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What is a Hacker? An Overview of Hacking History and the Evolution of the Term Hacker

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The term “hacking” has its roots in a time and place that had no major influence by personal computing. The ubiquitous PC and the Internet were still decades off when people began “hacking” at the Tech Model Railroad Club, in 1946. A “hack” would be an interesting innovation in the model trains the group played with. Such a fascination with trains and things can be seen still today in a less physical way, though the TMRC remains, in games like OpenTTD, which is a hacked extension of a game released commercially in the 1990s. The point is: to “hack” does not have to mean “to destroy.” In contrast, the spirit of the hacker is that of determination to achieve. Whatever the goal and whatever the obstacles, the hacker strives to achieve. One of the most famous hackers in history is Gary McKinnon, whose belief that the US government had evidence of alien life on earth was so strong it drove him to compromise several top secret systems within the US government.

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The term has garnered quite a bit of negativity over the decades, as mass media have labeled it to various famous miscreants, be they childish and somewhat benign or outright dangerous. News clips like the following illustrate the point:

For the purpose of clarity, the reader should note that in our age the term “hacking” relates strictly to computers, programming, and the like. Various bastardizations of the term, like “lifehack,” are often met with disdain by members of the security community. Hacking almost exclusively now refers to computer network security, although it is occasionally used to refer to programming with very strict goals in mind. One might say “I’ve been hacking on my Python project all weekend,” and merely mean they’ve been trying to achieve certain goals in their project.

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So, what is a hacker? A hacker is someone who will stop at nothing to achieve their goal, particularly in terms of computing. A hacker will learn programming languages in order to write scripts that can compromise an obstacle system. A hacker will stay awake for weeks on end trying different methods to make a given thing work. The spirit of the hacker is that of endless curiosity and spurious determination, or, as Richard Stallman once put it: “Hackers typically had little respect for the silly rules that administrators like to impose, so they looked for ways around.”

“Types” of Hackers

As humans, we like to classify things in little boxes that can be checked. When we see an automobile, we like to know it’s not just a sedan, but a red 2016 Chevy Impala. Thus, over the years, to distinguish the various types of hackers, both professional and amateur, a few terms have been settled upon.

The black hat hacker is perhaps the most infamous and well-known type of hacker. The black hat hacker can be a mercenary or government-sponsored hacker, or they can just be a maladjusted kid doing it for the laughs. The primary defining characteristic of a black hat hacker is their unwillingness to disclose security vulnerabilities to software vendors or system administrators. Instead, black hats often seek to profit from these, or in the case of particular missions from state agencies, seeks to establish regular access for the purpose of spying or other murky activity. The black hat is often what has come to encompass the meaning of the term “hacker” overall in the popular lexicon. When someone says “hacker” on television, they often mean a black hat hacker.

In direct contrast to black hat hackers, and perhaps most responsible for the persistence of these terms, are “white hat” hackers. These are individuals who do the same type of work as black hats, but seek to inform those who’d be victimized by black hats. Instead of selling exploits, white hats disclose them. Often, they are rewarded for doing so. A whole community is dedicated to this process, called HackerOne, where hackers can submit vulnerabilities and other bugs they’ve found in various commercial applications. Once their discoveries are vetted, they are rewarded with cash. The goal of such organizations is to make it profitable to “do the right thing.”

Lastly, you have the gray hat hackers. Gray hats are somewhere in between. They are not as motivated to “do the right thing” if, for instance, they don’t like the organization they’ve found to be vulnerable. They might engage in white hat and black hat activities during the same week. Some of the most famous hackers have been gray hats, notably the l0pht group, who developed l0pht crack and other software to help less-skilled people achieve their ends. One of their members coined the term in 1997 at the first Black Hat Conference. Contrary to its name, the Black Hat Conference mostly plays host to white hat hackers and professional computer security firms. It is not some gathering of super villains.

Motivations For Hacking

As in all things, the biggest motivator for hackers in the modern age is money. Hackers find and sell exploits to other hackers, to government agencies, and, as previously stated, even to the would-be victims of the exploits. A common compromise of systems in recent years has been the “cryptolocker,” also known as “ransomware,” which makes a computer’s filesystem inaccessible to the owner until they pay a ransom. However, other motivations also exist.

In the early days of networked computing, the simplest motivation was curiosity. What would happen if I did this, the hacker would ask, and then simply do it, regardless if it was against the rules. Government agencies like the NSA hack as part of their mission, which changes with the political atmosphere. Thanks to the hacker Edward Snowden, we’ve learned that they actively seek to weaken security in commercial communication protocols for the purpose of eavesdropping.

