


But Isn’t the U. S. Dollar Backed By Gold?

You might be asking, wait…. Don’t they need gold in the bank to back up all of those dollars?  I saw an episode of Looney tunes where Bugs Bunny defended all of the gold in Fort Knox against Yosemite Sam; 

From Looney Tunes Episode: 14 Carrot Gold

NOT ANYMORE.   The United States first used a fiat (meaning by decree, not to be confused with the small Italian car) currency in the early days called the Continental. It was a paper money that wasn’t anything backed by anything, but JL Collins said the country went into hyperinflation in 1776, in his book The Simple Path to Wealth. paper money and it didn’t work out so well so they Said money needed to be gold and silver in the constitution.

“Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

  In 1776, Adam Smith wrote the Wealth of Nations. https://www.amazon.com/Wealth-Nations-Adam-Smith-ebook/dp/B000FC1CVE  The problem was that gold would eventually be debased. The miners of the gold could not to be trusted to keep the gold pure, so they melted it down and added other metals to it.

“Princes and sovereign states have frequently fancied that they had a temporary interest to diminish the quantity of pure metal contained in their coins; but they seldom have fancied that they had any to augment it. The quantity of metal contained in the coins, I believe of all nations, has accordingly been almost continually diminishing, and hardly ever augmenting. Such variations, therefore, tend almost always to diminish the value of a money rent.”

   In 1971 we had the Nixon Shock that took the US completely off the gold standard.  According to the Bitcoin Standard, French President Charles De Gaulle send French Military carrier to get their gold back.  Germany tried to get it’s gold back and on August 15, 1971, Nixon said we were no longer using gold for money, at least temporarily. 

We never went back.

The point is the dollar was no longer backed by gold and all of the currencies of the world were traded amongst each other n a free-floating market. This is called the Forex market which stands for freeing exchange.  It’s the biggest market in the world All of these currencies are running on this fractional reserve banking system.  They are traded just like any other commodity and based on supply and demand.


What The Fuck Does This Have to Do With Inflation?

Well… everything.  The monetary supply is what control the inflation.  Central banks control the interest rates.  @hen they make the interest rates low, credit is cheap and it entices people to use more credit.  When inflation starts to get higher than the Federal Reserve or European Union would like, they raise the interest rates.  When the interest rates are high, people are less likely to take on credit and the money supply shrinks.  Inflation, therefore, is just supply and demand for money and the central banks control the strings to the system.  Their goal is to keep aggregate spending at a level that keeps the money flowing in the economy while maintaining a 2% inflation rate.  Think of them as pulling puppet strings on all those cats.

In conclusion, this is why minimalism is such a radical idea.  We are all encouraged to spend-spend-spend because we have been taught that our money will lose value.  If we put it in the bank, we will get a whisker worth of interest.  Why would you save if you expect to lose your spending power?  Sure, you can do the stock market, but most people don’t have time to figure out how to invest in between binge watching Netflix and eating out. We also get bombarded with the latest gadgets and gizmos hacking our emotions to take our money. We are like ants taken over by the cordyceps mushroom, doing the bidding of the corporations. Ask your doctor about drugs and hurry to the Buick dealership —YOLO.

I say take the red pill.  When your money goes up in value something strange happens to your behavior. Suddenly, Buick’s don’t look so Shiny and bicycles look more appealing. Beans taste good and they are quicker to make in an Insta-pot than making a run for the border.  You have seen the light and you turn it off when you leave the room.  You start doing laundry twice a month and even hag dry your clothes. You shine your od shoes instead of buying new ones. Sew buttons on shirts. You buy used and discover you don’t need a bigger TV because you have to catch up on all the books you got at the library.

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The $1,000,000 Schrodinger’s Cat

HODL

Today, I am going to talk about Hodling.  A while back, some drunk dude in the bitcoin community typed HODL instead of Hold and now it has become crypto-parlance for holding bitcoin.  We say it stands for  Hold On for Dear Life.  This is because Bitcoin has more swings than a schoolyard.  It is highly volatile. I have seen the price drop in half at least three times since I’ve Hodled, but I took these lumps like a Stoic philosopher standing under a tree of well-fed pigeons. It’s been a proverbial roller coaster.

