money.lol
Money Evolution      ₿itcoin      Private Property      Aggressions     

Money acts as the foundation for all trade and savings, so the adoption of a superior form of money has tremendous multiplicative benefits to wealth creation for all members of a society. — Vijay Boyapati.

Money is the tool that functions as a store of economic value, a medium of exchange, and a unit of account.
It improves social coordination.

Economic value is a measure of the benefit provided by a service.

A medium of exchange is the asset used to settle a transaction (i.e., the currency in which it is denominated, such as USD), while a means of payment is the method used to execute the transaction (i.e., the instrument or tool, such as a credit card).

Currency is a generally accepted medium of exchange.

The attributes that enable a good to perform monetary functions are listed below in order of relevance:

  • Verifiable scarcity
  • Storability
  • Transferability
  • Fungibility
  • Divisibility
  • Saleability

The goods that have historically satisfied those properties evolved into money through the stages of:

1. Collectible stage:

Humans, driven by genetically evolved instincts, enjoy collecting, displaying, storing, and trading rare items.

50,000 years ago the Homo Sapiens took pleasure in collecting shells and animal teeth, making jewellery out of them, showing them off and trading them; Neanderthals did not.

beads made of ostrich eggshells
Beads made from ostrich eggshells dating back 45,000 years were found in Denisova Cave, Siberia. However, the nearest ostriches lived thousands of kilometers away in warmer regions.

Through their hobby, Homo sapiens inadvertently developed proto-money, enabling them to store and transfer wealth. This social coordination advantage contributed to their triumph over the physically stronger Neanderthals.

The cost of these collectibles could be quickly assessed at a glance. Some simply consisted of mnemonics representing privileges.
Their scarcity was easily verifiable and would foreseeably remain so.

Scarcity is the relative low availability of something.

2. Store of Value stage:

Durable and easy to hide, these jewels protected value against theft or loss. They were preserved across generations, being transferred only during significant life events.

Their use helped temper aggression, as tribute proved more lucrative than continued violence against the defeated in battle.
Furthermore, they facilitated reciprocity of favors, fostering increased food sharing—a pivotal step towards the development of civilization.

3. Medium of Exchange stage:

During the Neolithic era (10,000 BC - 1,200 BC), money mostly consisted in collectibles made out of precious metals but without an uniform value.

Small, high-value items, distributed widely enough to be fungible, served as a means of exchange.

Metal assessment was costly, limited to large merchants. However, around 700 BC, the Lydians, residents of a key trade hub in present-day Turkey, pioneered coinage. This innovation made it possible to entrust verification to coin issuers, providing excellent fungibility and divisibility.

Lydian coin
Lydian coin.

4. Unit of Account stage:

Monetary metals gained saleability, fostering market development and price standardization, with gold and silver emerging as value standards.

Historically speaking gold seems to have served, firstly, as a commodity valuable for ornamental purposes; secondly, as stored wealth; thirdly, as a medium of exchange; and, lastly, as a measure of value. — William Stanley Jevons.

In various regions globally, non-coinage forms of money persisted.


The appearance of paper money

In 7th-century China, merchants started issuing paper receipts for coins entrusted to them. Over time, this system became more centralized and government-controlled.

By the 10th century, only authorized establishments could provide this service, and two centuries later, the Song dynasty assumed direct control, issuing claims over nonexistent coins.

In the 13th century, exchanging paper claims for precious metals was prohibited.

Paper money from the 14th century
Paper money from the 14th century.

Printing abuse led to hyperinflation and the collapse of the system in 15th-century. Consequently, monetary metals regained prominence.

In the West, during the 16th century, paper receipts like bills of exchange and promissory notes assumed monetary roles, facilitating trade across hostile lands.

By the 17th century, bank notes became prevalent as monetary receipts, representing specific amounts of precious metals stored in vaults.

In the 18th century, technological advances of the industrial revolution led to widespread counterfeiting of coins. Bank notes emerged as a solution due to their easier verifiable authenticity, causing monetary metals to flow into bank vaults.

Improvements in communication and transportation, like the telegraph and trains, enhanced banks' transfer capabilities. Ultimately, a few banks became major custodians of gold and silver.

Governments restricted paper banknote issuers and eventually monopolized the activity.

Paper receipts brought divisibility to gold, diminishing silver's advantage as a medium of exchange. In 1717, British officials, influenced by Isaac Newton, introduced the "gold standard", a model adopted by around 50 countries by 1900.