Speaking of politics, many hackers have had political motivations. Perhaps the most infamous hacking group of the past decade has been Anonymous, a group which has often hacked in the name of various social justice causes. One of the most high-profile hacking incidents in recent memory is the December, 2014 hack of Sony Pictures, a hack which was conducted by the so-called “Guardians of Peace,” who sought to force the company to not release “The Interview,” a film which made raucous fun of North Korean dictator Kim Jung-un. This hack was successful in scope, and the film was canceled in many theaters for security concerns. Instead, it was released directly via Google Play and other online distribution services.

Proper attribution of hackers can often be hard, as most competent hackers are well-versed in the art of remaining anonymous or a few steps ahead of those who would apprehend them. The group “Anonymous,” for instance, could be attributed with all the hacks ever conducted, since the group technically has no center or driving body. Actual claiming of hacks by Anonymous is only verifiable on the basis of reputable sources, such as Twitter handles that are known to have connections inside the actual group. In the case of the Sony Pictures hack, the North Korean government was blamed despite there being evidence that it could have been an inside job.

So, What Is A Hacker?

Like most words in English, “hacker” means different things to different people. The common citizen probably perceives the word with either fear or admiration. In a sense, the hacker is the one responsible for the continued improvement of computer security the world over. He or she is the reason that large corporations you trust with your data have entire departments working to ensure that your data is secured, and often enough, at his day job, also the one finding ways to ensure as much.

The hacker disregards petty rules in favor of actual results. The World Wide Web presented untold intellectual freedom and the hacker is perhaps the last line of defense between power-hungry despots and the elimination of that freedom. Hackers have been responsible for some of the most important involuntary disclosures by the US government in recent years, including the revelation of war crimes and spying on citizens. Without such bold people in the world, as we increasingly rely on technology for nearly every part of human life, liberty might all but cease to exist in practice, with every facet of life having come easily under the control of powerful lunatics.

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1 Comment

1 Comment

  1. Dawood Khan

    December 15, 2015 at 8:17 pm

    “In computer security, a hacker is someone who focuses on security mechanisms of computer and network systems. That is, the media portrays the ‘hacker’ as a villain. Nevertheless, parts of the subculture see their aim in correcting security problems and use the word in a positive sense. White hat is the name given to ethical computer hackers, who utilize hacking in a helpful way. White hats are becoming a necessary part of the information security field.”

    Taken from here.

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Trading 101

Trading 101: Moving Averages and Moving Average Strategies

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What are Moving Averages?

Moving Averages are among the most popular trend indicators in Technical Analysis. They provide a simple, yet powerful visualization of the ongoing trends in an asset. They are used for a wide variety of reasons, primarily for trend following and reversal strategies.

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Simply put moving averages are connected points calculated for every day (or whatever the timeframe is). The calculation itself is simple; you take a given number of previous days and calculate their average. Of course, you don’t have to do the calculations yourself. All basic charting software and trading platforms do the math for you and plot the moving average (or up to dozens of averages for that matter) on the chart of the asset.

How to Interpret Moving Averages?

(more…)

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Commodities

How have various asset classes performed during previous wars

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North Korea, the dictator ruled nation has been threatening the US and its allies with a possible missile attack, which may also have a nuclear warhead on it. The experts are divided on the actual capability of North Korea to undertake the attacks, however, its leader, Kim Jong-un leaves no opportunity to provoke the US and its allies.

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Key points

  1. Stocks perform better than average when the conflict starts
  2. Gold rallies before the start of the conflict
  3. Bonds have underperformed stocks during previous wars
  4. The US dollar has fallen on few occasions during a conflict
  5. The current war, if it starts, can severely impact electronic goods
  6. The US national debt is likely to balloon if US involves itself in South Korea’s reconstruction after the war ends

Though North Korea’s military prowess is nothing great to write home about, it can still cause extensive damage to millions of civilian lives and the economy of its neighbor South Korea, to some extent Japan and the US territory of Guam. However, in this article, we shall restrict ourselves to the impact of the war on various asset classes and the world economy. We shall use the historical evidence to arrive at our conclusion.

How does the US stock market perform during wars?

The US has fought several wars since 1960 as shown above. While a few ended quickly, others have been a long-drawn affair. Notwithstanding, Barron’s has outlined the effect of the following seven major hostilities on the Dow Jones Industrial Average since early 1980s.