                I first heard about the technology in 2014 in an episode off the Joe Rogan Experience. The idea I found most intriguing was that the bitcoin inflation rate is scheduled in advance, unlike the whimsical monetary policies of Central banks.  There amount of new Bitcoin gets cut in half about every four years. Of course, it took me a good six months of research before I mustered enough courage to buy any.  I asked about it on Twitter and someone gave me a small amount, about $1.50 worth using a twitter app named Change Tip. That app  doesn’t exist anymore, but if you are one of the first ten people to share this blog using the hash tag #minimalstructure, I will send you 28,882  satoshis on the lightning network. Just send me an invoice. I’ll explain how to do that in another blog if you would like.  The short answer is use Blue Wallet

When I first heard it, bitcoin was less than $200 and down from an all time high of $1,300. If you would have bought some at the height of the market, your investment would have been down about 90% percent by 2014. This didn’t discourage me.  If you had Hodled, your BTC would be worth 4X that initial investment assuming you didn’t put anymore money into it while it was cheaper.  If you had held onto it until December of 2017, everybody including your long-lost dear aunt Sally who has never even sent an email would have told you to “Sell! Sell! Sell”

It went all the way from around $20,000 to $3,000 and it’s $5,000 today.  It jumped about 17% the last time I looked.  So you might be asking yourself, what the hell is wrong with this guy?  Is he  more Loco than El Pollo?  I thought bitcoin was dead again. What’s going on here?

                Well, if you look at the worst-case scenario where someone invests in December of 2017 and holds onto it all the way until last month, you are selecting for the worst-case scenarios, which is aweful, but If you started investing in 2015, you are up about 20X.  There is another financial blogger who I love and respect that talks bout once getting $300% returns because he got lucky.  This is 2000% return, and for the record, I am not a millionaire.  If it makes you feel better, I made less than $8,000 in 2017, so it’s not like I had a lot off capital to throw into bitcoin. Even If I had a lot more, I wouldn’t have gone all-in anyway.  I also listened to an podcast about bitcoin in 2015 called EconTalk, an economics podcast hosted by Russ Roberts, professor of Economics at George Mason University.  It’s a great podcast with a wide range of past guests that include Milton Friedman, Charlie Munger (Warren Buffet’s partner) and Thomas Piketty.  I like the show because even though Roberts is biased, he is willing to talk to a wide range of guests.  He even had Gavin Andreasen back in the day when it just $1.00, but I was not lucky enough to listen to the show back then.

                In 2015, he had Wences Casares, CEO of Xapos, on the how. Casares talked about growing up in Argentina a country wrecked by hyperinflation while he was a child. He told a gut-wrenching story about having to run around the grocery isles to try and beat the price labeler to the punch so they could buy their food before the prices went up again.  We don’t really think about this type of stuff in the United States because this country has never experienced hyperinflation.   This clearly illustrates why he is so biased to believe that the technology is so powerful.

The Bitcoin Inflation Schedule

                Bitcoin is designed to eventually be neither inflationary or deflationary.  At first it is inflationary. It started out by increasing at a rate of 50 new Bitcoin issued every ten minutes until the first having after 4 years.  Then it decreased to a rate of 25 new Bitcoin every ten minutes.  In 2015, it decreased to 12.5 new bitcoin every ten minutes.  In 410 days from 4-8-2019 (the date I published this)  the rewards will decrease to 6.25 new bitcoin every ten minutes.  4 Years after that, it reduces to 3.125 every ten minutes.

This is technically inflation, but in about two years the rate of inflation will be less than that of the inflation of the US dollar. Eventually there will only be 21,000,000 Bitcoin.  Technically it’s slightly less, but we all say 21M just for simplicity.  Those 21 million can be divided by 100 million individual units called satoshis.  In other words, there will be 2,100,000,000,000,000 individual units for circa 8 billion people in the world.  At this point, more Bitcoin will be destroyed and no more will be created.  Miners will be paid by fees. Technically there will be some lost coins and forks that may be considered inflation or deflation, but the protocol that everyone deems as Bitcoin has not inflation after that. 

“ Eventually at most only 21 million coins for 6.8 billion people in the world if it gets really huge.  But don’t worry, there are another 6 decimal places that aren’t shown for a total of 8 decimal places internally. It shows 1.0 but internally it’s 1000000000.  If there is more inflation in the future, the software can show more decimal places.” Satoshi Nakamoto, creator of bitcoin. Here’s how bitcoin’s inflation works until 2022:


I didn’t add every halve-ning to this table. Basically, It gets halved every 4 years. Do the rest of the math yourself, don’t  just take my word for it. That’s the beauty of it, you don’t need to trust anybody!

                So, if I had to explain Bitcoin in one paragraph I would put it like this: Bitcoin is an experiment in one where the unit of account is verified by cryptographic signatures on an individual level and a cryptographic hash on the group level. This cryptographic hash time stamps a public ledger that needs no trusted third party or central bank because everyone knows how much Bitcoin has been spent. And how much will be released today, 4 years from now, and 140 years from now. The collective is rewarded with new Bitcoin and mining fees for time stamping this ledger.

