Author: satoshistoolbox

The Irishman; thuggery as seen through a Bitcoin lens.

Rather than providing access to the cash in one's pocket wallet, a bullet to the head is ineffective against a brain-wallet.
Rather than providing access to the cash in one’s pocket wallet, a bullet to the head is ineffective against a brain-wallet.

It is now possible to mitigate the risks of thuggery by viewing capital assets through a Bitcoin lens. With virtual convertible currencies, especially Bitcoin when proper key management protocols are followed, physical force becomes uneconomical when capital cannot be lifted off one’s corpse as “loot” becoming part of the Gangster’s “booty”. Brain-wallets become a defense against thieves putting a bullet in your brain, mitigating the risk of physical attack. Creating a unique situation where brains beat brawn.

When viewed through a Bitcoin lens, one quickly sees that obscurity of identity and location has become the most effective defense of our data. This is not a great revelation in itself, the revolution is in the mobility, liquidity, and unconfiscatability of virtual assets like Bitcoin, IF pseudo-anonymity has been maintained. That secrecy is a survival mechanism has been demonstrated by the truly powerful who, for this very reason, historically protect their anonymity at all costs. As those wielding power behind every throne well know: PRIVACY IS SELF-DEFENSE!

The reason for this is based on a principle of Tai Chi Masters; a bullet can’t hurt a cloud, the best way to avoid a bullet is to avoid having the barrel of the gun pointed at you, and if it is directed your way then all it can target are countless droplets of water, (i.e. a cloud cluster of wallets)! This tactic is becoming even more feasible through the Lightning network, with its 2nd layer onion routing of payments that record transactions off the main chain of block confirmations. Once the closing of Lightning channels is obscured when the Schnorr signatures and Taproot upgrades are made to Bitcoin’s code, then these protocol changes will enabling those signatures to look like any other block transaction. Making even the fact that Lightning protocols have been used undetectable. Further transaction privacy is enabled when both the public and private “channeling” of capital is NOT publicly recorded on the transparent public ledger UNTIL the channel is closed. This brings with it decreased transaction costs and time delays, along with the added protection against chain analysis de-anonymizing Bitcoin addresses.

Lightning channels can almost be thought of as “storm clouds of capital” that have been building up an electrostatic charge. One that will issue a bolt of Lightning when the “open circuit is closed”, transferring the obscured potential energy of the cloud to the transparent financial waters of the Bitcoin ledger.

Transactional anonymity and financial privacy have been recognized as the fountainheads of freedom long before our modern digital world began eroding personal privacy through its ever-present surveillance infrastructures.

It was the personally identifiable information of Hoffa’s associates that made him a security sinkhole to those with power. Those hidden figures, still not known to this day, removed Hoffa from the playing field. As those with power were defending their power, which would’ve diminished greatly if their identities were brought into the limelight, then and likely now too. It was because he knew who the ultimate beneficial owners were, (those operating behind the scenes through multiple protective shell entities), that he became a threat to them that had to be eliminated, because “it is what it is…

What one know can be more important than Who one is, or What one has!

This euphemism, “it is what it is“, was used by the characters in The Irishman as a means of expressing resignation to fundamental realities; those with great power will exercise that power (at any cost) in order to protect their power. Any threat that risks exposure of the identity of those with power becomes the greatest possible danger to that power. True power is implemented without even exposing that one is exercising it. This principle is applied by Banksters, Gangsters, Corporations, and Politicians alike; those power brokers that trade in data, in recognition of the fact that knowledge is more powerful than money. For those in control of the printing presses, preservation of power matters more than capital created out of thin air as credit…

Viewing the risk of thuggery through a Bitcoin lens fixes this. We discover that the greater potential force of any majority (whether enforced by a Thug with a gun, badge, policy, or a statute), is ineffective against an unidentifiable adversary using a non-corporeal asset.

The economics of violence have changed. The return on the investment in physical force is no longer viable.

