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The War On File Sharing is the New War On Drugs

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File sharing

“It’s called stealing or piracy, as if sharing a wealth of knowledge were the moral equivalent of plundering a ship and murdering its crew. But sharing isn’t immoral — it’s a moral imperative. Only those blinded by greed would refuse to let a friend make a copy.” — Aaron Swartz

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Federal authorities recently arrested the owner of the website Kickass Torrents, Artem Vaulin. KAT, as it was commonly known, had, following the end of the Pirate Bay and subsequent jailing of its owners in Sweden, become one of the world’s most visited websites and certainly the go-to place for torrents. As the reader is probably aware, there’s no good way to limit the content of a torrent – the torrent protocol is a dumb pipe, similar to other transfer protocols, and simply transfers data. In its case, it uses the power of peer-to-peer networking. Thus the primary use of KAT was “pirated” content, or bootleg copies of music, movies, games, and other forms of intellectual property.

The war on filesharing has gone on for virtually the entirety of the web’s history. In the early days of the Internet, it was commonplace to share code and other things. The spirit of the new generation was, indeed, sharing. As bandwidth increased throughout the 1990s, people moved from using BBS systems and the Kermit protocol to using more advanced ways of sharing, including plainly out on the web. The mid-to-late 1990s is when the FBI began taking it more seriously, at the behest of various industries, including the software industry. This 1997 article from the San Francisco Examiner outlines an important part of the situation:

Accompanied by corporate representatives to identify the software, FBI agents took the computer systems off-line and confiscated the equipment and other documents.

Did the reader catch that? Corporate representatives accompanied the FBI on raids. In all of this anti-piracy business, the FBI has essentially acted as the attack dog of private industry. In the same way that commercial drug manufacturers are a massive lobby in keeping marijuana, the most commonly prosecuted substance in the ongoing “War on Drugs,” intellectual property-based industries have a vested interest in ensuring that there are steep penalties for sharing files. However, it’s not only the actual owners of the content who would like copies of 20-year-old movies to remain at premium prices, but other vendors, including the likes of Netflix and Hulu, as well.

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The War on Drugs has been going on since the Nixon administration, and during its 40 years, the rate of drugs entering the country and the rate of drug use have done everything but decline. Some states have begun to rebel, moving toward treatment policies and in the case of marijuana, even legalization. The War on Drugs has nothing to do with morality or public health and everything to do with money. Police agencies nationwide make millions from asset seizure related to drug raids. The end of the drug war would equate to a severe budget gap for some agencies. In a similar way, without the FBI to do their bidding, intellectual property owners would have to find more inventive ways to attract money.

But that’s not really the problem, either. The real problem with both the War on Drugs and the War on Digital Piracy is that they are not winnable wars. You cannot dictate human behavior from on high, and as long as there are networked computers, there will be ways of sharing files. The torrent protocol is only the latest to become popular. This generation also saw Napster, which had a fundamental flaw of being centralized. These efforts by the government are massive wastes of money in the end, at least in accomplishing their goal. This article is not meant to suggest alternative approaches, but rather to underline the parallels of the two movements.

As soon as Kickass Torrents was taken offline, people worldwide began working on clone sites. And, more to the point, KAT was not the only torrent site left standing. IsoHunt is a long-standing provider of torrent files, and Usenet remains another option for those who do not want to buy all their content from the myriad of subscription and a la carte media providers. Information wants to be free, as Stewart Brand said, and by this he did not mean freedom, but free of charge. This argument is based on the idea that the cost of delivering information (or content) has severely dropped over the years, and so too should the cost.

Information wants to be expensive, at the same time, because it is valuable. Brand pointed out that this tension will never go away. In one browser tab a user can acquire a recently released movie for free, and in another tab he can choose to pay for it on Amazon.

The War on Digital Piracy is a war of attrition. Any perceived “gains” are immediately squashed by the proliferation of alternatives. As long as there is a demand for alternative sources of content, people will provide it. Were every torrent site to be taken off the clear net, the dark web could quickly provide alternatives. After all, these sites do not actually serve any content, just links to torrent files and magnet links. The torrent protocol itself does not actually require sites to list the files, and people could continue to distribute them in other ways. No matter what the government does. No matter what the industries do.

Prosecuting people for linking to content is a dangerous constitutional precedent. It’s like saying that giving directions to a criminal is a crime. The prosecution of Artem Vaulin, Fredrik Neij, and Peter Sunde (of the Pirate Bay) is criminal. If anything, the people actually distributing pirated content should be the target of the government. But this also raises the question: should the government be expending precious resources to go to war for industries that make millions and billions of dollars per year, or shouldn’t it be dedicated those resources to more important pursuits, such as anti-terrorism investigations?