In other words, everyone is incentivized to hide their keys and miners are incentivized to keep the public ledger verified every ten minutes.

$1,000,000 Schrodinger’s Cat

In that episode of EconTalk, Wences Casares said he believed that there is about a 50% chance that bitcoin will fail, but there is also a 50% chance that it will succeed and be worth $1,000,000 within the next 15 to 20 years.  Using this framework, I like to compare Bitcoin to Schrodinger’s cat, only this cat is worth $1,000,000 and it stuck in the box for 15-20 years.  It is both dead and alive at the same time, just waiting for an observer to set off the device that either kills the cat or lets it live based on where the proton is at the time of the observation. If we see the proton ends up on the poison gas side, Bitcoin dies.  On the other hand, if the proton does not set off the poisonous gas, one Bitcoin will be worth a million dollars. **

Casares admits that he is super biased, and no one can really foretell the future, but his early childhood experiences clearly have colored his Bitcoin colored lenses.   The world is full of examples where a national currency has failed. We have all heard stories of Zimbabwe, Argentina, Germany after world War 1 where hyperinflation became the sad, scary reality of those nation that printed too much money and were unable to pay it back.  We have recently seen issues with Brexit, protests of austerity in in Greece, and dangerous hyperinflation in countries like Venezuela. Since these are international events, they undoubtedly create political divides, but one thing is clear—These things keep happening again and again. It would be silly to think that every currency in the world will not never have these issues again. Even though most of the world is not in hyperinflation, many countries have currencies that are experiencing 10-20% inflation and most of the world has no access to any banking system. 

I really do not know what bitcoin will be worth in 20 years, but Casares suggest putting no more than 1% of your wealth into this new technology.  He reasons that most people can afford to lose 1% of their wealth.  I think this is an acceptable risk for me, so That’s what I do.  Now you see why I’m not rich, given that I make so little money.    It would clearly be a mistake to put your kids college fund into it or take out a second mortgage, but I think it’s a fine idea to risk 1% for most people as long as you are willing to lose it.  The thing is, even if it does go to a million dollars it is very easy to still lose all your Bitcoin.   If you put it in the wrong wallet, your money is gone forever and there is no customer service to help you retrieve it in bitcoin.  Think of it as digital gold that is buried and can only be recovered with a special shovel. If you lose the shovel you are screwed. No one can get it back to you.

In a way, this is Pascal’s wager for money with one subtle difference. Bitcoin works right now.  I know this because I run a node every transaction gets added to the Blockchain every ten minutes. It’s not dead yet because it still works. This is not to say it won’t be dead tomorrow or 29 years from now.  The future can not be verified, but right now, the past transactions on the Blockchain can be verified.  This is an important point—the future cannot be verified and that is why I can not say for sure that Bitcoin will be around in 100 years. There is no such thing as a sage investment.

                Index funds are the probably the best risk to reward ratio.  Bonds are kind of boring to me, but I understand their purpose.  JL Collins wrote an excellently book called the Simple Path to Wealth that describes all these financial instruments and I highly recommend it and he says nothing about bitcoin or cryptocurrency. You should read that before going deep down the rabbit hole.  He wrote about the big scary events like hyperinflation and deflation.   I just included Bitcoin as another edge versus worldwide hyperinflation.  

To me, it represents an exit plan for people in the countries with no other option, or for people that have no access to a banking system.  To me, this is more valuable than gold… It’s even more valuable than Bitcoin, but that is something you must decide for yourself.  Just make sure you realize that this is not investment advice.  As Satoshi Nakamoto and Mr. Mustache point out, bitcoin does not have a dividend or potential dividend.  Bitcoin is more of a gamble than an investment.  Actually, it’s more like a commodity such as corn or a collectible such as a baseball card, albeit one that allows you to exit the banking system if you have to.  Don’t Risk More than you can afford to lose. I look at it like a coinflip and that’s how you should look at it too. You wouldn’t want to risk your life savings on a coinflip(I hope) and you should also not risk it on a bitcoin flip.

The Cash App is my favorite place to buy it, but please don’t risk what you can’t afford to lose.

https://cash.me/app/MCLFTJTIf

If you would like to store your Bitcoin using Cold Storage, please check out Leger Nano.  https://www.ledger.com?r=6c06a57e6d68

 They are an affiliate, which means I will get paid some money if you get one using this link, but it’s an awesome product that lets avoid exchanges—You know those big news stories you hear about bitcoin getting lost or hacked?  It’s actually the exchanges that get hacked or lose their coins, it hasn’t been the protocol.  You can also store more than bitcoin on it.  Put any questions you have in the comments.