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Serial No War Year
01 The US invasion of Grenada 1983
02 The US invasion of Panama 1989
03 The first Gulf War 1991
04 The US bombing of Kosovo 1999
05 The US War of Afghanistan 2001
06 The second Gulf War 2003
07 The US bombing of Libya 2011

Source: Barron’s

The markets hate uncertainty; a proof of this is the average 0.6% drop in the Dow a month prior to the start of the conflict.

However, once the conflict commenced, the Dow quickly turned direction, rising 4% in the first month. The rally did not stop there. Over the next three months, the Dow rose an average 6.7%, and the gains swelled to 7.2% after six months of the start of the conflict.

Therefore, if history repeats itself, a war between the US and North Korea – if it were to happen – will not start the next bear market.

How does gold perform during wars?

Gold is considered as a safe haven during times of uncertainty. Therefore, the yellow metal has rallied from about $1260/toz to about $1360/toz levels, as tensions escalated between North Korea and the US.

But, will gold continue its rally if the war starts?

Economists at Capital Economics have analyzed gold’s performance since 1985, during military conflicts, acts of terror and political tension.

They established that “over the past forty odd years, the price of gold has on average risen by 4.1% in the six months prior to a conflict turning into a full-blown war. However, it barely moved in the months following the event. This makes sense as gold thrives in periods of elevated uncertainty and the start of an armed conflict partly erases that.”

Performance of long-term bonds during wars

Though bonds are also considered as a safe haven investment, their performance has lagged their historical average during wars, according to a study by the CFA Institute. The possible reasons are an increase in inflation during war times and the second is the higher borrowing by the government to fund the war. Due to these two, bond prices fall. Therefore, selling out of stocks and buying bonds fearing a conflict might not prove to be a good strategy. The only aberration was during the gulf war when bonds beat stocks, albeit marginally.

How does the war affect the US dollar?

The evidence of the past three decades shows that the US dollar weakens during war, according to Kathy Lien, Managing Director of FX Strategy for BK Asset Management. The US dollar fell 5% when the Libyan war started and fell 9% during the first three months of the second gulf war. The dollar was weak even during the first gulf war.

However, this time, the situation is more complex and a lot of currency movements will depend on whether China actively involves itself in the war or remains neutral. The Australian dollar, the New Zealand dollar, and the Japanese Yen will see large moves if China supports North Korea directly during the war, else the movement in the currencies is likely to be comparatively subdued.

“As the tensions grow the dollar will suffer and the actual announcement of war could take USD/JPY to 105 but if it’s a swift victory the pair would also recover quickly,” said Kathy.

Though historical evidence gives us some idea about the possibilities, every new war is different because it involves different nations and affects different asset classes.

What sectors will be affected if a war with North Korea takes place?

Commodities

North Korea, in itself, can’t impact commodity prices. However, it is surrounded by nations that are major consumers of commodities. China is one of the major consumers of commodities, however, it is unlikely that the war will impact China’s consumption materially.

South Korea is a major importer of coal and exporter of steel. Both these commodities will be majorly impacted because South Korea will be severely affected if a war breaks out. Similarly, liquified natural gas prices will be affected, as Japan is its largest importer in the world.

The seaborne trade will also be severely affected because China, South Korea, and Japan receive about one-third of the global seaborne crude supplies. Similarly, 84% of the world’s iron ore and 47% of the metallurgical coal reaches the shores of these three nations through the seaborne route.

The agricultural commodities will also be affected because China is a major importer of rice and soybeans while Japan is of corn.

Economic costs of the war

War has both a direct and an indirect impact on the economy. South Korea is a hub for manufacturing liquid crystal displays, semiconductors, and cars. A war will impact these activities, leading to a shortage across the globe. The alternative suppliers can’t bridge the gap in such a short span of time.  Therefore, prices of various electronic products are likely to rise significantly, which will impact the developed economies, including the US.

“U.S. spending on electronic items, including smart phones, cameras, tablets and computers accounts for roughly 1 percent of the consumer price inflation basket. If a war in Korea caused prices of these items to double, it would add 1 percentage point to U.S. inflation,” a report by the research consultancy Capital Economics warned, reports CNBC.

If inflation rises sharply, the Central Banks will be forced to raise interest rates, jeopardizing the fledgling global economic recovery.

Additionally, if South Korea’s gross domestic product (GDP) falls by about 50% due to war, it will reduce the global GDP by 1 percentage point, according to the report.