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5 stars on average, based on 1 rated postsP. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link




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  1. NorBdelta

    August 2, 2016 at 6:35 pm

    Definitely akin to the war on drugs, the lengths some corporations are going is absurd.

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Opinion

Crypto: Why The Best Is Ahead

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Good news has been rare these days both for investors in stocks or cryptocurrencies. Stock investors face greater uncertainty.  Stock prices have been driven by 40 years of lower interest rates.  That game is over now and inflation is on the rise. That means higher rates. That’s bad for stock prices. 

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Over time cryptocurrencies will come to be viewed as anti-inflation tools and that could turn out to be very good news for all that have endured the volatility of recent times.

No Need to Be Negative

For investors in bitcoin, Ether and other cryptocurrencies, it is easy to sit back and proclaim that the worst is behind.  After all is bitcoin going to fall another 55% or Ether by a further 33%?  It is very unlikely for this to happen.  

As painful as the last two weeks have been, let’s take a look at what was lost.  The price of bitcoin is now back to its pre-hyperbolic move that began in late November of last year, but still 7,000%+ above February 2017 levels.

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For Ethereum the picture is even better.  The price of Ether is nearly three times last November levels.  It matches the 7000%+ year over year gain of bitcoin.  Where else can you suffer such losses and still end up this well off?

Sentiment Overrules Logic

Investors are looking for logic to plan their strategies.  Technical analyst lately have been mostly gloomy but that is to be expected.  Once a down trend begins, that remains the story that nearly takes an Act of Congress to change.  The redeeming value of technical analysis is how it identifies investor sentiment.  Right now the sentiment is not going the right way.

Back in December it was the Chinese government cracking down, next South Korea stepped in and now we learn that financial regulators in Japan will be conducting inspections of certain cryptocurrency exchanges due concerns about vulnerability to cyber attacks.

Hungry deficit ridden governments everywhere are looking to collect taxes from investor winnings on cryptocurrencies, the US Internal Revenue Service benefitting from the new tax law.  Proposed regulation of cryptocurrencies seem to be in the headlines on a regular basis.

Anytime a government interferes with business investor sentiment turns negative turns negative.  Logic may dictate the moves by Asia’s three biggest countries represent efforts to improve safety and security and that will ultimately attract more investors.  However, sentiment overrules logic most of the time.

Nothing New

What is happening at the moment is no different than situations faced by just about every world changing innovation from the automobile to the Internet and beyond.  In the case of cryptocurrencies there needs to be the recognition of value beyond pure speculation. Otherwise these are nothing more than just another financial instrument with a pretty face.

We may be stating the obvious, but these days the negative sentiment is originating from various government regulators with the stated intent of shielding its citizens from “the bubble”.   Right now the world is overlooking the key benefits of currencies like bitcoin, Ripple and Litecoin: the seamless transfer of money anywhere in the world 24/7.  Once something happens to return the focus to applications of this technology, logic will be restored to the planet.  

Readers will identify our bias toward Ether and there is a reason for it.  The very nature of their open source platform offers limitless applications the average investor can taste, touch and smell.  Yes there are all those stories about failed Initial Coin Offerings that used the Ethereum platform, but that is part of the development process.

Speed And Cost Become Key

Before mainstream adoption takes place, the twin issues of speed and cost must be solved. The current lethargic processing pace of fewer than 20 transactions per second is one thing but the idea of ultra low cost is a joke.  Last year witnessed the proliferation of thousands of use cases.  It inspired investors and sent prices of cryptocurrencies to record levels.  From here getting the details of the technology up to mass market applications is what should drive prices higher.  This is a lot less sexy but adds much greater value.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 20 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Are Most Cryptocurrencies Headed for Zero? Goldman Sachs Believes So

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Extreme volatility, high correlation and a lack of intrinsic value all spell trouble for the cryptocurrency market, according to Goldman Sachs. In a carefully worded research note on Wednesday, the Wall Street behemoth warned that most of the world’s 1,500+ cryptocurrencies were headed for zero.

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Grim Future for Most Coins

Investors should expect the vast majority of cryptocurrencies to fall to zero, with only a small handful dominating the market, Goldman analyst Steve Strongin said in a Feb. 5 report. Although Strongin didn’t speculate about a timeframe, he said massive price swings in the digital asset class are a clear sign the market is in a bubble.