**This is not investment advice. I can’t tell the future and I don’t actually know the percentage of bitcoin going to a million dollars, but It’s an interesting experiment that works right now, even though it is volatile—Which it obviously is.

I also take lightning tips on Twitter @marcsmyname

Thanks for reading.

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Breakfast

Breakfast

I watched a Mr. Money Mustache video a few weeks ago.  He said it costs $42.00 a gallon to drive a car. I don’t trust anyone but math so I thought it would be fun to mathematically figure out my transportation costs from last year. I don’t have a Cadillac or one of those trucks compensating for a small peanut so my math is a little different.  I bought a car off of Craigslist that makes people think I have a small wallet. I also eliminated things like car crashes and the cost to my health for a sedentary lifestyle because I haven’t had an accident in years and my ADHD doesn’t allow for me to be too sedentary.  I combed through a years-worth of Personal Capital expenditures and tallied up everything that went to my family’s transportation. I counted things such as the cost of tires, gas, registration, windshield wipers, et cetera. Some of these things were spent on my wife’s Kia, but I just divided it by two as she also got tires and windshield wipers on her car.  Since her car is not as fuel efficient as mine and her tires were more expensive, the math is not perfect, but it gives me a good idea of how much I am spending when I drive.

It turns out that my little used 2012 Prius C costs about $0.25 per mile to operate.  I even included the expect to replace the $1,200 battery during the car’s lifetime.  I get 47 miles per gallon. In other words, a gallon of transportation juice actually costs a whopping 12 bucks. ($11.75 for all of you math nerds) If I drive 100 miles, that’s like literally burning $23.50.  Since we drive approximately 20,000 miles per year, we are spending $5,000 per year to drive to jobs.  It’s not $42.00 a gallon, but that’s still a lot of dough that could go a long way into baking my financial freedom.


With this car, women must look at me and say “Wow, he must be hung!”

This new mathematical revelation just gave me a huge epiphany.  The price of a widget we see on the shelf is also not the true cost of consumption.  When I go to a restaurant, they are really giving me some bullshit price to trick me into believing I am getting a better deal. The price of a meal on a menu is not really the true cost of the meal.  I had to go to northern California for a funeral this last weekend.  My aunt was generous to give us a hotel to stay in so that was covered, but we decided to go out for breakfast.  We are watching our waistlines, so we tried to eat a light breakfast. I had steel cut oats with some dehydrated fruit and my wife had a yoghurt parfait.  The steel cut oats were $8.00 and the yoghurt was $7.25. I thought we were eating a reasonably priced breakfast. Our meal should be about fifteen bucks…right? That was the quick math I did in my head anyway just like when I used to see gasoline cost 2.99 a gallon I think:  hmmm… I have a ten-gallon tank so I must be spending about thirty bucks right now—Wrong!  I’m spending $117.50 to fill my tank.

I was shocked when I signed the credit card bill to see that I had spent $30.13 on a meal that I thought was only $15.00.  Here’s the problem.  I just automatically ask for coffee because I am a caffeine junky. I never look at the price.  I just ask for some java and hope the waitress brings a syringe full of the stuff so I can get my fix as soon as possible. This hotel restraint, non-peaches and cream flavored mocha, regular drip coffee costs 4.50.    That means we spent nine bucks, on coffee that happens to be “free” if you make it in the hotel. (okay it’s included in the price of the hotel 😉) I know the old saying from Ben Franklin about death and taxes, but I rarely think about taxes.   Add another $1.88 to the bill. 

Then there’s this thing that I’ve always wondered about. Why don’t they just include the tip in the damn bill in the first place.  Why don’t we just increase the price on the menu and pay these people a decent wage for busting their ass waiting on me instead of expecting someone to be good at math and not a dead beat. I round up to 4.00 using the double the tax method and now my bill comes out to $30.13 or $15.07 per meal.  Why don’t they just list this price on the menu?  It’s because less people would spend the money when faced with the true cost.

                These FI (Financial Independence) blogs and books I’ve been reading as well as audiobooks and podcasts I’ve been listening to have got me thinking a bit differently. I suspect I might be starting to look like one of those weird people on TV like the guys who split two-ply into two rolls toilet paper or eat French fries people leave on their plates at restaurants.  I am somewhat afraid of people looking at me this way.  What if I become a social paruria?  What if people make fun of me? What if people think I’m homeless, or worse—a cheapskate!  What would my family think?  What will my wife say if I implement all these crazy ideas?  These are real fears of mine.  I’m scared of being unable to hang out with my friends at the bar when they want to meet up for a drink.  I’m afraid of being guilted into buying things… It’s such and such’s birthday, it is family, don’t you think you should spend time with your family?  You just got a new job, you deserve a new car.

