Welcome To The Age Of The Information-Industrial Complex

Authored by James Cobett via The Corbett Report,

When WWII ended and the American deep state welded the national security establishment into place with the National Security Act, the world entered into a new era: the era of the military-industrial complex.

But when the Cold War ended and the “Clash of Civilizations” became the new existential threat, the deep state found an opening for another paradigm shift. As the all-pervasive threat of terrorism became the carte blanche for total surveillance, the powers-that-shouldn’t-be found the organizing principal of our age would not be military hardware, but data itself. Welcome to the age of the information-industrial complex.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

It is not difficult to see why these words passed so quickly into the political lexicon. Think of their explanatory power.

Why did the US use inflated estimates of Russian missile capabilities to justify stockpiling a nuclear arsenal that was more than sufficient to destroy the planet several times over?

The military-industrial complex.

Why did America send 50,000 of its own to fight and die in the jungles of Vietnam, killing untold millions of Vietnamese (not to mention Cambodians)?

The military-industrial complex.

Why did the US use the public’s fear and anger over 9/11 and a phony panic over non-existent weapons of mass destruction to justify the illegal invasion and trillion-dollar occupation of Iraq?

The military-industrial complex.

Why did Nobel Peace Prize laureate Obama expand the fictitious “war on terror” into Pakistan and Yemen and Somalia, refuse to close Guantanamo despite his earlier promises to the contrary, commit US forces to “kinetic military action” in Libya without so much as seeking Congressional approval, and launch a new era of covert drone warfare?

The military-industrial complex.

Why has Trump not only continued but further expanded the US military presence in Africa, increased US aid to Israel and Saudi Arabiaactively enabled the war crimes in Yemen that have led to the largest cholera outbreak in human history, and killed more civilians in his first six months in office than former drone-king Obama killed in his entire eight-year presidency?

The military-industrial complex.

Image result for the information-industrial complex

When you think about it, it’s rather remarkable that such a phrase was ever uttered by a President of the United States, much less a former five-star general. Could you imagine any modern-day President talking about something like the “military-industrial complex” and its attempted “acquisition of unwarranted influence” without immediately dismissing the idea as a conspiracy theory? Over the decades there has been much speculation about Eisenhower’s use of the phrase, and what precisely he was warning against. Some have argued that the phrase was prompted by Eisenhower’s discovery that the Rand Corporation was grossly misrepresenting the Soviet’s military capabilities to John F. Kennedy, who ended up using the Rand invented (and completely fictitious) “missile gap” threat as a cornerstone of his 1960 presidential election campaign.

Whatever the case, it is perhaps time to revisit Eisenhower’s most famous speech. What Eisenhower is ultimately describing is the rise of American fascism; the merger of government and corporate power. What term can better capture the nature of early 21st century American political life? Is there any longer any doubt that the military-industrial complex has reached its ultimate expression in firms like Blackwater (aka “Xe” aka “Academi”) and its military contractor brethren? Is there any other word but “fascism” to describe a state of affairs when a Secretary of Defense can commission a study from a private contractor to examine whether the US military should be using more private contractors, only for that same Secretary of Defense to leave office and become president of the company that conducted the study, only to leave that company to become Vice President of the US and begin waging a war that relies heavily on no-bid contracts awarded to that same company based on the recommendation that it made in its original study? Yet this is precisely the case of Dick Cheney and Halliburton. It would be difficult to think of a more blatant example of the military-industrial complex fascism that Eisenhower was warning of.

But as it turns out, there was another warning about fascism embedded in that farewell address that has received far less attention than the “military-industrial complex” formulation, perhaps because there is no catchphrase hook to describe it:

“Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.”

Given that this warning came in 1961, before the age of communications satellites or personal computers or the internet, it was a remarkably prescient observation. If scientific research half a century ago was dominated by federal grants and expensive computer equipment, how much more true is that for us today, half a century later?

So what is the problem with this? As Ike explained:

“Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.”

Here, again, the warning is of fascism. But instead of the military-industrial fascism that dominated so much of the 20th century, he was describing here a new fascistic paradigm that was but barely visible at the time that he gave his address: a scientific-technological one. Once again, the threat is that the industry that grows up around this government-sponsored activity will, just like the military-industrial complex, begin to take over and shape the actions of that same government. In this case, the warning is not one of bombs and bullets but bits and bytes, not tanks and fighter jets but hard drives and routers. Today we know this new fascism by its innocuous sounding title “Big Data,” but in keeping with the spirit of Eisenhower’s remarks, perhaps it would be more fitting to call it the “information-industrial complex.”

The concept of an information-industrial complex holds equally explanatory power for our current day and age as the military-industrial complex hypothesis held in Eisenhower’s time.

Why is a company like Google going to such lengths to capture, track and database all information on the planet?

The information-industrial complex.

Why were all major telecom providers and internet service providers mandated by federal law to hardwire in back door access to American intelligence agencies for the purpose of spying on all electronic communications?

The information-industrial complex.

Why would government after government around the world target encryption as a key threat to their national security, and why would banker after banker call for bitcoin and other cryptocurrencies to be banned even as they plan to set up their own, central bank-administered digital currencies?

The information-industrial complex.

The effects of this synthesis are more and more felt in our everyday lives. Every single day hundreds of millions of people around the world are interfacing with Microsoft software or Apple hardware or Amazon cloud services running on chips and processors supplied by Intel or other Silicon Valley stalwarts. Google has become so ubiquitous that its very name has become a verb meaning “to search for something on the internet.” The 21st century version of the American dream is encapsulated in the story of Mark Zuckerberg, a typical Harvard whizkid whose atypical rise to the status of multi-billionaire was enabled by a social networking tool by the name of “Facebook” that he developed.

But how many people know the flip side of this coin, the one that demonstrates the pervasive government influence in shaping and directing these companies’ rise to success, and the companies’ efforts to aid the government in collecting data on its own citizens? How many know, for instance, that Google has a publicly acknowledged relationship with the NSA? Or that a federal judge has ruled that the public does not have the right to know the details of that relationship? Or that Google Earth was originally the brainchild of Keyhole Inc., a company that was set up by the CIA’s own venture capital firm, In-Q-Tel, using satellite data harvested from government Keyhole-class reconnaissance satellites? Or that the former CEO of In-Q-Tel, Gilman Louie, sat on the board of the National Venture Capital Association with Jim Breyer, head of Accel Partners, who provided $12 million of seed money for Facebook? Or that, in 1999, a back door for NSA access was discovered in Microsoft’s Windows operating system source code? Or that Apple founder Steve Jobs was granted security clearance by the Department of Defense for still-undisclosed reasons while heading Pixar in 1988, as was the former head of AT&T and numerous others in the tech industry?