At the start of World War I in 1914, major European powers, suspended the convertibility of their notes for gold in order to finance their operations by printing unbacked bills. By the war's end in 1918, most currencies had significantly depreciated.

The US dollar was pegged to gold at $20 an ounce, but the issuance of unbacked dollars prevented the Federal Reserve from fulfilling this exchange promise. In 1933, President Franklin Roosevelt, via Executive Order 6102, confiscated private gold, depreciating the dollar to a new exchange rate of $35 per ounce of gold.

Executive Order 6102
Executive Order 6102.

During World War II (1939-1945), the continental United States became the most secure location for gold custody, so they came to hold most of the world's gold reserves.
In 1944, the victors established the Bretton Woods system, pegging their currencies to the US dollar, which, in turn, was pegged to gold.

The abuse of printing presses led to currency devaluation against the US dollar. In 1971, President Nixon announced the end of the US dollar's gold convertibility.

Since then, Central Banks print pure fiat money.


Fiat Money

Explain to me how an increase in paper pieces can possibly make a society richer. If that is the case, why is there still poverty in the world? — Hans-Hermann Hoppe.

Fiat Money is the currency exclusively issued by political authorities.
Its monetary units are created through a Central Bank controlled by a state or a group of states.
The plan for assigning newly created fiat units is known as monetary policy.

Physical fiat units include coins and bills, while digital units are represented by Central Bank's accounting notes known as Commercial Banks Reserves. The sum of both forms constitutes base money.

Individuals can only possess physical units. Exposure to digital units occurs indirectly through intermediaries like Commercial Banks, which issue promises in the form of checking accounts. These accounts, also called demand deposits, represent claims on a specific amount of money, ostensibly redeemable on demand.

If banks held the full deposit amount as a reserve, accounts would be termed money-certificates. However, banks typically keep only a fraction in reserve and invest the rest, resulting in multiple liquid claims for each actual unit. The aggregate of these claims is referred to as bank money.

Cash plus bank money is widely considered the current available monetary value. Consequently, consumer prices are more responsive to changes in these amounts than to alterations in the monetary base.
This recognition prompted the study of money aggregates like M2, also known as money supply or broad money.
Money aggregates represent the accounting aggregation of various types of monetary claims to cash.

The money multiplier concept posits that bank money is determined by dividing base money by the average reserve ratio, where the reserve ratio is defined as demand deposits divided by bank reserves.

In the short term, central banks influence the quantity of bank money by creating or withdrawing bank reserves, thereby manipulating the rates at which commercial banks lend reserves to each other.
Incentives to borrow increase when interest rates are lowered, leading to the creation of bank money, while raising interest rates has the opposite effect.


The digital age

The digital age saw a progressive restriction on the use of cash, accompanied by expanding regulations that led to extensive bureaucracy and financial censorship.
Capital controls were implemented under the guise of Anti-Money Laundering (AML) laws, and Know Your Customer (KYC) requirements that compelled financial services to collect and disclose user information that would eventually be publicly exposed.

Trusted third parties are security holes.

People gather your data on the promise that they will never share it, when in fact they cannot, and will not retain control of it for long.
— Nick Szabo.

Financial assets became concentrated in the custody of a few government-controlled entities, transforming them into tools for surveillance. Owners were only granted access to software displaying accounting entries, subject to permission.

Don't put most of your family's wealth in assets that some stranger can turn on and off like a switch. — Nick Szabo.

Nevertheless, every time a money becomes more of a Medium of Censorship, it becomes less of a Medium of Exchange.


Cryptographic money

I don't believe we shall ever have a good money again before we take the thing out of the hands of government; that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop. — F.A. Hayek, 1984.

In the 1980s, a group known as cypherpunks emerged, dedicated to preserving privacy in communications through the development of encrypted systems.
The intersection of their ideas with those of libertarian futurists gave rise to dreams of depoliticizing money.

Privacy

is the power to selectively reveal oneself.


The computer can be used as a tool to liberate and protect people, rather than to control them.(...) It's going to have to be a grass-roots activity, one in which individuals first learn of how much power they can have, and then demand it. — Hal Finney (1992).

Privacy is necessary for an open society in the electronic age. — A Cypherpunk's Manifesto by Eric Hughes (1993).

Early attempts like Hashcash by Adam Back (1997), B-Money by Wei Dai (1998), Reusable Proof of Work by Hal Finney (2004), and Bit Gold by Nick Szabo (2005) failed due to lack of decentralization. However, the mysterious Satoshi Nakamoto figured it out.
The Bitcoin White Paper, "Bitcoin: a Peer-to-Peer Electronic Cash System", was published on October 31, 2008, at bitcoin.org.