Instead of buying a new car, I have resolved  to put my newfound skills into practice.  All the books and all those podcasts are useless if I don’t apply the information to my life. I wanted a peacoat because it has felt like an Alaskan winter in Southern California this year, but I winced at the prices of new coats and there are not many options in our local thrift stores.  I reasoned there would be more coats in Northern California thrift stores where the climate is cooler and the coat selection is bountiful. 

I tried on this cashmere and wool overcoat that made me feel as rich as Captain Crunch.  I looked in the mirror and the price said $50.00 because the 2 looked like a five when read backwards in the mirror. So I got this really warm coat for $20.00! 

Then I perused the appliance section. Perused actually means to read carefully, so I didn’t really peruse the appliance section, but big words make sound smart. I came across something that looked like a hot plate. I once listened to an episode of The Radical Personal Finance show on how to save money while traveling.  I found this episode completely fascinating and even took notes on it, but my wife did not find these frugal travel hacks so appealing.  Joshua Sheets had great ideas such as using a Yeti cooler to keep your food cold in a hotel without a fridge, frying an egg on a tin-foil covered iron, using a hot plate and backpack cooking gear, turn on a crockpot while site-seeing and come back to a home cooked meal.  It was time to stop wasting $30.00 on breakfast and put this information into action. I googled Hamilton Beach Hot surface and I found out that this little contraption was a breakfast sandwich maker. I also figured I could use it as a hot plate for my next trip. 

I took a trip to Safeway and found this interesting CoinStar machine.  I didn’t use it to buy bitcoin because they charge a 10% vigorish for counting change and they probably charge more for satoshis. (One bitcoin can be divided into 100,000,000 individual units. One satoshi is the smallest unit of bitcoin or 1/100,000,000 of one bitcoin) Mr. Money Mustache would not approve of such a machine, but I still love his blog.  I bought some English muffins, half a dozen eggs, and a little bit of beer and wine. For the record, the beer and wine were not part of the breakfast.

I used the cup to mix the egg whites and got some salt and pepper from an earlier trip to Wendy’s.  I’m a little worried that my wife is going to apply for me to get on a show called Extreme Cheapskates: Travel Edition, but so what? 

A couple of years ago, I started reading stoic philosophy after hearing Tim Ferris talk about it on his poddcast.  Here’s a passage that really resonated with me:

“Set aside a certain number of days, during which you shall be content with the scantiest and cheapest fare, with course and rough dress, saying to yourself the while: ‘Is this the condition that I feared?”—Senneca

I once dressed in a stained t-shirt and some basketball shorts and paid for a piece of bread at a grocery store using some spare change I had around the house after reading this. The cashier looked disgusted because he obviously thought I was homeless.  He didn’t want to touch my hand as I gave him the change. It was enlightening; but it was time to really put this passage into practice. What the hell did I read so many books for?  What’s the use of reading Henry David Thoreau if you are not willing to be self-reliant, build your own house, chop your own wood, and grow your own beans? What if my wife did have me go on that extreme cheapskate show?  Is this the condition that I feared?  When I got home, I applied that to more things in my life.  I realized that I was not saving as much money as I could because I was worried that people would consider me a miser. Look at all the words in the English language used to describe frugality.

 Can you believe that stingy bastard making his own breakfast in a hotel?  What kind of miser saves a buck like this? It must be St. Patrick’s day because he’s pinching that penny as if Abraham Lincoln didn’t wear green. What a tightwad! Can you believe how niggardly Scrooge MarcDuck is?

Is this the condition that I feared?  People will talk behind my back and call me names.  I will shrug. Seneca lived as a banker, playwright and advisor to the emperor.  He actually had plenty of money until Nero had him killed. Another stoic philosopher named Epictetus was born a slave and then bought his freedom. 

“Wealth consists not in having great possessions, but in having few wants.”—Epictitus.

When I got home, I started reading Early Retirement Extreme, Your Money or Your Life and finished the Simple Path to Wealth.  I decided that I wasn’t going to be afraid of what people thought of me because I have student loans to pay off.  I believe a debt should be honored and paid back, nevertheless I can’t claim bankruptcy on my student loans, which is most of my debt.  Think about what this means?   I may not exactly be a slave like Epictetus was, but having a debt that can not be forgiven is indentured servitude. 

Once I realized this, I turned off the heater and wore a sweater. I turn off the lights when I leave the room.  I wait two weeks before I do my laundry with my own laundry soap. 

I made my own Greek yoghurt.

I’ve started to consider every purchase I make. I go over my receipts and see if I could have done better. I didn’t buy that soda at Target. I use bodywash/facewash/shampoo, shave with a safety razor. Hopefully I can get my wife to cut my hair again.  I’m no cheapskate.  I am spending a lot of money on the thing I find the most valuable.  I’m buying my freedom.