The connections between the IT world and the government’s military and intelligence apparatus run deep. In fact, the development of the IT industry is intimately intertwined with the US Air Force, the Department of Defense and its various branches (including, famously, DARPA), and, of course, the CIA. A cursory glance at the history of the rise of companies like Mitre Corporation, Oracle, and other household electronics and software firms should suffice to expose the extent of these relations and the existence of what we might dub an “information-industrial complex.”

But what does this mean? What are the ramifications of such a relationship?

Although the signs have been there for decades, perhaps the most startling example of what lies at the heart of this relationship has been revealed by the whistleblowers at the heart of the National Security Agency, one of the most secretive arms of the American intelligence apparatus. While Edward Snowden has received the most attention with his “revelation” of the PRISM program, much of the information about the NSA’s ability to surveil all electronic communications has been revealed over the past decade by NSA whistleblowers like Russ TiceWilliam Binney, Thomas Drake and J. Kirk Wiebe, third-party contractors like Snowden and AT&T whistleblower Mark Klein, and independent journalists like James Bamford. Together, the story they tell is of a truly Orwellian society in which all communications are being captured and analyzed by the NSA, and, with the advent of facilities like the new data center in Utah, presumably stored indefinitely for use at any future time in any future investigation for any pretense by anyone with authorization to access that data. According to Snowden, this includes lowly third-party contractors like himself operating at NSA subcontractors like Booz Allen Hamilton in the vast (and expanding) private intelligence industry that has grown up around the information-industrial complex in the exact same way as private military contractors like Blackwater formed around the military-industrial complex.

In some ways, this information-industrial complex is even more insidious than its military-industrial counterpart. For all of the ills caused by the military-industrial complex (and there are many), at the very least it required some sort of excuse to drain the American people’s resources, and its failures (like the Vietnam quagmire or the debacle in Iraq) happened in the clear light of day. In the information-industrial complex, where vast spying programs happen in the shadows and under the cover of “national security,” it takes whistleblowers and insiders willing to risk it all even to find out what is being done by these shadowy agencies and their private-sector contractors. Even worse, the entire Orwellian spy grid is being run on the flimsiest of pretenses (the “war on terror”) that has no defined end point, and “justifies” turning that spy grid inward, on the American people themselves.

Surely Eisenhower never envisaged the monstrosity that this information-industrial complex has become, but the foresight he had in identifying its early stages over half a century ago is remarkable. The problem is that we are even further away from heeding the warning that he delivered in that 1961 address than we were at that time:

“It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system—ever aiming toward the supreme goals of our free society.”

If only this were the rhetoric that was shaping today’s debate on the issue, instead of the well-worn canard that we must “strike a balance” between freedom and security. Sadly, until such time as the National Security Act of 1947 is repealed and the cover of national security is lifted from the dark actors that populate this sector, the information-industrial complex is unlikely to be quashed—or even hampered—anytime soon.

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Vegas Massacre Victims Must Wait A Year For More Clues About Shooter’s Motive

The FBI and Las Vegas Police Department seemingly left no stone unturned in their quest to ascertain exactly why 64-year-old Stephen Paddock – a multimillionaire real-estate investor and video-poker aficionado – decided to carry out the deadliest mass shooting in US history.

Investigators raided Paddock’s homes, interrogated his siblings and longtime girlfriend – whom he had reportedly “sent away” on a trip abroad before committing his horrible crime – scrutinized his finances and interviewed employees at the casinos where he regularly was comped rooms and other luxuries, perks of his high-roller status.

Still, many details remain unclear. The official timeline of events was changed several times, and there’s still some doubt as to whether Paddock shot security guard Jesus Campos – the first person to alert authorities to Paddock’s whereabouts – before or after he opened fire on an unsuspecting crowd of country music fans. Authorities insist they have found no evidence to suggest that Paddock had help in carrying out his assault.

Joe Lombardo

And while investigators have made little progress in their search for a motive, sheriff Joe Lombardo of the Las Vegas police revealed last month that Paddock had racked up millions of dollars in gambling losses in the years before the shooting.

But now that the initial phase of the investigation is over, the victims and their families will need to wait until late next year before the FBI releases its definitive report on the Oct. 1 shooting, which left 59 dead and more than 500 injured. According to Fox News, the report is expected to be finished shortly before the one-year anniversary of the shooting.

While the LVPD is preparing its own report, the FBI will focus on why Paddock did what he did – a question that has been left almost totally unresolved, according to Fox News, which cited an interview with the Las Vegas Review Journal.

“Now that’s a long time for some people, but speaking for the FBI, that’s light speed, all right?” Special Agent in Charge Aaron Rouse told the Las Vegas Review-Journal on Wednesday.

 

Rouse said reports from other agencies investigating the mass shooting will be released at different times, but the FBI’s one is “focusing a large part on the why” which is “what everybody wants to know."

 

That burning question has not been answered, but Rouse said evidence still suggests Paddock was the only person involved in the attack and that he has not been linked with any affiliations or ideologies. The FBI previously denied claims by the Islamic State that Paddock was responding to a call to intensify attacks against Western countries bombing its territories in Syria and Iraq.

 

Las Vegas Metropolitan Police Department Sheriff Joe Lombardo has said in the past that Paddock’s mounting gambling losses may have played a role.

 

“As I sit here today, I believe that we are learning as much as we possibly can about why the subject did what they did,” Rouse said.

One it’s finally released, the report will include a digest of all the information gleaned from over 400 interviews FBI agents conducted in the US and abroad. The bureau has also reviewed 22,000 hours of footage captured by surveillance cameras and cell phones.

Rouse told the Las Vegas Review-Journal that the FBI has interviewed around 400 people worldwide in connection to Paddock and has brought in the same number of specialists to help document evidence. He said the Route 91 Harvest music festival site took investigators 14 days to comb over, while Paddock’s room and hotel hallway at the Mandalay Bay Resort and Casino took 13. Important items found at both sites have been sent to the FBI's central lab in Virginia.

 

"We’re going to have, I think, the best digital schematic of what happened and where it happened and how it happened that you can come up with," Rouse said.

 

He added that FBI investigators have 22,000 hours of surveillance and cellphone footage and 250,000 photos to look over, amounting to about 40 terabytes of data.

 

"We didn’t leave anything uncovered,” Rouse told the Las Vegas Review-Journal. “And again, the casinos, with their support, let us track down a lot of information of who may have had contact with that person. And it was very helpful to us."

In the two-and-a-half months since the shooting, hundreds of victims and their families have filed lawsuits against MGM Resorts, the owner of the Mandalay Bay resort and casino where Paddock carried out his deadly massacre. Many of the lawsuits allege negligence on behalf of the hotel and its staff. As the victims’ attorneys begin discovery, it’s possible that some of the details withheld by the FBI and police might surface.