Cash is defined as bearer money, i.e., not in the custody of a third party.

The proposal was shared with the main cryptography mailing list. Nine days later, Satoshi Nakamoto stated, "I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper."
The code was ready.
The software was released as an open-source project, and on January 3, 2009, the Bitcoin Network commenced operation.

Cryptography is the science that creates protocols to configure messages in such a way that will only be able to be revealed by their receiver.
The term has Greek roots, stemming from "Kryptós" and "Graphía," which translate to "To hide" and "To write," respectively.
The word Cypher is a Latin synonym for Kryptós.

The headline from that day's edition of The [London] Times is embedded in the block 0 of the Bitcoin chain.

The Times main page on January 3, 2009
The Times main page on January 3, 2009.

Nobody showed much interest except for Hal Finney, who was the first person to join the network.

"Running bitcoin" — @halfin (11/01/2009)

Although the nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime as Satoshi posted, new developers joined the project and contributed to improve the security of software.

On May 22, 2010, the first commercial exchange of bitcoin occurred: Laszlo Hanyecz posted a thread on Bitcointalk.org with the title "Pizza for bitcoins?" offering 10,000 bitcoins for two pizzas. Another forum user accepted the offer and ordered two pizzas for Laszlo.

On April 23, 2011, Satoshi Nakamoto disappeared, mentioning in an email, "I've moved on to other things."

Appreciation for Bitcoin grew slowly.

"I wish I had kept my 1,700 BTC @ $0.06 instead of selling them at $0.30, now that they're $8.00! #bitcoin" - @GregSchoen (17/05/2011)

In under 10 years, the Bitcoin Network emerged as the world's most reliable and secure financial network, supported by tens of thousands of globally distributed nodes.

First they ignore you, then they laugh at you, then they fight you, then you win. — Mahatma Gandhi.

Bitcoin's scarcity stems from its immaculate conception, longest-established history, and extreme decentralization.

Every time somebody gets censored, Boom! they become a Bitcoin fan. It's almost a binary thing: if you haven't been censored, or have never been strongly sympathetic with somebody who has been censored by the financial system, then you don't understand the biggest early use cases of Bitcoin. If you have, nobody needs to "convert" you. — Nick Szabo.

Bitcoin's discovery enabled financial self-sovereignty, allowing the global storage and transfer of value in an uncensorable manner.
It is the first nonviolently securable property in history, since its ownership is enforced through the possession of a small piece of data.

Bitcoin's strongest reputation has attracted the best cryptographers to review and secure its code.

Gifted people tend to want to work with other top people and work on something that matters, that they believe in. Motivation matters. Protocol design and coding is partly an artistic, aesthetic endeavour; people do their best work on a mission: uncensorable global internet money. — Adam Back.

Alternative "cryptocurrencies" compromise security for temporary gains in some functionality.
They resemble Bitcoin much like a doll resembles a baby. They lack the predominant source of value that distinguishes Bitcoin from fiat money: the minimization of governance.

If the designers of your blockchain talk about "saving the planet", "increasing throughput", "compliance", "governance", "democracy", or any other topic more than they both talk and actually care about securing your financial property, run! do not walk away from that chain. — Nick Szabo.


The minimization of financial governance

Bitcoin technology enables to decentralize the control over a monetary system, minimizing financial governance. Bitcoin operates based on rules without rulers.
Questioning "who controls Bitcoin?" is akin to asking "who controls a language?".
Cypherpunks repulse governance, so the absence of it has always been the goal. This absence enhances the immutability of the network's security and the credibility of its monetary policy.

“Yes: stand back a little bit, you are taking away the sunlight from me”. — the philosopher Diogenes' reply to Alexander the Great's offer of granting him any wish.

In Bitcoin, consensus emerges when different computers simultaneously run the same protocol. By maximizing the role of the consensus protocol, social consensus is ruthlessly minimized.
The core design of Bitcoin is immutable, only those technological innovations that improve security are justified to be gradually included in its code. Advancing slowly is a dogma.

The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime. — Satoshi Nakamoto.

We must handle Bitcoin software with the respect we handle nuclear reactor software. — Hugo Nguyen.

This stuff is difficult. This stuff is subtle. If you are frustrated by how slow Bitcoin moves, let me tell you, Bitcoin moves too fast. Cryptography is hard and scary, and we need to make sure we move slowly. — Andrew Poelstra.