I ♥ ฿⚡tips!

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bitcoin address

3B3nMuux5KMFq5KKGrdzyxKdArpUR67fEK

Note: I guess I did not include how much of a tip should be included on this menu.  I’m not sure.  My idea was to treat this blog as if I was a street performer offering entertainment. I also might try selling something to experiment with the technology. If a magazine costs about five bucks, and a blog is like an online magazine that I am giving away for free, 20% would be $1.00. At the time of this writing, $1.00=24,000 satoshis.  Hopefully it is possible to make a profit without any ads.

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I Am Jack’s Ligtning Network Invoice

I listened to Jack Dorsey on The Joe Rogan Experience.  He’s the CEO of Twitter and Square which seem like two completely different companies at first glance.  Square is a financial services company that owns the Cash App which I wrote about in a previous post. It’s my favorite way to buy cryptocurrency because it’s easy and it also gives me the opportunity to send money to anyone, even in fiat.  I get my side hustle income directly deposited into the app which has a routing and checking account number.  Usually, that money goes straight to bitcoin… but the fact is, not everyone is as into bitcoin as I am. I have, however, met someone whom  uses the Cash App even though she has no interest in bitcoin. (I try not to use the no-coiner pejorative)   She uses it to collect rent from a couple tenants.  She is not interested in bitcoin at all, but the app conveniently lets her tenants transfer fiat into her account, and she transfers the fiat into her regular checking account from there.

That’s more powerful than I initially realized.  This app is a technological solution to a huge problem.  The Cash app is an easy way to bank people that have initially been locked out of the banking system because of bad credit, lower income, or just not knowing how to budget properly. Now these people can directly deposit their paychecks into the account and pay their rent to landlords, perhaps buy something online, or even build up savings.  Of course , there is no interest in the checking account, but traditional banks also don’t offer much in the way of interest these days.  A typical bank account pays 0.01% annually.  This translates to $1.00 every year for every thousand dollars of savings.  That doesn’t even beat inflation.  Instead of a savings account, it offers a bitcoin account.  You can save your money or a portion of your paycheck in a deflationary currency.

  Despite the aftermath of the previous bear market, bitcoin has still done exceptionally well compared to the standard savings account.  It was only about $1000 in February of 2016.  A $1000 in a savings account from 2016 would be worth about $1003.03 today.  A thousand dollars of bitcoin bought in 2016 would be worth $3400 today.  It is true that if you bought at $19,000 you would have lost a lot of money, but I like to dollar cost average bitcoin.  I put aside 1% of my income into this bitcoin savings account every month.  You lose some months and you gain some months, but over the long run this dollar cost averaging has served me well.

Jack Dorsey is really the CEO of two communication companies.  Twitter is a microblogging platform that allows anyone in the world to speak through its platform. They have some rules that are sometimes controversial, and he even admits that the platform is not without its problems, but it’s based on this idea that everyone has a right to speak. It’s a first amendment thing. In the United States, we have the right to speak freely.  Our country was founded on this principle.  Twitter gives anyone with a cell phone that same right…for the most part. The Cash App also gives rise to a new kind of communication and the choice of currency that just wasn’t possible before 2009.

Money is also a form of speech, a different kind of communication allows people to communicate value to each other.  Therefore, the Cash app is also a communication platform. It allows people to communicate value either by using fiat or bitcoin. That’s a pretty radical idea.

Recently, an anon on Crypto Twitter that goes by the name of @hodlonaut started something called the Lightning Network Trust Chain.  The idea is to paste a lightning network invoice to your twitter feed and someone will send you a certain amount of satosis. (the smallest unit of bitcoin) then that person will send it to another ln invoice.  It is up to almost 29 million satoshis which I think is about $340 give or take @Jack was one of the people who was handed the torch.  Imagine if it were possible to send someone value as easy as liking a tweet.  It will take some time to make it user friendly, but that’s totally possible.  What if one like =1 cent?  What if you could earn more from a single tweet than the interest in your traditional savings account? What if your microblogging could earn you a living?  That’s how revolutionary this bitcoin thing is.

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How To Use Bitcoin

How to Use Bitcoin

Okay, so you’ve heard of this bitcoin thing and you want to send some bitcoin to someone, but you don’t know where to start.  Here’s the quick and easy walk through. 

1. The first rule of using bitcoin is, you need to get some.  There are several ways of doing this. My favorite is the Cash App!  Although I am working on becoming an affiliate of the Cash App, I use them and recommend them even if I was not.   There are other ways of obtaining bitcoin, but I am not recommending those sites, although I might recommend some exchanges that allow you to buy other cryptocurrencies some other time.