* * *

Meanwhile, Clark County Coroner John Fudenberg on Friday released the official coroner's report on the massacre. It included some grim details: Of the 59 people (including Paddock) who were killed, all of them died of gunshot wounds, according to the New York Post. None had been trampled, as some media outlets had initially reported.

Most of those killed died from a single gunshot wound, though four victims sustained multiple gunshot wounds, the coroner said. Twenty-one people were shot in the head, 36 died with chest and back wounds and one – Rocio Guillen of Corona, California – died of a gunshot to the leg, according to a chart the coroner released. Another 500 people were injured during the shooting.

 

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“The World Is Criminally Corrupt & Broken” – A Surprising Dinner Conversation With The Younger Generation

Authored by Mike Krieger via Liberty Blitzkrieg blog,

Dressed in red velvet, she trampled under her reckless feet the stray flowers fallen from other heads, and held out a salver to the two friends, with careless hands. The white arms stood out in bold relief against the velvet. Proud of her beauty; proud (who knows?) of her corruption, she stood like a queen of pleasure, like an incarnation of enjoyment; the enjoyment that comes of squandering the accumulations of three generations; that scoffs at its progenitors, and makes merry over a corpse; that will dissolve pearls and wreck thrones, turn old men into boys, and make young men prematurely old; enjoyment only possible to giants weary of their power, tormented by reflection, or for whom strife has become a plaything.

 

– Honore De Balzac, The Magic Skin

I don’t get out all that much these days, but last evening I had a really engaging and illuminating dinner conversation. In attendance was a 47-year old commercial real estate investor and fellow Boulder resident who I’ve become friends with, a 32-year old professional poker player looking to move here, and 28-year old tech startup founder. Although I hadn’t met the younger attendees before, it became immediately apparent that everyone in attendance was highly intelligent and very engaged with the world around them.

We discussed religion, philosophy, crypto assets, the importance of nature to humans, travel and more. That said, the reason I’m writing this post is due to some of the generational observations I came upon. It confirmed the overall thesis I discussed in detail within last month’s post, The Generational Wheels Are Turning.

Here are a couple of passages from that piece to refresh your memory:

The Baby Boomer generation, which has dominated so many aspects of our country for so many decades — including the overall narrative of everything — is finally heading off into the sunset.

 

It’s not so much that they’re physically expiring, but their influence is beginning to wane significantly. It’s not completely obvious just yet since our world continues to be defined by the institutions and ideals they championed, but in the hearts and minds of so many, particularly the younger generations, the world they left us is hopelessly corrupt, archaic and can’t be displaced quickly enough.

While at dinner last night, I tried to listen as closely as possible to how the younger guys saw the world and where it was headed.

I wouldn’t say their views of the future were wildly optimistic, but there wasn’t a sense of dread or pessimism either. There was a vibe of, yeah our generation was screwed, the government sucks and so do all these corrupt institutions, but we’re gonna get out there and do our best. I’ve noticed this worldview consistently over the years from people roughly tens years younger than me, i.e., the heart of millennial generation. Not only is my wife in that age group, but so are many of my close friends at this point, and this ethos has been pretty consistent from my experience.

They don’t trust government, corporations or anyone with power to do the right thing. This is why they didn’t enthusiastically buy the Hillary Clinton kool-aid, despite not liking Donald Trump either.

It seems being thrust into adulthood with terrible employment and wage prospects resulted in a very healthy dose of cynicism about how things work. There’s a very clear appreciation that the world as is functions today is criminally corrupt and broken.

When I go out and chat with people my age and older, I notice a completely different tone compared to when I engage with younger generations. One thing is crystal clear. Older friends of mine not only think the status quo will strike back against extremely disruptive forces like Bitcoin and crypto assets, they also think the status quo will win. They expect a return to the gold standard, or some IMF-globalist one world digital currency to provide a framework for the post-dollar reserve currency system. Generally speaking, the biggest difference between the two groups is that one expects the current power structure to cunningly survive this current period, while younger people think the world can, and will, be fundamentally changed for the better. You know which camp I’m in.

Generally speaking, older people tend to be strongly anchored to the world paradigm as it exists, while those who are younger are naturally more open to massive disruption and upheaval. I’d argue that the current younger generation is even more willing to flip the table over and build entirely new structures than most people realize. The popularity of crypto assets amongst this generation is just one manifestation of this desire. That’s not to say us optimists are naive and expect this to be a smooth transition without a fight, but it’s to say we believe paradigm level, positive change is not only possible, but likely. Which is precisely the attitude you must have if you want to win. If you go into a battle expecting to lose, the result is obvious.

Most interesting to me was how the youngest member at the table responded when the subject of gold came up. He said something like, “I get the investment thesis, I get the concept of it, but it’s just not something I’m interested in.” He went on to describe why.

He likened it to buying an asset, holding it tight, and then waiting for the world to burn around him to profit. This blew my mind because I’ve heard this exact same sentiment, virtually word for word, from other people his age previously. They get gold and they understand the investment thesis, but they simply aren’t interested in it for very specific and interesting reasons. Many older people think millennials are just acting stupid and naive with their interest in crypto assets. They think these kids don’t know anything about gold or monetary history, which is why they’re attracted to these new digital forms of value, but if you actually talk to them, you’ll see that’s not the case. I’ve had too many experiences like the one described above with intelligent and aware millennials to be increasingly confident of this conclusion.

It reminded me of what I wrote last month:

This is where many older people who understand how fraudulent and terminal the current system is seem to get sidetracked. To them, the next logical step as we enter a new financial system has to be to go through gold. Far more ridiculously, some people even push the spectacularly idiotic idea that an SDR will become the accepted global currency of the future. While I don’t profess to know exactly how things will play out, I try to keep an open mind as others arrogantly dismiss Bitcoin completely.

 

It’s no coincidence that many of those who are particularly condescending toward Bitcoin are from older generations. They’re doing what humans tend to do, which is take their own understanding of the world and life experiences and extrapolate them into the future. Someone who lived 30 years or more before the internet came to dominate everything will naturally possess a radically different perspective of the world and where it’s headed than someone who never knew life without it. This is precisely why a younger person will inherently understand the value and utility proposition of something like Bitcoin far more easily than someone much older.

The only person at the table who owned no crypto assets was the oldest one in attendance (although he’s totally supportive of the space). This pattern is repeated over and over again in my experience. When I go out with friends my age or older they’re almost never involved, but when I go out with younger generations they almost always are. Some people will write the whole thing off as a fad, but my observations point me in an entirely different direction. The evolution and success of Bitcoin and crypto assets is not just a function of revolutionary technology being introduced into the world. Its blistering adoption rate is a reflection of a global consciousness developing amongst younger generations. It’s reflection of a burning desire for a more dynamic, trustless and decentralized world, and it will be up to them to ensure that it happens.