Security updates

Bitcoin security updates follow a meticulous process:

1. Research: While deployment of new features in Bitcoin is incredibly slow (for good reason), the pace of research is overwhelming. — Andrew Poelstra.

2. Proposal: Updates are proposed for peer review, brain-storming, deployment on sidechains/test-nets, and iterative development.

3. Consensus: If the proposals generate interest, there is overwhelming consensus among network participants, and the most active software contributors unanimously accept them, the updates are implemented and tested.

4. Open Source Deployment: Updates are deployed as open-source code, allowing users to verify them independently.

5. Enforcement: The updates are enforced by nodes. Each node operator must manually install updates if they choose to embrace them.


The term "fork" refers to a change in consensus rules:

- Soft Fork: Tightens the consensus rules. Blocks considered valid by nodes running the old version may be considered invalid by those running the new version. It does not necessitate a simultaneous upgrade of the entire network.

- Hard Fork: Relaxes the consensus rules. Blocks considered invalid by nodes running the old version may be considered valid by those running the new version. It requires every node to upgrade, making it a last resort solution against an extreme security problem in the blockchain.

The greater the procedural risk and mental cost, the fewer incentives there are to upgrade.

In the event of a catastrophic and general failure in Bitcoin's technology, influential developers, hopefully sharing common principles, might contribute to deploying code that migrates the basic Bitcoin rules into a new technology. This scenario, often referred to as "the nuclear option," suggests that in such circumstances, the concept of Bitcoin would likely endure despite changes in technology.

If SHA-256 became completely broken, I think we could come to some agreement about what the honest block chain was before the trouble started, lock that in and continue from there with a new hash function. — Satoshi Nakamoto.


The network

A Bitcoin implementation is code that individuals can run on their computers to turn them into Bitcoin nodes.
The reference implementation is the open-source code known as Bitcoin Core, which can be downloaded from bitcoincore.org

Interconnected Bitcoin nodes constitute the Bitcoin network:

Bitcoin Network representation

The function of a node is to independently verify the validity of transactions, rejecting those that do not follow the Bitcoin rules.


Transactions

A Bitcoin transaction consists of a digitally signed message instructing the transfer of a certain amount of monetary units.

Digital signatures are generated from a Private Key and its corresponding Public Key.
A Private Key is a random number between 0 and 2^256 (roughly the number of atoms in the known universe), so its entropy is 256 bits.
The Public Key is derived from the Private Key through a one-way function, which means that is impossible to obtain a Private Key from a Public Key.

A Private Key can encrypt data that only its corresponding Public Key can decrypt, and vice versa.

A digital signature for a message involves encrypting the message with the Private Key and adding a text that includes the original (non-encrypted) message along with the Public Key.

Verification that the owner of the Private Key has authorized the message is achieved by decrypting the message with the Public Key and confirming that the resulting message matches the original one.


Bitcoin Addresses are encoded Public Keys, designed to be more human-readable and resistant to typos.

The generation and storage of Private Keys, along with their corresponding Public Keys and Addresses, are straightforward processes that can be facilitated by programs called Wallets.

Nodes maintain a mempool, which is a list of transaction requests, and store a copy of the distributed ledger known as the Blockchain, containing confirmed transactions.

Each node obtains the whole set of balances, referred to as the UTXO set, from its own copy of the Blockchain.

A balance is a given amount of monetary units.


Proof of Work

In the case of conflicting transactions, validity should be determined by chronological order.
But nodes cannot mathematically prove the order of solicitation, and as transaction requests are propagated like gossips between nodes and can be published from any node, different nodes receive these commands at different times and in varying chronological order.
Therefore, if the nodes differ in which version of the trasaction should be recognized as valid, a double-spend occurs, resulting in the coexistence of different monetary systems.

A monetary system is a set of balances that can be transacted voluntarily by their owners.

Bitcoin's key innovation to address this problem is the mechanism known as Proof of Work.
This mechanism makes it possible to dispense with the need for a central authority by probabilistically rotating the power to execute transaction requests. Different mining nodes earn that power based on their relative computational strength.

It works akin to a continuous decentralized lottery where participants acquire "tickets" using an impossible-to-falsify resource: energy.

Alternative systems to Proof of Work rely on resources within their own system, which makes them insecure. These systems are verified through data that can be cheaply falsified and they are vulnerable to attacks where a single entity clandestinely controls the majority of nodes.
Consequently, these systems require an authority to expend human resources, leading to bureaucracy and privileges.