Trace Mayer

With Bitcoin there is

  • no target to place in the sights of a gun,
  • no one to put the cuffs on, or
  • to summon into court,
  • no seizable asset as a reward for doing so, and
  • no unlimited supply of credit issued by unpredictable centralized decree, with nothing but a promise backing it,
  • a fixed and predictable supply of BTC, backed by electricity and computing power spent on proof of work ,
  • controlled in issuance by incorruptible code, rather than corruptible and very fallible humans.

This combination of factors is changing the way humans are now able to govern themselves. This asteroid of disruptive financial technology is easily observable when viewed through a Bitcoin lens. It is already impacting international financial waters by making thuggery less effective than ingenuity. When it comes to protecting virtual currencies, brains matter more than brawn. The resulting tidal wave of monetary change has not reached the commercial shores of main street and Wall street operators, yet it is coming and there is no stopping this idea whose time has come. The Nation-State monopolies on money have been broken, the free open-source nature of Bitcoin makes it a genie that cannot be put back into the bottle. The honey badger of money will only become bigger, stronger and more fierce if they try.

Handling” a honey badger is by itself a dangerous enough proposition, much like swimming with sharks. But then, we must also add in the unpredictable market swings and the unforgiving nature crypto seas. Considering as well, the inevitable waves of price volatility inherent in a relatively small pool of capital, AND the many bad actors drawn to take advantage of a trustless, unregulated, and unsupervised realm. User error and market manipulation, as well as ever-present thieves, frauds, and government regulators are all very real threats to our virtual assets.

Understandably many will prefer to outsource these risks. Others will prefer to trust only themselves to safely protect their digital data. Doing so will require the acquisition of not only the proper tools (crypto wallet vessels, trading weaponry, and cyber security armory), but also the knowledge and skill required to properly use them. Consideration of all these concerns has led us to curate a collection of 15 tools and 3 subscription services into a Bitcoin Business Toolkit; our contribution towards helping standardize digital defensive strategies, tactics, and tools. Hardening our operational security against all forms of thuggery (physical, contractual, and virtual), by viewing asset protection through the lens of Bitcoin.

This is why we’ve created and recommend this toolkit;

  • to allow us to add a layer of financial identity protection for you when making the purchase through us acting as your proxy buyer’s agent
  • providing ourselves some camouflage protection from the herd regarding our own purchases, despite publicly recommending their use.

We’ve curated this collection to suggest very specific categories of concern, and the tools to address them, that any and every commercial Bitcoin endeavor may want to consider for their own toolbox. While simultaneously helping all these hardware and service providers to stay alive and grow their businesses.

How to confidently operate a Bitcoin business…

surfing with sharks
The waters of the crypto seas are cold and unforgiving, with many predators just waiting for an opening that would allow them to feast on your virtual assets. Failure could be catastrophic. Proper skills, tools, and balance are required to survive.

Wealth stored in tangible, yet non-physical, format enables personal sovereignty over that wealth. Due to the new reality that greater strength does not overcome greater intelligence, operating a Bitcoin business requires the business owner to work smarter, not harder.

This was not the case until Bitcoin began providing monetary choice to those willing to assume personal responsibility for their asset’s custody, clearance, compliance, and security. Doing so requires the proper tools to manage these concerns. Safely operating these tools requires knowledge of how each one works and the function it fulfills. Understanding how the pieces of the puzzle fit together is necessary to create a private Bitcoin banking arrangement and for many this will be their greatest challenge.

The highest level of play in the cryptocurrency “money game” is that of an owner of a business operating on a Bitcoin standard. To help foster understanding of how pieces of this jigsaw puzzle fit together I’ll describe a snapshot of one possible arrangement. Created to help aspiring Bitcoin bankers see a bigger picture enabling them to craft personalized solutions for themselves. I expect that many of the creators of these pieces of the puzzle have themselves yet to see the possible use-case-scenarios of their own offerings.