None of us know exactly how the future will unfold, but I’m going to take my cues from younger generations. Their values and desires will be what shapes the world as older generations retire and die off. If you aren’t talking to them and studying the way they see things, you’re going to be completely blindsided by the next 10-20 years.

*  *  *

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FBI Foils San Francisco Terror Plot By Islam Convert Using “Vehicle and Firearms”

The FBI has arrested a Modesto, CA convert to Islam for what they say was a plot to attack San Francisco’s Pier 39 on Christmas using a combination “of a vehicle and firearms.” The suspect cheered the October 31, 2017 truck attack in New York City in which 8 people were killed, referenced President Trump’s recent decision to recognize Jerusalem (“Al Quds”) as the capital of Israel, and said he was “ready to die” according to the FBI.


Everitt Aaron Jameson, AKA Abdallah abu Everitt ibn Gordon al-Amriki

Everitt Aaron Jameson, 26 – who went by “Abdallah abu Everitt ibn Gordon al-Amriki,” was arrested following an undercover FBI sting operation in which he was “planning and undertaking a violent attack in San Francisco in support of ISIS” with an undercover agent he thought was a senior ISIS leader. On October 27, 2017 Jameson messaged the undercover agent “Salaam Alaykium warmatual Allah wabarakatu, I’m here to beg to join the cause against darul kuffar. I’m ready,” according to FBI documents

“Jameson identified a possible target location, noting that the best place would be a large area such as San Francisco… Jameson specifically mentioned Pier 39 in San Francisco as a target location because he had been there before and knew that it was a heavily crowded area.”

 

“Jameson commonly refers to people he perceives to be enemies of radical Islam as “kufr,’ a derogatory Islamic term for unbelievers, and specifically told an FBI Confidential Human Source (cHS) that he “beg[ged] to join the cause against darul kuffar.” 

When the undercover FBI agent asked Jameson if he was a “revert” (a convert to Islam), Jameson replied “Yes. I am. That is what will make me more useful. I can blend in. Or shock and awe,”  adding in another exchange “I can suit up and take myself to our brothers. Or whatever they need done here. Give the word and it shall be done.” 


Jameson mentioned a desire to use explosives, and described a plan in which explosives could “tunnel” or “funnel” people into a location where he could inflict casualties. He discussed acquiring “PVC pipe, nails, and powder (presumably, black powder used for commercial explosives and ammunition.), which he planned to assemble into explosive devices at a remote campground in the mountains. 

Abu Bakr al-Baghdadi, leader of ISIL 

After a December 20 raid on Jameson’s home, a white envelope was found containing a signed letter, which calls America a “Nationalistic, Godless society,” criticizes President Trump for recognizing Jersalem as the capital of Israel, and voices support for ISIL and its leader Abu Bakr al-Baghdadi.

I Abdallah adu Everitt ibn Gordon have committed these acts upon the Kuffar, in the name of Dar al Islam, Allahu AKbar! You all have brought this upon yourselves. There is no innocent Kuffar! Each and every Kuffar in this Nationalistic, Godless society has a hand in this. You’ve allowed Donald J Trump to give away Al Quds to the Jews. Both You and he are wrong, it belongs to the Muslemeen. We have penetrated and infiltrated your disgusting country. These acts will continue until the Lions of Islam overtake you. Turn to Allah, make tawbah and fight with us, the soldiers who fight in the day and the night. Allah SWT is most forgiving, I am not. Long live Isil, Long Live Abu Bakr al-Baghdadi. Allahu Akbar! 

 

Abdallah abu Everitt ibn Gordon al-Amriki

Jameson told the undercover agent that he has been “trained in combat and things of war,” adding “I was a soldier in the Kuffar army before I reverted,” referring to his service in the U.S. Marine Corps – which consisted of basic training and a “sharpshooter” rifle qualification, before he was discharged for failing to disclose a history of asthma. 

The FBI also noted that Jameson “liked” and “loved” pro-ISIS and pro-terrorism posts with a “suspicious Facebook account” he created – including a “like” and “loved” on a November 29, 2017 post that is an image of Santa Claus standing in New York with a box of dynamite looking out over a crowd of shoppers. The caption reads “We meet at Christmas in New York…soon”


Several posts were also discovered on social media which were “supportive of terrorism, communicating with people he believes share his jihadi views and offering to provide services to such people, including in the form of his presumably employer-provided tow truck.” 

Several firearms were found at Jameson’s Modesto home, including a gun purchased in January of 2017, two .45 caliber magazines, one of which was loaded, three cylinder fireworks, a Winchester .22 caliber rifle, a Ruger model M77, a Ruger 9mm handgun, and an empty handgun magazine. 

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The 10 Most Interesting Predictions From 2018 Forecasts

Via Nicholas Colas of DataTrekResearch,

Tis the season for predictions… In fact, it seems to us that the requisite crystal ball gazing gets more popular every year. A nice compact list of bite-sized thoughts makes for easy social media sharing, after all.

But the really interesting thing to us is not “What” a person or organization predicts, but rather two other factors. First, how many different prognosticators agree on a given topic? Second, how do they all come to their conclusions?

We have spent the last few days combing through the year-end predictions from a wide array of brokerage firms, consultancies, and other sources.

What follows is a “Top 10 list” of the best of those. We have annotated each to highlight the important points, and included links so you can read them for yourself. There are many predictions in each full report we could not summarize efficiently, and each one merits a quick skim if you have the time.

With that introduction, the list:

#1): You don’t need to be a Goldman Sachs client to read a comprehensive summary of their very positive case for global economic growth in 2018. The only problem in translating that into a bullish stance on stocks: they see the US Federal Reserve tightening monetary policy much more aggressively than market expectations. Even still, however, they still expect global interest rates to remain low.

http://ift.tt/2B1zK2G

#2) From AT Kearney (who had a pretty good run with their 2017 predictions): expect more regulatory pressure on US Tech giants (a concern we share), a tougher than expected final Brexit negotiation, and a breakthrough in quantum computing. That last one is a very important call for technology – Moore’s Law won’t keep working forever. Quantum computing is the answer, but it has been an elusive solution so far.

http://ift.tt/2Bm43OL

#3): From Accenture, a splash of cold water for those who think self-driving cars are just around the corner: “Fully autonomous cars will not come in 2018”. They do, however, see value in blockchain technology to secure the data transfer between passenger vehicles and dealerships, factory, and IT solutions.

http://ift.tt/2BnIygu

#4) From Deloitte: “More than a billion smartphone users will create augmented reality content at least once in 2018”. What’s augmented reality? Remember the Pokemon smartphone game that overlaid cartoon characters on your screen? That’s AR. But just imagine being able to shop for a new sofa or TV console and see how it would look in your living room, all right on your smartphone screen in real time. That’s AR, too.