Consensus mechanisms that don't involve work, instead involve governance.

Blocks

Once a transaction request is included in a block of data that is independently verified, copied, and propagated by each node, it is considered executed.

However, the coexistence of two competing blocks for some minutes is possible. This issue is resolved when a new block is created, as each new block must be linked to the last previous block, and nodes follow the chain with the most cumulative work, typically the longest chain.
Consequently, the probability of a block being discarded diminishes with its depth in the chain, and each subsequent block increases the probability of immutability, referred to as confirmation.

Transactions in discarded blocks return to the list of transaction requests.

The creator of each block receives a reward, consisting of transaction fees and a subsidy through a transaction called coinbase.
Each transaction request indicates the fee to be paid to prioritize its execution.
The subsidy comprises new bitcoin units, with issuance halved every 210,000 blocks (around 4 years). This results in a decreasing monetary inflation to reach a maximum of 21 million bitcoins.

The integrity of the information within the block record is easily verifiable due to the use of cryptographic hash functions. These one-way functions transform any digital data input into fixed-size data called a hash.
Hashes are entirely different from one another, even with only slight differences in the input data.
In Bitcoin, the most commonly used hash function is SHA256, which produces a 256-bit hash. For instance, the transaction ID is the double SHA256 hash of the transaction data, and the block ID is the double SHA256 hash of the data in the block header.


Data contained in the block header:

1. Hash of the previous block ID.
2. Root of a Merkle Tree.
3. Nonce and hash target.
4. Timestamp.

Each block consists of its header and the transactions along with their respective hashes:

1. The hash of the previous block ID:

It forms a chain where each new block's hash includes the entire transaction history.
Any alteration to a block invalidates it and all subsequent blocks.
Similar to a mosquito in amber, the deeper a block is in the chain, the more immovable it becomes.


2. The root of a Merkle Tree:

It consists of the combined hash of all transaction hashes. It provides an easy way to verify transaction integrity.


3. Nonce and hash target:

Nonce:

To mine a block, one must find a nonce that, when combined with the rest of the block header data, results in a hash (Block ID) lower than a specified threshold, known as the hash target.

For instance, if the aim is to obtain a hash starting with 00 from data containing the text "bitcoin" attempts could be made with "bitcoin-1", "bitcoin-2", and so on until a successful nonce is found.
Try it here!.
In this example, the nonce would be 53.

The block ID is thus an easily verifiable proof of work.
Miners use energy spending to propose transactions, while the actual execution of transactions occurs in a decentralized manner through nodes.


Hash target:

Its function is to maintain an average block production rate of 10 minutes. This ensures a comparatively quick block propagation and validation, reducing orphan blocks and discouraging mining centralization incentives. The design prevents large miners from gaining significant advantages by building on their own blocks.
Moreover, a minimal data stream minimizes node operation costs and facilitates information replication.


4. Timestamp:

It is the approximate time each block was mined by its respective miner.
Every 2016 blocks, the network calculates the time difference between the first and last timestamps to adjust the hash target based on changes in total mining power.

The hash target can be multiplied or divided by a maximum of 4 to limit the impact of certain double spend attacks.

Timestamps aren't exact and do not necessarily increase in time from block to block. To be accepted by a node, a timestamp must be later than the median of the previous 11 timestamps and earlier than two hours in the future according to the node's current time.


Thanks to this mechanism, for the first time in history, the inflation of a monetary good is predictable.

The process of mining

Bitcoin technology uses electricity to avoid consuming human resources. It frees human time.

When we can secure a financial network by computer science rather than by accountants, regulators, investigators, police, and lawyers, we go from a system that is manual, local, and of inconsistent security to one that is automated, global, and much more secure. — Nick Szabo.

Bitcoin miners utilize energy much like firefighters use water when extinguishing a fire.

Bitcoin mining gravitates towards sources of power that unlock stranded energy, which would otherwise be wasted. Bitcoin miners provide a highly flexible and interruptible load, capable of operating anywhere.
In the long run, as competition increases and mining profitability decreases, only the use of surplus energy will remain economically viable.


Bitcoin's great achievement is to automatically enforce property rights in a monetary system.

Good fences make good neighbours. — Robert Lee Frost.

The recognition of property avoids the conflicts that arise over the control of any good that may have alternative uses.

Private Property goes hand in hand with the concept of rights.

Rights are inherent abilities of the human being that demand respect.
In a civilized society, rights are self-evident, sensed by conscience.

