Delving Into Bitcoins And The Deep Web

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Several days ago, the USD/BTC exchange rate soared to dizzying heights, reaching almost $250 for one unit of the virtual, decentralized currency. Then it crashed to $55. But since then, it has gone back up to $100.

I’d heard of them before, but I had assumed it was some sort of pyramid, and that the train had already passed. Pyramids are only good for those at the top. It’s the creators of currencies who get rich, not their users. In short, I was skeptical.

Still, as someone on a perpetual lookout for lazy and socially unproductive ways of making money, I knew I had to check it out.

And I discovered some rather interesting things.

First, Bitcoins can’t be just created out of thin air. Just like gold or other minerals, they have to be “mined” by solving complex cryptographic puzzles. In practice, some users pool their computing power for this task. There is a theoretical limit to the total amount of Bitcoins that can enter circulation: 21 million. So you can’t inflate it like you can with any fiat currency.

Second, they offer real advantages over conventional currencies. There are no banking or transfer charges, because you are your own bank. Your Bitcoins are held in an encrypted file on your hard drive, and can easily be transferred between your own accounts, or “wallets,” and other accounts. These transactions can be completely anonymous, because your wallet isn’t linked to your “true name” (paging Vernor Vinge).

This anonymity means that you can, in relative ease and safety, avail yourself of online black markets selling all kinds of cool shit of dubious legality.

For instance, on April 15th 2011 – since known as “Black Friday” in certain circles – the DoJ flunky Preet Bharara shut down the three biggest online poker companies operating in the US. In the ensuing panic, dozens of others left of their own accord, voluntarily restricting access to US players to avoid any legal ramifications. But a few continue to operate here. Perhaps the most interesting case is that of Seals with Clubs, a site where you gamble with Bitcoins. This is an example of an innovative and dynamic enterprise that has bypassed real life problems to create a product that people enjoy and that is likely to continue to grow, especially if governments start taking a harder line against online poker. (Incidentally, the games at Seals seem to be very soft, even at high stakes – or at least that is the impression I got from observing them for 15 minutes or so. Definitely something to look into if you get some portion of your income from poker).

But this is just the tip of the iceberg.

Investigating Bitcoins led me, of course, to the “deep web,” the Silk Road, and even weirder places. I will retrace the journey, should you wish to undertake it yourself.

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Book Review: Matt Forney – Confessions of an Online Hustler

Confessions of an Online Hustler by Matt Forney, published in 2013. See the Amazon version of this review. Rating: 4/5.

confessions-of-an-online-hustler-matt-forneyLet’s get one thing straight right off the bat: This book isn’t for the casual reader. Despite the title, it’s not a “life interest” story with a morass of prurient and scandalous details, nor is it a deep social or philosophical commentary. It is very specifically written for those who want to grind a living from online writing and punditry (especially those who write on controversial subjects like HBD and feminism, as does Matt Forney). If that doesn’t describe you, I can’t in good conscience recommend you buy this book. On the other hand, if you enjoy writing and wish to make a living as an iconoclastic blogger, then this book will definitely add much value and save you a lot of trouble.

Much of the book is taken up with the technical details of setting up a WordPress blog and publicizing it. As someone who has been blogging for 5 years and counting, I can testify that this book has an accurate and succinct summary of all the most important things you need to bear in mind. You can find the same information for free elsewhere, but the problem is that the Internet has a low signal to noise ratio – it will take time, and may well lead you down dead ends. Why not fork up the equivalent of an hour’s worth of a minimum wage job and spend a single evening’s reading time to avoid going through all that?

But at least to me the most interesting and original part was Matt’s (well, not entirely his, but he refined it) concept of “tiered blogging.” I have come to much the same conclusions on my own, if via annoying and costly errors, but it was great to see it so lucidly formulated and systematized. Here’s the lowdown. A Tier-3 blog is an everything-that-interests-me kind of blog, where you post whatever the fuck you feel like. The problem is that unless you develop a cult of personality, like Tucker Max, then you’re not going to get massive amounts of traffic (or money) through that alone. But you will notice that some posts of yours are going to get a much better response than others. Say, to take my own example, while most readers couldn’t care less for my ramblings on Human Biodiversty and dog pictures at AKarlin, a great many of them are interested in reading my ramblings on Russia. So I create a far more narrowly specialized Tier-2 blog like Da Russophile that is specifically about Russia just for them. This audience is much more homogeneous than my AKarlin audience – they, at least, are all interested in Russia at a minimum, whereas the AKarlin folks may be interested in HBD, dog pictures, professionally trolling me, and any combination thereof.

Once you get your Tier-2 hustle going, you can start thinking of making money. But it’s not as simple as putting up a ton of ads and retiring with your laptop to the Caribbean; unless you manage to become a “superstar” blogger, it is extremely unlikely that you will ever make any significant money from running ads. It’s virtually impossible if you are an original thinker and would rather cut off your hands than engage in the vacuous vapidity that passes for mainstream commentary. Getting money through donations and affiliate marketing can be more profitable, but they will (realistically) only get you a modest secondary income – and an unstable one at that. Selling information products is where the real game is at: DVD’s, software, music, and, of course, books. This is Tier-1, the “summit of hustle mountain.” Almost every “professional” pundit does that: Liberals like Glenn Greenwald and conservatives like Steve Sailer, players like Roosh Vorek and “online hustlers” like Matt Forney himself. And for that matter I too will soon be joining their ranks with my upcoming book The Dark Lord of the Kremlin about the Western media’s war against Putin’s Russia.