I have used other ways to purchase bitcoin.  One of those companies was a little draconian, however.  I’m not going to name names, but it will block your account if you send your money to someone they don’t like, such as an anonymous flower salesman if you live in a place where certain flowers are illegal or a site like Wikileaks that Satoshi said kicked the hornets’ nest. I received a nasty letter from this site when I cashed out a small amount of bitcoin from the online poker room America’s Card Room (Full disclosure, I am also an affiliate of America’s card room.)  I initially recognized the value of bitcoin because of my experience of Online Poker’s Black Friday, but that’s a story for another blog post)  or whomever else there team determines is worthy of censorship. 

So that’s why I recommend the Cash App. You can get that here:  https://cash.app/MCLFTJT –We will both get $5.00 if you sign up and deposit some money using this link.

Here’s the process.  

1. Download the Cash App

2. Enter your email or phone number.

Enter your first and last name here

They will send you a confirmation code

3. Type that confirmation code here:

Enter the code here

4. Enter your first and last name

5. Enter your Zip Code

Enter your zipcode here

6. Enter your bank account information. The App won’t let you take a screen shot of this step, but it’s pretty self-explanatory.  

7.  There arre some cool features to the CASH App.  First, you can get a bank account. You need to go through some KYC and AML Stuff to confirm your identity, at least in the Unites States, but I imagine it is the same in many other countries.  You can use this app the same as any other bank account. It gives you a routing number and a checking account number. You can get then set up a direct deposit to that bank account through your work.  I signed up for Door Dash and got my money deposited directly to the cash App.

8. You can also obtain a Cash App Card.  It’s a cool looking black card that has the bitcoin symbol on it. Unfortunately, at the time of this writing, you cannot directly spend your bitcoin, but rather exchange it for fiat before using the card. There are other ways to do this if you are interested using and something called a shift card. You can get that too, but I used it when bitcoin was $400.  When bitcoin reached $19,000, I experienced buyer’s remorse after using that card to buy big gulps at 7-11 and other useless junk I can’t even remember.

The Cash App Card

If you must spend your bitcoin, you will have to sell it manually in the Cash App before you can use your coin. ( You have already been warned about buyers remorse 😊)

9. Now that you have your information all in. You can add some cash to your cash app or earnm some money via direct deposit. I signed up for door dash and earned a few bucks here and there delivering pizza, wine, and fast food to people. The money went directly to the cash app.

10. Buy Some Bitcoin. The BTC will show up in your account.

11. Now you are ready to send some bitcoin.  Open the cash app. Click on the place where you put your picture.  click on Bitcoin.

 Scroll down to where it says withdraw bitcoin and click on that. It will ask if you want to transfer your bitcoin to another wallet. Click yes.

12. Warning: Bitcoin transactions cannot be reversed after they are confirmed in about ten minutes, but for all intents and purposes you should consider any bitcoin you send to someone else gone. If you send more than you meant to, you will not be able to change that, so be careful. 

There are several calculators out there that will convert bitcoin to your native fiat currency. I like: https://www.coindesk.com/calculator

Enter the amount of money you want to send on the USD side. At the time of this writing, it equals 0.001425 bitcoin. Note: Bitcoin is abbreviated by both XBT and BTC

If you want to send $5.00 USD of value to someone using bitcoin, type 5 into the USD (or your chosen currency)  It It will tell you the deicimal place of bitcoin that you should send.  At the time of this writing it is 0.001425BTC, but it changes by the minute if not second. Remember, if you forget a zero, you are sending 10 times what you thought, so be careful  

To send money to bitcoin, make sure it is a bitcoin address and not a bitcoin cash or some other address.  If you send it to the wrong wallet, it is like burning that money as the transaction will never get confirmed, you will lose it, and no one will ever receive that money. Here is a screen shot of Dan Carlin’s bitcoin address.  Dan Carlin produces the show Hardcore History. It’s awesome and I like to ship bitcoin to him. https://www.dancarlin.com/dc-donate/ You can either type his address or use the QR Code. The QR Code is the easiest way.  Scan the QR code and click confirm.  Make sure you verify the address when you send bitcoin.  You want to make sure the monies get sent to the right address.

Of course, if you found this information valuable, feel free to try this out on my bitcoin address too. 😉  Thanks. 

The Minimal Structure Bitcoin Address. This sends bitcoin directly to the author. Thank you for your contribution.