Property is the right of exclusion over a scarce resource. It is the standard from which all other rights are derived; if not, rights would become fuzzy and contradictory.

Everyone has the right to preserve and enjoy their property, encompassing their own life and peacefully acquired possessions.
Respect for life lies in the recognition that each person is the owner of his body and the fruits of his labor, acquired through voluntary exchange, production, or homesteading.

The condition in which rights are respected is known as Justice.


Freedom

Freedom is the individual ability to dispose of and use one's own property.

Freedom and property rights are inseparable. You can't have one without the other. — George Washington.

Rights don't imply positive obligations or the duty to act, as that would violate freedom. This realization leads to the principles of non-aggression and the right to self-defense.

Don't tread on me.

Nothing requiring others' labor is a human right; for instance, there exists a moral obligation to assist the needy, yet the needy does not possess the right to coerce others into providing help.
One person's rights can only imply negative obligations for others.

Live and let live.


Trade and Peace

Trade thrives on respect for Private Property and induces social cohesion through spontaneous cooperation.

Free trade is God's diplomacy and there is no other certain way of uniting people in the bonds of peace. — Richard Cobden.

Voluntary exchange turns strangers familiar with each other, creating benefits for honest participants and disincentivizing hostile attitudes.

It is almost a general rule that where there are mild customs, there is trade and that where there is trade, customs are mild. — Montesquieu noticed in 1748.

A man without a smiling face must not open a shop. — Chinese Proverb.


Economic development

Beyond ethics, the respect for Private Property facilitates economic development by enabling economic calculation and incentivizing the creation of value.


Economic calculation:

Economic freedom and sound money are essential conditions for the existence of a reliable price system.

Prices enable the quantification of value by comparing the scarcity of any good with that of monetary units.
The price system works as a mechanism for transmiting dispersed economic knowledge.

Free-Market economies are knowledge economies about consumer preferences.

The accounting of revenue and cost makes it possible to estimate profits and losses, informing goods' providers whether they are creating more economic value than they are destroying.
Profit compared to the value of the tools that were utilized to produce it, is called interest.

Interests and risks guide entrepreneurs in the allocation of resources and activities.


Incentives for the creation of economic value:

Private property fosters cultures of long-term orientation, as entrepreneurs, driven by the pursuit of higher interests, accumulate capital, experiment, and cooperate to better compete in satisfying consumers' desires by offering better services at a better price.

Virtually all economic growth comes from innovation. New technologies, new habits, new ideas are what drive up living standards. Innovation is the parent of prosperity but it is the child of freedom. — Matt Ridley.

Economic growth acts as a scarcity-liberating mechanism, transforming what was once considered scarce into abundant. This progression signifies an increase in the availability and quality of goods, leading to an improvement in the standard of living, i.e. a rise in real incomes.

Private property also entails responsibility, fostering self-monitoring and resource maintenance.

Of all 36 ways to get out of trouble, the best way is...to leave. — Chinese proverb.

The wrongdoing of an isolated act of aggression by an individual is easily identifiable. However, when the same action is systematically carried out on a large scale by an organized group in a position of domination, then the evil may be masked with a semblance of morality.

In order to reduce resistance, aggressions are often justified as necessary means to achieve a goal that is allegedly more important than any individual.

The more they "love" these abstractions (world, community, nature, etc…), the more they hate real individual human beings. — Nick Szabo.

The urge to save humanity is almost always only a false-face for the urge to rule it. — H.L. Mencken.

Nonetheless, no goal justifies any infringement of rights. Respecting individuals and their freedom is always the paramount good and the most important end.

As the old medical doctrine says: First, do not harm.


Socialism

Socialism is the political system that abolishes private property.
Socialist ideology is rooted in the state ownership of the means of production.
In pure socialism, also known as communism, all goods are owned by the state, as any good can be considered a means of production.
The distinctions between democratic socialism, socialism, and communism lie in degrees rather than fundamental principles.

If a State is defined as the organized group with a monopoly of violence over a certain territory, and considering a mafia as an organized armed group extracting income through violence, one could argue that under socialism, the State is a sofisticated mafia that justifies its criminal activity as good and necessary.

If politics is the art and science of managing centralized coercion, then socialism is the increasing of political inequality. It is the empowerment of a bureaucratic elite that exercises control over all economic activities.
An extreme concentration of power is required to systematically violate private property, so hyperstatism, absolutism and despotism are inherent to socialism, as it can never be anything other than a hierarchical technocratic system.