But at this point, I have to make my own confession. I lied to you back there. In reality, I got the whole “tiered blogging” thing ass backwards. I started out writing at Da Russophile, but did not have the discipline to keep it confined to Russia period, and started mixing it up with unrelated things like peak oil and my shifting political ideologies. That drove away a lot of people. Only gradually over several years did I realize the vital importance of compartmentalizing my interests – which can be fickle as well as controversial – away from “hustles” with dedicated but easily alienated audiences. To illustrate the concept, say my Da Russophile audience consists of 100 liberals, 100 conservatives, and 100 people who care nothing for anything not Russia related. Now suppose that for every post about Russia there I were to also write a post defending gun rights and a post on global warming. I would alienate both the liberals and the conservatives, bore the hardcore Russia watchers, and create three times the work for myself to boot. It’s raving lunacy!

But unfortunately, that’s only obvious in retrospect. I could have saved myself a lot of time and disillusioned readers had I practiced “tiered blogging” from the very start.

This does not mean I agree with everything here. I think Forney’s attitude to regular blogging is too strict and disciplinarian, and may well be part of the reason that writing a new blog post now brings him about as “as much joy as a crack whore sucking off another dirtbag behind the club dumpster.” While there’s no disputing that discipline in blogging is a good thing, is it really worth it if it sucks all the joy and passion from what should really be a hobby? If that’s how you look at it, then how is it any different from your bog-standard, soul-crushing 9-5 job then?

I appreciate Forney’s nods to the Cracked school of writing that intersperses bouts of flippant levity in between paragraphs of actual information. This makes it much more readable than your standard, dry as a nun’s nasty self-help book. (See what I did there?). For all that, perhaps the reader could have done with a couple less allusions to pasty-faced virgins and homosexual orgies, Matt.

The one very substantial issue I disagree with him is on optimal book pricing, especially as applied to e-books. He claims that $10 is an entirely normal price for a Kindle book, and that charging less can even hurt your total sales because customers have learned to associate low prices with poor quality. A nice and plausible enough theory, with only one problem: Actual data doesn’t support it. The “sweet spot” for Kindle books in terms of maximizing revenue has been convincingly demonstrated to be $3-$4 (with a 40% markup if said book is non-fiction).

Self-improvement is a roadmap, not a guided tour. There can be no guarantees of success – as Matt himself, unlike the vast majority of self-help gurus, is honest enough to admit. Nonetheless, it is safe to say that reading this book will appreciably improve your chances of success. And considering that a hell of a lot of money can depend on this – maybe even a new career – this book way more than pays for itself in terms of the additional positive expected value it generates for you. If you wish to make serious money through blogging – well, through writing books and propagandizing them on your blog – then you could do a lot worse than getting hold of Matt Forney’s literary debut and spending a couple of hours digesting the hard-won wisdom in its 120 pages.

At the very least, as Matt himself might say, it would be “healthier than some of the other things people do in their spare time, like going to furry conventions.”

A Gambler’s Odyssey: The Beginning

Many people dream of breaking free of the 9-5 rat race, e.g. by acquiring an income stream – or a “muse,” as Tim Ferriss calls it – that is independent of bosses, location, and schedules. For most it remains just a dream. But for some it comes from creating an Internet business, a profitable patent, or a good play on the financial markets. A few realize it through professional gambling.

Of course, to do this sustainably you need to maintain a positive rate of expected winnings, which is impossible with most casino games. For instance, even under optimal play, the house will always a retain a wafer-thin advantage in blackjack (unless you count cards, but casinos have caught on to that nowadays). The biggest exception is poker. Though luck is very significant for the first few hundreds of hands, the effects of skill begin to predominate after c.15,000 hands in Texas Holdem No-Limit.

My experience of poker, until recently, came from the odd home game and the one or two times I bought in at a casino table. I was pretty crap at it. I limped in with hands like K7 offsuit and went all-in chasing straight draws. But a few months ago, one of my net buddies pointed me to a thread in a forum he used to frequent, in which a Las Vegas hustler recounts how he started playing online poker and ended up making $100/hour by the end of the month. Then soon after I came across Tim Ferriss’ concept of the 4 hour workweek, and exploiting geoarbitrage – the art of earning money in high-income countries and spending it in cheap, low-income ones where one can live like a king on a US minimum wage. I added two and two, realizing that online poker has potential for a great synthesis of these principles; if you earn $200 in a day playing online poker, then you could spend the rest of the week lolling on the Thai beach in style and comfort. All you need are skills and a reliable Internet connection. I had all the Internet I wanted, but acquiring the poker skills was going to take a lot more work.

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Poker And Capitalism

waterloo“[Poker] exemplifies the worst aspects of capitalism that have made [the United States] so great.” Just consider the array of similarities:

1. Though there are rules and etiquette loosely associated with it, otherwise everything goes: in other words, its fundamental nature is profoundly amoral. (This is contrary to the ideologues who claim that capitalism is either A) “moral” / God-sanctioned / Rand-sanctioned / etc or B) “immoral” / “imperialist” / etc; newsflash, it’s NEITHER).

2. Players governed by emotions that cloud out calculation lose out in the long run. Blocking out emotions is harder than it sounds, because as in real economies, even able and rational poker players are sometimes overcome by the “animal spirits” of the moment.

3. It is important to maintain a good reputation: for instance, if you become known for bluffing too much (or not bluffing at all), you are going to get called out on it and lose money. Under advanced capitalism every major corporation maintains a PR department.

4. The majority of people in many capitalist societies such as the US believe that they are good enough to get well ahead, whereas in practice that is rarely the case (e.g. median household incomes have been more or less stagnant since 1973). Likewise in poker, most players believe they’re really good at it – ask around and you’ll find that 75%+ of people who play poker say they win on average, despite the mathematical impossibility – but in real life, only <10% end up corralling most of the gains.

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