http://ift.tt/2ANX7dQ

#5) A very thoughtful prediction piece from TechCrunch agrees with the AR point above, and also thinks:

  • Competition between providers of streaming content will only accelerate, and Apple will enter the fray more aggressively.
  • A breakthrough year for Siri and Alexa as Apple and Amazon start to monetize these Trojan Horses with advertising and shopping suggestions for users.

http://ift.tt/2AsMInn

#6) Still on the mobile technology theme, App Annie (a research firm in the space) notes that 2018 is the 10th anniversary of the Apple App Store, and predicts:

  • Consumers will continue to download and use new video streaming apps, further fragmenting content consumption.
  • Physical retail stores will increasingly become order pickup locations for customers who order on their mobile device but want an item right away.

http://ift.tt/2AZXzbw

#7) From health care investors Venrock: “Amazon will not shake up pharmacy benefits managers.” They also expect another health care unicorn to fail in 2018 (as Theranos did this year), hospital hiring to slow (bad for macro job growth), and Anthem, Humana, Cigna, and Optum to all “Aggressively acquire higher margin, less regulated businesses”.

http://ift.tt/2ADXMRV

#8) Aetna’s Global President of Population Health puts undiagnosed diabetes on the same list as better-known problems like opioid addiction and mental health. And while not strictly a 2018 prediction, Dr. Sneh Khemka notes that a rapidly expanding global middle class is straining health care systems around the world. Lifestyle related diseases are “In”; infectious diseases are “out”.

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9) Will it still be President Trump in December 2018? Yes, with a 69% chance according to Predictit.org. If that doesn’t sound especially high to you, we tend to agree.

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10) And which political party will control the House after midterm elections? (Drum roll, please)… Predictit.org gives the odds to the Democrats, at 62%. We think this is an underappreciated market risk for next year. Midterm elections strongly favor the party that doesn’t hold the White House. What happens to US equities as the market starts to discount a return to gridlock?

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Why This Canadian City Could Be The Epicenter Of The Next Bitcoin Rush

There is a new Gold Rush 2.0 currently underway across the world, and prospectors have their eyes set on Winnipeg City in Manitoba, Canada.

In 1848 through 1849, the news of gold quickly spread around. People from Hawaii and Latin America were the first to hear the breaking news. Next came the rest of the U.S., Europe, Australia, and China in 1849, as the peak rush was seen in 1852, after gold reserves became harder to mine. The buzz around bitcoin is similar, although information dissemination is now much quicker and as the euphoria of bitcoin mining spreads across the globe, many cryptocurrency players have started their descent onto Manitoba in search of cheap power for their digital mining operations.

The gold rush ushered in the development of California in the 1850s and ultimately it became a state. Roads, churches, schools, and entire towns were built, to house the gold miners who sought nothing more than to extract the yellow metal from the foothills. A similar fate may await one Canadian city.

CBC News has learned that international investors have had interviews with “commercial real estate companies, economic development organizations, cryptocurrency industry players and Manitoba Hydro,” who view the area as a “top-tier location” to open up a mining shop. CentrePort Canada, North America’s largest inland port, offers 20,000 acres of cheap commercial land in Winnipeg, says early interest from Asian investors and South American companies who want to mine cryptocurrencies is currently underway. CentrePort president and CEO Diane Gray said, “we’ve had inquiries from very large non-Asian companies, some of which have roots in North America and are looking to expand significantly.”

“They’re having site visits and meetings with Manitoba Hydro and whomever else they feel are relevant to their decision-making process. So I would say strong interest, but still speculative.”

Is the next bitcoin boom area in Manitoba? 

The environmental downside in mining cryptocurrencies is that it requires a tremendous amount of energy (See: Each Bitcoin Transaction Uses As Much Energy As Your House In A Week). CBC explains why a bitcoin transaction consumes a lot of energy, furthermore highlights North America’s cheapest cities for electricity costs in 2017. Here, Winnipeg City in Manitoba, Canada ranks number one, while Toronto ranks last. New York is not too far behind Toronto, ranked number 19.

In lieu of a central banking authority controlling transactions involving cryptocurrencies, a public digital ledger controlled by a network of users records every virtual-currency transaction.

 

However, this record-keeping process requires computers around the globe to solve complex mathematical problems and then verify the output. When this is complete, the transaction and the solved equation is added to what is called a “blockchain” as a permanent record.

 

People who purchase these specialized math-solving computers around the world don’t do it for free. Their reward is payment through the creation and issuance of new bitcoin. They become, essentially, tech-era gold miners — hence the term “bitcoin miners.”

Interesting facts about Bitcoin mining and electricity consumption:

  • In the past month alone, Bitcoin mining electricity consumption is estimated to have increased by 29.98%
  • If it keeps increasing at this rate, Bitcoin mining will consume all the world’s electricity by February 2020.
  • Estimated annualized global mining revenues: $7.2 billion USD (£5.4 billion)
  • Estimated global mining costs: $1.5 billion USD (£1.1 billion)
  • Number of Americans who could be powered by bitcoin mining: 2.4 million (more than the population of Houston)
  • Number of Britons who could be powered by bitcoin mining: 6.1 million (more than the population of Birmingham, Leeds, Sheffield, Manchester, Bradford, Liverpool, Bristol, Croydon, Coventry, Leicester & Nottingham combined) Or Scotland, Wales or Northern Ireland.
  • Bitcoin Mining consumes more electricity than 12 US states (Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming)

Growth of Bitcoin Mining Electricity Consumption is set to explode.

In this context it's easy to figure out why bitcoin miners have Manitoba, and Winnipeg, in their crosshairs: the area hosts cheap energy through hydroelectricity, along with the “lowest average annual temperatures of major North American cities”— just perfect for cooling computers with cheap energy. Ryan Behie, vice-president and managing director for CBRE Winnipeg says, more than a dozen groups are looking at commercial properties in the area for setting up bitcoin mining operations.

“The issue is that this commands a tremendous amount of power, so much so that in my discussions with [Manitoba] Hydro about what they can offer in terms of power at any particular locations in the city of Winnipeg, there are few, frankly, if any sites that work.”

Bob Antymniuk, senior director of sales and leasing with Capital Real Estate, says his team of experts have canvased areas in Manitoba, and Winnipeg, but “there’s not many of those types of buildings that have the types of power requirements that these guys want.” Antymniuk indicates the infrastructure in Manitoba, and Winnipeg is severely lacking the requirements for bitcoin operations, but we must add, this is the perfect time to enter before the rush starts.