Fallacious definition

Socialism is sometimes erroneously defined as the political system striving for wealth equality. However, any political system should be defined by the actions it implements rather than the ideals that inspired it.

All pure socialist experiments, including the Soviet Union, Maoist China, Pol Pot's Cambodia, North Vietnam, Cuba, Venezuela, North Korea, resulted in a misallocation of resources, turning economies into humanitarian disasters; and while the political class thrived through confiscation, the majority of people were impoverished.
These experiments, instead of redistributing wealth, redistributed poverty, creating extreme inequality in living standards between civilians and politicians that tend to redirect people's discontent towards scapegoats who are vilified.

What belongs to everybody belongs to nobody; or rather to the few who exercise the property right in the name of "everybody".

Thus, all regimes that initially claim to be real socialism end up being labeled as "not real socialism."

Politically, the term "social" is often used to justify large-scale, coercive actions attempting to replicate systems that have been demonstrated to work only in small and homogeneous communities based on trust.

"We and we alone have the best social welfare measures" was said by the Propaganda Minister of National Socialist German Workers' Party, Joseph Goebbels in 1944.
If we understand “social” to refer to voluntary human interactions, then socialism can be considered the most anti-social political system. Its core ideology involves forcibly replacing voluntary interactions with mandated obedience.


Rights inequality

Socialist ideology often uses the concept of wealth equality to institutionalize the greed for others' goods by appealing to the instinct of envy, by wrongfully associating natural economic inequality with poverty and portraying the economy as a static zero-sum game where all wealth comes at the expense of someone else.

Such theories fail to acknowledge the expansion and dynamism of free economic systems that create and mobilize prosperity.

Not all equality is desirable; forced wealth equality is certainly not, as it implies rights inequality.

There is all the difference in the world between treating people equally and attempting to make them equal. — Friederich Hayek.

In a civilized and peaceful society, the only equality pursued is the equality of rights.

A society that puts economic equality ahead of freedom will end up with neither equality nor freedom. - Milton Friedman.

The main source of material inequality is one's own being. Economic value naturally differs among people as different preferences and choices imply unequal economic outcomes.
Human beings are not even equal to themselves on different days, and they are conditioned by externalities like the place, time and community in which they are born.

From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the Law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time. - Friederich Hayek.

If there is not equality of outcomes among people born to the same parents and raised under the same roof, why should equality of outcomes be expected when conditions are not nearly so comparable?. — Thomas Sowell.

Diversity is something to be celebrated with tolerance.


The corruption of Law

Well-organized aggressors corrupt the term "Law" by inventing alleged laws that go against human rights.
They set up legislation to codify injustice by establishing their own will in the form of written mandates, norms, decrees, statutes, bills, rules of conduct, and so on.
Therefore, violating certain rights will simply consist of applying corrupt legislation.

Lex injusta non est lex (Unjust law is not law). — San Agustín de Hipona.

Justice is codified through a simple norm: any aggression against rights is wrong.
Therefore, the immensity of any regulation tends to imply the existence of rules contrary to Justice.

As the representation of Justice by a girl with blinded eyes suggests, Law applies equally to all regardless of particular circumstances.
Human rights are universal.

Blind lady Justice sculpture

On the contrary, legislation frequently consists of norms that apply to particular subjects, such as privileges.

Good people disobey bad "laws".
One has a moral responsibility to disobey unjust laws. — Martin Luther King Jr.

In any case, it is important to note that there is no government of laws, but rather a government of people.
As Mao Zedong used to say, "Power comes from the muzzle of a gun".

Any norm can be interpreted and amended in multiple ways. Legislation is made, executed and sanctioned by a dominating group of people that tends to not make any norm that harms them. And in cases where such a rule exists, they may change or breach it.


War

War is mass murder.

It is the health of the state, as it provides fertile ground for the growth and entrenchment of state power.
The narrative of national security may persuade citizens to accept surveillance, censorship, and suppression of dissent

During wartime, governments often expand bureaucracies, curtail civil liberties, and increase taxation and control of the economy, normalizing state intervention.


Economic interventions

Beyond ethics, aggression against private property impedes economic development by hindering economic calculation and disincentivizing wealth creation.

A central entity will never be able to approach the level of knowledge that is acquired in a decentralized manner.

The price system makes possible to communicate the combined knowledge from people each of whom possessed only a portion of it. Based on that divided knowledge people coordinate the utilization of resources, producing a solution. — F.A. Hayek.

State aggressions against services and voluntary exchanges are referred to as economic interventions.