One way to strategically use current Bitcoin banking tools to diversify risk

Imagine if you will, that you’ve a successful online business and you’ve begun using BTCPay server as a self-hosted payment processor that eliminates all 3rd party fees. Your wallets are filling up with BTC, and it’s time to diversify the holdings into multiple “vaults”.

It’s now Friday, payday for your employees, and allowance day for your kids. You’ve issued your family tools for managing their Bitcoin in three different forms, designed for short, medium, and long term holding;

–an Opendime USB “bearer stick” as a form of 5-yr crypto-bond, not to be touched until 2025.

–a ColdCard wallet air-gapped SD card reader mimicking the appearance of a simple calculator as a form of savings account, to only be used for large purchases and to receive overflows from the “crypto checking” account.

–and a Tangem reloadable “crypto smart-note” NFC card for managing daily expenses, whether personal, business, or travel expenses.

On a weekly basis, from a Samourai wallet on a Librem 5 privacy-phone, send some BTC to the kids’, wife’s, and employees’ Tangem cards. Also, issue these Tandem smart-notes to your employees as a means of managing payroll and to your family for their “petty cash allowances”. These crypto smart notes are useful for business travel to allocate funds towards transportation, food, and lodging expenses and create a fully transparent record for accounting purposes. Another application of the Tandem cards is to issue them to the business managers for funding weekly operational expenses for the business, as well as to the employees for dispensing their weekly salaries.

It is also now possible to create and program your own NFC cards to access a Lightning Network paylink that instantly and at almost zero cost loads funds into the chosen Lightning Wallet. a few to consider are the Blue wallet, Phoenix wallet, and the Bitcoin Lightning Wallet. I’ve successfully reprogrammed other NFC cards from other companies, making these pre-paid lighting cards obscured by their previously branded use case. ONLY if a phone has the chosen Lightning Wallet App installed will the device read the card at all. At the moment though, using this paylink service does require trusting a 3rd party, and the Lightning Network is not completely trusted as secure, #reckless.

Not your node, not your confirmation…

Confident clearance and settlement of a Bitcoin transaction requires not only knowing how and where to determine your trading price, it requires confirming the transaction has been recorded on the blockchain for yourself. Trusting block confirmations to the wallets and blockchain readers does not provide the same level and security that maintaining a node for oneself does. Doing so not only increase sovereignty over your transaction clearance, it enables additional features such as running your own Samourai Dojo installation in order to use Whirlpool to erase the transaction history of your Bitcoin. Running your own full node on a dedicated device of your own also enables running a Lightning Node that can increase privacy, decrease transaction fees and settlement times, and allow for earning additional Sats by hosting a Lighting Channel used by your clients.

The highest level of security when doing so requires building your own Rasberry Pi device, or securely setting up your own dedicated server. This added security comes at the cost of convenience though. There are multiple turn-key Rasberry Pi nodes now available that increase the convenience but require trusting the provider of the device to have securely installed the node software and to have not installed any malware on it. Some currently trusted brands for this are the Raspiblitz, NODL.it, and Casa Node 2. As with all things in the crypto realm, always do your own research and proceed at your own risk.

Regulatory Compliant Bitcoin Business Operations

Management of Bitcoin business operations requires knowing how to keep the hotwallets functioning securely. It also requires a strategy for managing price volatility in order to enable earning spread fees by Selling BTC over-the-counter for a premium above Spot prices. One way to do this is to use a Samourai wallet installed on the point-of-sale tablet that’s been integrated with BTCPay server. It will also need topping off when the 5% commission has been earned by providing customers with BTC as “crypto cash back” over and above their purchases. When Buying BTC from the customers at a discount below Spot prices the BTC received flows directly into the dedicated banking tablet’s Electrum wallet.