On the other hand, Manitoba Hydro officials aren’t convinced bitcoin mining operations in the region need the extra power upgrades—yet.  Officials are unsure if cryptocurrencies are in a bubble, and actions by the power company today could be premature. “The key difference lately has been the magnitude of the requests to establish dedicated bitcoin and cryptocurrency farms,” said Manitoba Hydro spokesperson Bruce Owen.

To put the potential consumption into perspective, the cryptocurrency requests coming into Manitoba Hydro recently are for the equivalent electric consumption of about 1,900 average Manitoba homes.” One local cryptocurrency insider says, there are more than 20 mining operations of different sizes throughout the area. It’s hard to put an exact figure on the number because many want to remain anonymous.

Nick Burley, chief operating officer of Fiber Hosting, a Winnipeg web hosting company said, “if it ends up turning into a situation where it does become concrete for the long term, we will risk giving up our early lead in the industry to other players around the world, which will unfortunately [mean losing] out on job opportunities for Manitobans in high-tech jobs.”

According to CBC, Burley, himself a bitcoin miner, estimates about 100 skilled miners are employed in the province, and many more are coming with an infrastructure that is in need of an upgrade. “If it is seen that Manitoba is too slow to react to the demand, then it could be a situation where we lose competitiveness in that space.”

Nevertheless, Manitoba, and Winnipeg could be in the beginning stages of a new gold rush, however this time the expansion is north and it’s digital, as the hunt for cheap energy and cold climate is top on every bitcoin miner’s mind.

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How Facebook’s Secret Unit Created Digital Propaganda Troll Armies To Influence Elections

Authored by Shelley Kasli via GGI News,

Just days after GreatGameIndia exposed how American and Japanese companies could be hacking Indian elections, a recent Bloomberg report has revealed how a secret unit of Facebook has helped create troll armies for governments around the world including India for digital propaganda to influence elections. Under fire for Facebook Inc.’s role as a platform for political propaganda, co-founder Mark Zuckerberg has punched back, saying his mission is above partisanship.

But Facebook, it turns out, is no bystander in global politics. What he hasn’t said is that his company actively works with political parties and leaders including those who use the platform to stifle opposition—sometimes with the aid of “troll armies” that spread misinformation and extremist ideologies.

The initiative is run by a little-known Facebook global government and politics team led from Washington by Katie Harbath, a former Republican digital strategist who worked on former New York Mayor Rudy Giuliani’s 2008 presidential campaign as well as 2014 Indian elections.

Since Facebook hired Harbath to run their secret global goverment and politics unit three years later, her team has traveled the globe (including India helping political clients use the company’s powerful digital tools to create troll armies for digital propaganda.

In India (many other countries as well) the unit’s employees have become de facto campaign workers. And once a candidate is elected, the company in some instances goes on to train government employees or provide technical assistance for live streams at official state events.

In the U.S., the unit embedded employees in Trump’s campaign. In India, the company helped develop the online presence of Prime Minister Narendra Modi, who now has more Facebook followers than any other world leader.

At meetings with political campaigns, members of Harbath’s team sit alongside Facebook advertising sales staff who help monetize the often viral attention stirred up by elections and politics. They train politicians and leaders how to set up a campaign page and get it authenticated with a blue verification check mark, how to best use video to engage viewers and how to target ads to critical voting blocs. Once those candidates are elected, their relationship with Facebook can help extend the company’s reach into government in meaningful ways, such as being well positioned to push against regulations.

That problem is exacerbated when Facebook’s engine of democracy is deployed in an undemocratic fashion. A November report by Freedom House, a U.S.-based nonprofit that advocates for political and human rights, found that a growing number of countries are “manipulating social media to undermine democracy.” One aspect of that involves “patriotic trolling,” or the use of government-backed harassment and propaganda meant to control the narrative, silence dissidents and consolidate power.

In 2007, Facebook opened its first office in Washington. The presidential election the following year saw the rise of the world’s first “Facebook President” in Barack Obama, who with the platform’s help was able to reach millions of voters in the weeks before the election. The number of Facebook users surged around the Arab Spring uprisings in the Middle East around 2010 and 2011, demonstrating the broad power of the platform to influence democracy.

By the time Facebook named Harbath, the former Giuliani aide, to lead its global politics and government unit, elections were becoming major social-media attractions. Facebook began getting involved in electoral hotspots around the world.

Facebook has embedded itself in some of the globe’s most controversial political movements while resisting transparency. Since 2011, it has asked the U.S. Federal Election Commission for blanket exemptions from political advertising disclosure rules that could have helped it avoid the current crisis over Russian ad spending ahead of the 2016 election.

The company’s relationship with governments remains complicated. Facebook has come under fire in the European Union, including for the spread of Islamic extremism on its network. The company just issued its annual transparency report explaining that it will only provide user data to governments if that request is legally sufficient, and will push back in court if it’s not.

Facebook Troll Armies In India

India is arguably Facebook’s most important market recently edging out the U.S. as the company’s biggest. The number of users here is growing twice as fast as in the U.S. And that doesn’t even count the 200 million people who use the company’s WhatsApp messaging service in India, more than anywhere else on the globe.

By the time of India’s 2014 elections, Facebook had for months been working with several campaigns. Modi relied heavily on Facebook and WhatsApp to recruit volunteers who in turn spread his message on social media. Since his election, Modi’s Facebook followers have risen to 43 million, almost twice Trump’s count.

Within weeks of Modi’s election, Zuckerberg and Chief Operating Officer Sheryl Sandberg both visited India as it was rolling out a critical free internet service that was later curbed due to massive protests. Harbath and her team have also traveled here, offering a series of workshops and sessions that have trained more than 6,000 government officials.

As Modi’s social media reach grew, his followers increasingly turned to Facebook and WhatsApp to target harassment campaigns against his political rivals. India has become a hotbed for fake news, with one hoax story this year that circulated on WhatsApp leading to mob beatings resulting in several deaths. The nation has also become an increasingly dangerous place for opposition parties and reporters.

However its not just Modi or the Bharatiya Janata Party who has utilize Facebook’s services. The company says it offers the same tools and services to all candidates and governments regardless of political affiliation, and even to civil society groups that may have a lesser voice.

What is interesting is that Mark Zukerberg himself wants to be the President of US and has already employed in succession David Plouffe (campaign adviser to Barack Obama in 2008) and then Ken Mehlman (George Bush Jr.’s campaign adviser in 2004). He is currently employing Amy Dudley (Senator Tim Kaine’s former advisor), Ben LaBolt (Barack Obama’s former press adviser) and Joel Benenson (Hillary Clinton’s former campaign adviser in 2016).

How India’s Fake News Ecosystem Work

Most of us don’t give much thought to what we post on social media, and a lot of what we see on social media is pretty innocuous. However, it only seems that way at first glance. The truth is that what we post online has a frightening potential. According to recent research from the Pacific Northwest National Laboratory and the University of Washington, the things we post on social media could be utilized by software to predict future events – maybe even the next Prime Minister of India.