Intervened economies use mandates where free economies rely on coordination through knowledge.

Like any aggression, economic interventions benefit specific individuals at the expense of others who are harmed.

Very often, these interventions result in long-term consequences that are the opposite of the intended goals.


Price Controls

Forbidding certain services from being offered at lower prices than a determined threshold results in:
further shortages and deterioration of the intervened services. Quality providers are specially harmed, while costs associated with abusing consumption dissapear.

Converserly, forcing services to be offered at higer prices results in a purchaing power decrease of any consumer that lowers demand, creating a surplus of offer. It also results in the elimination of the main competitive advantage of weak providers.
An example is the minimum wage laws, which forcefully increases the service of the less skilled and experienced unemployed workers, who bear the worst consequences of the artificial surplus of labor that has been created.
Unemployment results from intervention and its legislative rigidities.
There will always be as much work to be done as there are unfulfilled desires.

Political propaganda often argues that intervened prices are "fair" rates; however, the only fair rates are those mutually agreed upon by the two consenting parties involved in the exchange.


Protectionism

Protectionism consists of a set of government interventions that favor certain businesses by imposing restrictions on their competitors. It hinders cooperation by prohibiting the implementation of competitive advantages.

Competition is the ultimate form of cooperation. — Antonio Escohotado.

We compete to be better cooperators, and we cooperate to be better competitors.

Competition between service providers ensures service quality, lowers prices, and promotes job quality while increasing wages.


Mercantilism:

It is a form of protectionism that imposes restrictions on foreign companies. It particularly harms foreign producers and it reduces purchasing power of domestic residents.

What "economic protection" teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war. — Henry George.

Denying the possibility of voluntary exchange is prohibiting the only peaceful means of acquiring other people's goods.

When goods don't cross borders, soldiers will. — Frederich Bastiat.


Political clientelism or corporativism:

It is a form of protectionism that favors large established companies by imposing restrictions on competitors without political ties. This leads to the hypertrophy of the favored corporations and the consolidation of monopolies and oligopolies.

Intellectual Property

Intellectual "property" legislation aims to create intellectual monopolies, by forbidding the reproduction of knowledge and forcing to treat easily reproducible concepts as if they were scarce physical goods, violating actual property rights.
This hinders competition and a slowdowns progress, since emulation of success is an essential part of economic development.


Violence against vices

Interventionism is also employed to coercively punish the providers of services satisfying the demand for what may be considered risky or not virtuous, such as vices.

Vices are acts where one trades short-term joy for potentially self-inflicted long-term negative consequences.

Those providers are then pursued as criminals, nevertheless, the alleged crimes they commit have no victims.

Treating peaceful voluntary exchanges as crimes leads to the formation of gangs and mafias around the prohibited service.
The increase in profits caused by the shortage of supply due to prohibition attracts real criminals who are already accustomed to the high cost of illegal activities: the threat of incarceration.


If two adults enter into a voluntary agreement in which they both hope to improve their situation, why should a third person be legitimized to prevent such an exchange through the use of violence?

Not everything immoral should be illegal.

Violent interference against the peaceful actions of others is unethical, even if the aggressor believes it is for the welfare of the people he aggreds.


Interventionist spiral

An interventionist spiral occurs when the solution to the problems created by interventions is considered to be more intervention.

The perpetuation of any intervention may encourage the misconception that certain services are impossible without such intermediation.

Shortly after the collapse of the Soviet Union, a British economist was asked by the director of bread production in the Russian City of St. Petersburgs: "Please understand that we are keen to move towards a market system, but we need to understand how such a system works. Tell me, for example, who is in charge of the supply of bread to the population of London?" Soviet mind was astonished by the notion that the economy could operate without a planner to coordinate it. — Christian Niemietz.

Hyper-regulation tends to create economies of scale in complying with regulations, thereby raising barriers to entry for small innovators while consolidating oligopolies and monopolies.


Taxes

Nowadays, from the so-called welfare states, petty theft is combated, but resisting the constant confiscation of income and savings is branded as fraud.

If stealing is the taking of another's property without consent, then income taxes are a recurrent theft.

Extortion is that theft that occurs by threatening the owner to surrender his or her belongings in order to avoid potential harm.
Thus, income taxes consist of extortions to obtain private information to be used in further extortions to confiscate economic value.

Preparing your accounts for the taxman is, in essence, no different from tidying yourself up for burglars.


There have always been, and there will always be, alternatives to each function performed by the state.