3B3nMuux5KMFq5KKGrdzyxKdArpUR67fEK                                       

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Welcome to Minimal Structure

The bitcoin protocol was released on  January 3, 2009. (I published this on the ten year anniversary) It is volatile the price reached about $20,000 a year ago and is about $3,800 at the time of this writing.   The price is the boring part, however.  The interesting thing is that it works.  It enables transactions to be sent without a trusted third party like a bank, credit card company, Paypal or Patreon.  Bitcoin is about freedom—Freedom from any  government or corporation. Bitcoin is a protocol for freedom. 

This is the bitcoin genesis block. It contains a headline from the day it was created "Jan/2009 Chancelor on brink of second bailout for banks."

This is how Satoshi Nakamoto described bitcoin in the abstract of the white paper:
“A peer-to-peer version of electronic cash system payments   to   be   sent   directly   from   one   party   to   another   without   going   through   a financial institution. “

That’s all bitcoin is.  It can be complex to explain how it works just as it can be complex to explain how a secure credit card transaction works or how the chip on your debit card uses cryptography to try and protect the money in your bank account.  Bitcoin is a form of electronic cash.  People hardly use cash anymore. Maybe you remember a time when you went to a grocery store and handed the cashier a few dollars to purchase a magazine.  The cashier gave you a receipt and some change and then you went home.  No one needed to know your name, your address, social security number, location of where you went after you purchased the magazine, what gas station you bought some gas at before you entered the store, the 1000 most common products you purchase, or which stores you opted to earn cash back from. The store did not care about your politics, what you wrote, spoke, or did on the Internet.

It did not care about your identity.

I understand that stores did care about your identity at one time.  It used to matter for things like where you sit on the bus, where you could get a drink of water, swim in a pool, or a bite to eat, what blacklists you were on, but those were the bad times.   Your identity is not supposed to matter anymore, but it does. You can’t hardly buy bitcoin anymore without sharing your identity and having it traced.  Some places that allow you to buy bitcoin can refuse to serve you, but no one can stop the transaction once it’s been sent.  Bitcoin is just a protocol like the Internet, a kind of software.  According to Tim May, in The Cyphermonicon, wrote “Code is speech and cypherpunks write code.”  It’s sort of the cypherpunk motto. If your identity is a problem, bitcoin is open source and someone can write code to fix that problem.

The freedom of speech is the foundation of western style democracy. It is the first right granted by the United States constitution in the Bill of Rights.  According to Dr. Jordan B. Peterson, the freedom of speech is the only way to correct human stupidity.  Dr. Peterson is leaving Patreon because of the recent exodus of many supporters who do not agree with the patreon decision.  A lot of us donate money to content creators because we want to avoid censorship.  We are paying for uncensored speech, but Patreon doesn’t offer that any longer.  Peterson as well as many others have lost a lot of money because the people paying for uncensored speech have left in droves.  This stems from a controversial decision to de-monetize a Youtuber named Sargon of Akkod said the n-word. Although I dislike this word, he used it as an argument against the racists he was talking to on another youtube channel.  In other words he was trying to use the word to correct human stupidity. Regardless about how you feel about Sargon of Akkod, other content creators that did not use that word are suffering.  The decisions of a centralized third party have affected the income of all of the other content creators on Patreon. This may have been an unintended consequence of Patreon’s decision, but it’s a consequence, nonetheless.

The issue is that the right to the freedom of speech is being threatened by corporations and political activists.  You might say that corporations are not government, so they don’t have to follow our bill of rights, corporations are people, they have the freedom of speech and are allowed to use the language of money however they want… but it’s a moot point.  Code is speech, cyperpunks write code. Satoshi Nakamoto wrote bitcoin; therefore, bitcoin is speech and speech really is money.  Rather than be protected by the U.S. 1st amendment, however, it is protected by cryptography.  Bitcoin is direct speech between one party to another–In other words, peer-to-peer. That is why it is revolutionary. It is decentralized.  There is no CEO of bitcoin, no trust and safety committee, and no terms and services agreement, and no one to stop payments to and from. In the bitcoin community, this is known as censorship resistance. You like this blog and you can tip me a little bitcoin directly on blockchain or on a sidechain like the lightning network.   No one can stop me because I say a bad word.  I can speak freely.  My income is not dependent on a corporation or government art fund, but on the free market and the generosity of people.

I used Patreon.  It’s easy and I like contributing to content creators. Rather than get involved in this huge debate about how artists and creators are being punished by the blah blah blah blah blah about Patreon, I figured I should write about something I find way more interesting—Using Bitcoin.  Hopefully I can teach others to use it to.  It probably took me about 6 months to understand…kind of, but I want to create a guide that can simplify the process.  I want to help other people learn how to use it as quickly and easy as possible.  The people who let Patreon should and do have another option.

Thanks for reading.