In a paper that’s just been published on Arxiv, the team of researchers found that social media can be used to “detect and predict offline events”. Twitter analysis can accurately predict civil unrest, for instance, because people use certain hashtags to discuss issues online before their anger bubbles over into the real world.

The most famous example of this came during the Arab Spring, when clear signs of the impending protests and unrest were found on social networks days before people took to the streets.

The reverse of this is also true. Meaning that anger can also be manufactured on social media & once it reaches an optimum level be targeted on to real life events on the streets as we have been witnessing since atleast a couple of years in India with cases of mob lynchings and such.

In India a massive fake news industry has sprung up exercising influence over traditional discourse of politics and has a potential in becoming a security challenge like the Arab Spring if not kept in check. As the debate over mob lynching in India is raging it should be understood that such incidents would not have had such a rapid and massive effect if the youth had not had access to Facebook, Twitter, YouTube, and other social media that allowed the fake news industry to organise and share made-up videos and information. The mob lynching since the past years are a direct result of the fake news industry spilling over from social media to the real world.

This takes a totally new dimension now that it has been revealed that Facebook & WhatsApp itself colluded with the establishment in creating such “troll arimes” for digital propaganda, resulting directly into violence on Indian soil. This is a clear textbook case of terrorism. Terrorism is defined as ‘the systematic use of terror or violence by any individual or group to achieve political goals’. In this case this terrorism is perpetrated by a foreign company Facebook on Indian soil using digital information warfare. What more are we waiting for to respond to such an act?

Fake News was used very effectively during US Presidential elections. It was part of the official campaign itself run in collaboration with tech companies and it is also being alleged that even the Russians also ran their own network. The same method was used to shape the Brexit debate as well. As we write this the fake news industry is spreading its tentacles in India as well. Many of India’s leading sportsmen, celebrities, economists, politicians have already fallen victim to this by disseminating such fake content. This is a dangerous trend and should be kept in check by our intelligence agencies to avert future disaster.

The way it works in short is like this. Numerous websites and portals of varying degree of legitimacy and funding are floated. Specific news contents are generated for different groups based on their region, ideology, age, religion etc. which is mixed with a heavy dose of soft porn to slowly blend in with their objective. These fake contents are than peddled in social media and specific groups targeted via analytics tools developed by tech companies. As a lot of such fake content is generated slowly it starts getting a momentum of itself and somewhere down the line it is picked up by any unsuspected person of influence – celebrities, politicians and even journalists themselves. What happens after this point is sheer madness.

Whether by choice or by ignorance even the mainstream media starts peddling this nonsense, dedicating their entire primetime news shows in analyzing the fake news, who said what and why and blah blah… instead of identifying where the fake content was generated in the first place and getting it shut. Due to the nature and sensationalism of the generated content and also because its echoed by persons of influence with time this fake worldview has the potential to spill over in the real world with physical casualties, as we have seen in so many lynching cases. If not kept in check it could capture and take over the entire national discourse. We will reach a point where it will be very difficult to keep track of what is fact or fiction and the entire society would be radicalized into different opposing camps all based on lies.

Facebook & Indian Elections

What is more is that the Election Commission of India itself has partnered with Facebook for voter registration during election process. Dr.Nasim Zaidi, Chief Election Commissioner, Election Commission of India, said “I am pleased to announce that the Election Commission of India is going to launch a ‘Special Drive to enrol left out electors, with a particular focus on first time electors. This is a step towards fulfilment of the motto of ECI that ‘NO VOTER TO BE LEFT BEHIND’. As part of this campaign, Facebook will run a voter registration reminder in multiple Indian languages to all the Facebook users in India. I urge all eligible citizens to enrol and VOTE i.e. Recognize your Right and Perform your Duty. I am sure Facebook will strengthen Election Commission of India’s enrolment campaign and encourage future voters to participate in the Electoral Process and become responsible Citizens of India.”

All 17 American Intelligence agencies have raised serious concern about the impact of this fake news industry on their election process and their society. According to a study conducted by the Pew Research Center a majority of Americans (a whopping 88%) believe that completely made-up news has left Americans confused about even the basic facts. And we in India are heading towards a worst scenario than this. Why? Because unlike India, the US Government and Intelligence community has publicly addressed this issue and are working towards resolving this menace. Will Indian govt address such meddling by Facebook in India’s internal affairs?

Committees after committees are being setup, senate hearings are being convened to reach to the bottom of this and new Units are being created to effectively counter this threat to their society. While Facebook is being investigated for meddling in US Presidential elections not much focus has been given to how Facebook’s secret unit has influenced elections in India. In light of these revelations Facebook’s interference in India’s elections should be thoroughly investigated. Ofcourse in order to do so first the Govt should have to acknowledge the existence of this fake news industry in order to take action against it.

Along with Facebook, American Microchip Inc and Japanese Renesas contracted by Election Commission for fusing secret EVM code should also be investigated for interfering in India’s elections and all those who colluded with them. It will be a grave mistake to take this threat of foreign companies interfering in India’s elections lightly.

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Texas Cops Shoot and Kill 6-Year-Old While Shooting and Killing Woman They Were Chasing

A two-hour search for and chase of a woman accused of stealing a car from a man she knew ended in front of a trailer police say she was trying to break into. Sheriff’s deputies fired an undetermined number of times at her, hitting her as well as 6-year-old Kameron Prescott, who was in the trailer.

The woman was pronounced dead at the scene, while the boy died after being taken to a hospital.

“I can definitively tell you that myself and all the deputies involved, there’s not a single one us of that wouldn’t trade places with this child,” Bexar County Sheriff Javier Salazar told reporters late Thursday.

The Bexar County sheriff’s department is investigating the shooting by Bexar County sheriff’s deputies. Salazar said yesterday he hadn’t yet talked to the four deputies involved and doesn’t know why they shot.

Deputies claim that the woman had earlier pointed a gun at them at least twice—nogun was found on the scene or in a subsequent search. Police say the woman, who they have not identified, swam across a creek and ran through a wooded area before arriving at the trailer park where the police shooting happened.

Salazar noted his department permits deputies to use deadly force against anyone threatening them or others (police and eyewitnesses also say the woman threatened a number of people during her flight), but did not answer questions from reporters about how that policy might apply “if a home is in the line of fire,” as the San Antonio Express-News reported.

Awareness of your environment is the fourth of the “Four Rules of Gun Safety.”

As HunterEd.com puts it: “If you pull the trigger, you cannot take back the bullet! Everything and everyone in front of, near, and beyond your target is your responsibility. Make sure you have an adequate backstop and never shoot at a flat, hard surface or water.”

A GoFundMe was set up for Kameron’s family.