“The high correlation between the different cryptocurrencies worries me,” the analyst said, according to Bloomberg. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

The cryptocurrency markets have experienced a chaotic selloff this week, with the total market cap falling some $550 billion from its peak.

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In the research note, Strongin added the following:

“Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors. At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”

Strongin’s firm has  expressed keen interest in cryptocurrencies. Goldman is expected to launch its own bitcoin trading desk as early as June, making it the first Wall Street bank to make markets in the highly controversial asset class.

Paradigm Shift

The views expressed by Goldman are in line with previous comments made by Vitalik Biturin, the founder of Ethereum. About four months ago, Buterin told a crowd at ETHWaterloo that 90% of initial coin offerings (ICOs) built on the ether protocol will fail. This paradigm, referred by Buterin as “Tokens 1.0,” could experience a cataclysmic end before the market transitions to higher quality projects. This era is referred to as “Tokens 2.0,” and could be here sooner than most realize.

Whereas Tokens 1.0 was characterized by hasty projects, bad ideas and even scams, the second generation of token sales will build off the previous era’s mistakes. Buterin said he believes this market will begin mobilizing as early as this year. That could be just in time for his new DAICO fundraising model, which combines the current ICO template with a Decentralized Autonomous Organization. DAOs rely on smart contracts to implement rules, a feature that many believe will be an integral part of future crowdraises.

Buterin’s outlook is clear: cryptocurrencies will need to evolve to remain feasible both as an investment asset and unit of transaction. It is the latter that presents the biggest challenge.

That being said, the era of Tokens 1.0 is still generating record revenues, with recent data showing $1.2 billion flowing into ICOs during the month of January.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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4.5 stars on average, based on 145 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Important Lessons From Recent Cryptocurrency Correction: Cornell Professor

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Emin Gün Sirer, a Cornell professor and an influential expert in the cryptocurrency sector, stated that investors should only invest in and hold cryptocurrencies which they believe will be used extensively in the future.

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Throughout this week, the cryptocurrency market has experienced one of its worst corrections in history. Most cryptocurrencies fell by more than 50 percent, while the price of bitcoin briefly dipped below $7,700. In December, the price of bitcoin surpassed $19,000 so from its all-time high, bitcoin experienced a 59 percent decline in value.

Today, on February 3, most major cryptocurrencies including bitcoin, Ethereum, bitcoin cash, and Cardano recovered. But, the damage has already been done and several investors in major markets like South Korea have went as far as to commit suicide after losing their funds from the recent correction.

The issue with most speculators and newcomers investing in the cryptocurrency market is their mindset to aim for short-term profits by trading cryptocurrencies they do not have strong knowledge about. Often, investors also obtain debt to invest in the market with hope to generate short-term profits.

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Sirer stated that daytrading cryptocurrencies and HODLing tokens for short-term profits are both “equally dumb.” As other experts including Andreas Antonopoulos noted many times in the past, investors should only invest an amount of money which represents their understanding of the technology behind the cryptocurrencies they intend to invest in. Sirer emphasized that investors should only hold cryptocurrencies that they believe will be used in the long run.

“Almost the entirety of all prices are based on speculation. It’s all those idiots who rushed in at the same time, who are rushing out at the same time. We have seen the problem, and it’s us. What matters now is what your reaction ought to be. You should only invest in and hold coins which you believe will be used, extensively, in the long run. If you bought coins on a whim, without an investment thesis, based on hype, well, they are pure speculation.”

Evidently, even with the recent drop, cryptocurrencies are massively overvalued. For instance, Dentacoin is valued at $466 million. How many dentists and members of the global dental community are actually using the Dentacoin blockchain network to settle payments or rate clinics? How many users are actually utilizing Tron’s content distribution network and is it enough to justify its $3 billion market cap?

At one point, Tron was worth $18 billion. Dentacoin was also valued at more than a billion dollars. The arrogance of investors and the choice of narrowminded traders aiming for short-term profits created short-term bubbles in cryptocurrencies that are simply not ready to earn multi-billion dollar market caps and millions of active users.

“This is a time to revisit your investment theses. If you cannot answer the question of “who would desperately want to acquire this coin in the future, and for what purpose,” then it’s worth re-thinking your position. At the end of the day, cryptoassets are just like every other asset. You need to have a firm investment thesis, and you should reevaluate it as more information becomes available,” Sirer added.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.5 stars on average, based on 3 rated postsJoseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.




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