Once the war ends, South Korea will need huge capital to rebuild its infrastructure. If the US involves itself and ends up spending the same amount as it did in Iraq and Afghanistan, then the federal debt will reach 105% of GDP, the economists at Capital Economics warned.

Conclusion

Though historical evidence suggests that the equity market returns are better than average during a war, the situation might be different this time because of the nations involved. Any jolt to the weak economic recovery across the globe will dent the confidence of the investors. Therefore, we don’t expect the stock markets to rise substantially during the war.

Gold’s performance is somewhat neutral and it can be used to protect the value of the portfolio. Therefore, selling some overvalued stocks and buying gold might be a good strategy if a war seems imminent.

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Entrepreneurship

Legally Slash Your Taxes with Flag Theory – Part 1

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Legally Slash Your Taxes with Flag Theory – Part 1

There are lots of different ways to earn money. You can get a job and set aside part of your paycheck every month, for example 33% as we advocate here on Hacked. You can also set up your own business and create something of lasting value for yourself. But what if your country doesn’t respect your right to keep your hard-earned money? With the power of freely available information online these days, you can legally avoid these high taxes and even grow your money through the use of Flag Theory.

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What is Flag Theory?

Flag Theory is a concept that allows open-minded and forward-thinking entrepreneurs to increase their income all while keeping their assets safe from unreasonable taxation, declining currencies, and inflation. It is essentially taking your business and establishing it in a place where you are “treated best”.

A ‘flag’ is a place in the world where you have setup a part of your life, and the goal of this is to diversify your affairs, both personal and financial, so that not one country has control over you or your money, thus keeping them safe for your own personal use.

An advantage of this is that if you put parts of your wealth in different locations around the world, you will not be tied down to one government who can control how you spend your money. Instead, as a foreigner in the country your money is held, you will not be liable to pay their taxes and other fees, allowing you to keep your savings intact. This will give you the freedom to choose what you want to do with your hard-earned money.

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The concept is indeed not a new one, but with power of the internet, cheap travel, and globalization, it has become increasingly relevant for ordinary people with small businesses who want to maximize their freedom. In this two-part series, we will explain how you can take advantage of this concept previously known only by the millionaires and billionaires of society.

History of Flag Theory

The term ‘Flag Theory’ was originally coined by the famous American investor Harry Schultz. His book Tax Exile was controversial when it first came out as it advised people on how to legally skirt around the tax laws implemented by the US Government.

The original theory started out with three flags, and the idea got picked up and popularized by an author hiding behind the pseudonym William G. Hill through a book series published during the 1980s and 90s. These books were sold through classified advertising through The Times in order to avoid any backlash.

Later in the 80s, Hill together with Schultz published a book called: PT: A Coherent Plan for a Stress Free, Healthy and Prosperous Life without Government Interference, Taxes or Coercion. This book had seven editions throughout its publication.

The duo was not done, and in 1993 published another book titled: PT2: The Practice: Freedom and Privacy Tactics: A Reference Handbook. What these two books had in common was that they were aiming to help people plan their finances a lot better than what was perceived to be ‘normal’ at the time.

Why should you use Flag Theory?

Before you decide that Flag Theory is not for you, think about this; with Flag Theory, you can achieve goals you have never thought possible. This can include legally decreasing or even eliminating the taxes you pay, allow you to move freely around the world, reclaiming your privacy and preserve and even generate more wealth from your business.

Original Three Flags

In the original theory, there were three flags that were meant to help people accomplish these objectives:

  • Flag 1: Second passport. Find a country that does not tax income earned outside of their borders and establish your citizenship there.
  • Flag 2: A safe and secure place for key assets. Establish your business in a stable, low or no tax country to help you maximize your profits.
  • Flag 3: A legal address in a tax haven. Property in said country.

Additional flags

Later on, WG Hill added an additional two flags and came up with the term “Flag Theory”. The additional flags were:

  • Flag 4: Asset Haven. This is where you keep your money. Ideally a place where there is relatively low to no taxes on capital gains.
  • Flag 5: Playgrounds. When you have money, you are free to spend it however and on whatever you like. Playgrounds can refer to a place or country that will allow you to spend your money how you see fit, without having to pay ridiculously high consumption taxes like sales tax or VAT.

In the next part of this series, we will cover the modern concept of flag theory and how young entrepreneurs from all over the world right now are taking advantage of this to grow and protect their money.

 Featured image from Shutterstock

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