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Hedge Fund Behind Mystery “Bitcoin To $50,000” Bet Revealed

The crypto space was thrown into chaos today as the price of bitcoin and its peers plunged overnight, cementing the pioneering digital currency's worst week since December 2013, only to rebound dramatically into the close, wiping out virtually all losses. Early today, just as the rout was nearing its trough, we shared a story from the Wall Street Journal about a mystery trader who placed a $1 million bet that bitcoin will climb to $50,000 by December 28, 2018.

That trade was a call option purchased on the LedgerX platform, which received permission from the CFTC over the summer to launch the first swap execution facility for the clearing of bitcoin-linked derivatives, and began trading in the fall, before CME and CBOE launched their own bitcoin futures. As the WSJ detailed previously, if bitcoin is below $50,000 on Dec. 28, 2018, the options will expire worthless, and the $1 million will be lost. But if bitcoin rises above that level, the options give their owners the right to buy 275 bitcoins for $50,000 apiece—a transaction that would cost about $13.8 million.

Some more details on the trade from AQR's Aaron Brown:

… one or more people delivered 275 bitcoin (valued at $4.5 million at the time) to the LedgerX clearinghouse, and wrote one-year calls at a strike of $50,000 ($13.75 million in total) against them for a premium of $3,600 per coin ($990,000 total); that is, the buyer paid the seller $990,000 today, and has the right but not the obligation to buy 275 bitcoin for $13.75 million any time before December 28, 2018. These 275 bitcoin are held by the LedgerX clearinghouse and will be released on Dec. 28, 2018 to either the buyer (if the buyer exercises the option by paying $13.75 million) or the seller (if the buyer does not exercise).

 

These are real bitcoin, and there is no need for any sort of settlement auction, the call option buyer can exercise and receive the physical bitcoin.

Naturally, it was unclear who the buyer of the call was, just as it was unclear if the call was a standalone trade or part of a broader, multi-leg option strategy. And perhaps more importantly, was the identity of the seller.

On Friday afternoon, one part of the the mystery was solved, when the buyer of the $50,000 call was revealed as Blocktower Capital, a prominent crypto hedge fund, Business Insider reported.

BlockTower Capital is among the best known crypto hedge funds in a booming space that now includes over 175 such firms, according to fintech analytics firm Autonomous NEXT. BlockTower was founded by Ari Paul, formerly of trading firm Susquehanna, and Matthew Goetz, a former VP at Goldman Sachs.

Paul tweeted about the WSJ story on Thursday:

Paul followed up that tweet by saying: "One thing to understand with options: a deep out of the money call is not a bet that something *will* happen, it's a bet that something *might* happen. Risk a little to win a lot."

Just days after the trade was executed, Blocktower is nursing a not insiginificant amount of bruises, because as a result of today's sharp repricing lower in cryptos and the acute impact of gamma and vega on what is already the world's most volatilte instrument (excluding electricity) the MTM value of the call option declined substantially (although in all fairness should today's sharp rebound continue for a few more days, all the losses will be offset by the renewed upward momentum). Indeed, some like Dan Novaes, CEO of blockchain company Current Media said, "The holidays are a notorious time for crypto prices to drop — that has been the case over the past several years. After the holidays, I expect the prices to rebound."

Perhaps Novaes is right: many have suggested that today's drop was nothing more than some tax loss selling which quickly snowballed on Thursday night into a major momentum-reversal drop in the illiquid pre-Christmas market. And perhaps bitcoin will indeed trade well above $50,000 before December 28, 2018, resulting in a substantial payday for Blocktower Capital.

And while we know who the buyer was, what is more interesting here is the identity of the seller, as that may have been one of the original bitcoin "whale" billionaires, who – as Aaron Brown speculated yesterday – has found a way to cash out partially of their massive positions without moving the market. 

Keep in mind that the only cash that exchanged hands when the trade was done was $1 million, or rather $990,000, between the buyer of the call, and the seller. Here is Brown's explanation why this particular option trade could be far more important not for directional bet on the underlying, but to allow the mega holders of bitcoin to cash out.

I spoke to some large bitcoin holders, most of whom have held for years and never sold, and all expressed at least some interest in doing similar trades. It is a natural one, the "bitcoin billionaires" — the approximately 1,000 people who hold an estimated 40 percent of all bitcoin, or an average of around $350 million each — reducing their exposure in return for some cash today. In turn, financial investors get a secure, levered exposure to bitcoin that is not hostage to an unproven price-setting and without the expense of setting up a system to hold physical bitcoin. Bitcoin miners need cash for equipment and electricity bills (China this year cut off lending on bitcoin collateral) and early bitcoin adopters could stand to diversify their portfolios.

In addition to allowing whales to cash out in dribs and drabs, such selling of calls (or puts) could also have a dramatically stabilizing effect on the market:

One trade doesn't make a market, but if, say, 1 percent of all bitcoin were taken off the market and held as option collateral, and financial investors put up cash in one-year derivatives, that could do a lot to stabilize the market. That means both reducing price volatility and giving confidence that market prices represent true trading prices for institutional quantities of bitcoin. This, in turn, could make Cboe and CME cash-settled futures more attractive, and thereby represent a solid base for bitcoin ETFs.

Finally, this increased visibility in the bitcoin pipeline and clearance would boost institutional confidence and lead to increased holdings:

And once that happens, institutions are likely to accept custodianed ownership of physical bitcoin, broadening and deepening the ownership base. There are few entities with institutional access to bitcoin derivatives trading and expertise with trading and holding physical bitcoin. That has to change for bitcoin to join the global financial system.

The last point is spot on because the inverse is also true: if bitcoin billionaires stay out of the market, institutional investment in bitcoin will remain problematic. Individuals will be able to trade small amounts in a fragmented market of loosely regulated exchanges, but futures and ETFs will not be securely backed by physical bitcoin — their prices will be pushed around by betting sentiment of people who own no bitcoin.

Then again, as Brown concedes "that's not necessarily a bad thing. After all, bitcoin was invented as an alternative to financial markets, and it functioned quite nicely for years with no connection to Wall Street. That's one possible path for cryptocurrencies, a parallel financial system. But many people have set their hearts on linking the two systems, and we may have just seen the first trade to validate their dreams."

Needless to say, for Blocktower Capital's bullish bet to be successful, a linkage which enables institutional investors to offload some of the "whale" holdings while stabilizing the market, would be the far better, not to mention profitable outcome, one which could indeed result in Bitcoin rising to $50,000, and above, in 12 months time.

Incidentally, Ari Paul is not worried by today's selloff. In fact, as he tweeted earlier, "a major sell-off with prolonged consolidation at a lower level would be the healthiest thing for crypto.  <50 million people own any at all today.  I'd love to see broader ownership."

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