Overflows can be sent to the Ledger Nano connected to the US Binance, Kraken, Coinbase, or Gemini exchange accounts that have been connected with the business bank account. The majority of BTC accepted for sales of goods, services, and OTC trades can IF, as quickly as possible, be moved back into USD in the business bank accounts to avoid the risk of short-term volatility eliminating profit margins. When waiting for BTC needed for short-term operational expenses to be turned back into fiat, a 50X leveraged Long position on Kraken can be created by business Management as soon as the BTC earmarked as long-term positions are sold for a premium. Protecting against a sudden increase in USD valuation of the sold BTC. To protect purchasing power against downside price movement, a leveraged short position can be taken out on a futures contract to defend against sudden drops in USD price. This protects the value of Spot holdings by acquiring enough additional BTC on the futures contract to offset the loss in value of the BTC held in cold wallets.

After company personnel have been compensated, the profits from the week’s business operations can be loaded onto the Ellipal wallet acting as the business savings account. This allows for the accumulation of funds in a perpetually air-gapped hardware wallet that is accessed when making large capital investments to grow the business endeavor. The business Owner can send weekly payments to his personal ColdCard, Digital Bitbox, or Trezor depending on which account needs refilling. Perhaps using the ColdCard for personal savings and the Digital Bitbox for funding international travels. Or maybe using the Trezor that’s integrated with an anonymous Binance exchange account, in order to enable speculative trading on Alt-coins, or for transaction history cleaning by trading them for privacy coins like Monero, Zcash, and/or Dash.

Bitcoin Business structuring

As a Bitcoin business has been operating for a while generating profits along the way, there’s hopefully been an accumulation of capital now needing long term storage, tax minimization, and estate planning. To acquire some regulatory clarity and to diversify jurisdictional authority a Wyoming LLC likely will have been established for retail banking purposes, a Nevada Prime Trust account for investment purposes, and a Puerto Rico Corporation for mitigating tax consequences. Each entity also has its own self-custodial and outsourced custodial solution, using each option as appropriate for the source and ultimate destination of the funds.

Profits from retail operations are sent from the LLC’s bank accounts and its retail crypto wallets into the investment accounts of the Trust (preferably from a Samourai wallet that has used coinjoin transactions to wash the transaction history clean) . Which has opened exchange accounts for trading in addition to the Ellipal for savings. Profits beyond that needed savings and capital investments, that have been earmarked for long-term holding or major capital investments are sent the bank account for the the PR Corp. In addition to its Cobo cold wallet providing military grade security kept in the business safe, or safety deposit box, in Puerto Rico. These are then paid out as dividends to the corporate shareholders, which may be the business owner, partners, or other international entities operating offshore.

Hedging your bets

Once the business owner has met payroll obligations and funded the Queen’s, offspring’s, and business’ vaults, then his own treasury can be topped off. A natural desire arises to begin speculative trading to take on more risk in return for the potential for greater gains, hedging to limit risk as a means of protecting capital purchasing power, and funding of liquidity solutions to enable daily spending. While also segregating assets into multiple liquidity solutions that store the capital until its spent through a debit card. Options exist to fund reload these prepaid debit cards with BTC and have the balance denominated in BTC through Paycent, in USD through Bitpay, in Gold through Goldmoney, and in Silver through Perpetual Assets.

As capital accumulates into larger amounts, store some of it internationally as both Gold and Silver through SilverBullion in Singapore. Enabling liquidity if/when needed through their P2P lending platform. Some of the excess BTC capital (if one believes there can be such a thing), can be liquidated through OTC desks. Then deposited into a Singapore bank for use to earn interest by lending it out through the P2P marketplace with those loans collateralized with twice the USD value in precious metals.

This BTC that has been liquidated for this purpose is protected from FOMO, fear-of-missing-out on long term gains by holding a matching futures position with high leverage on an exchange like Bitmex. When capital is needed for major purchases such as real estate, rather than taking out a fiat loan or over-collateralizing a BTC-backed loan through BlockFi, deposit it as precious metal that collateralizes the self-loan from the cash acquired in the OTC liquidation that’s been deposited into the Singapore bank.

These advanced Bitcoin business operational tactics provide fiat liquidity. Liquidity which is currently needed, but not at the cost of keeping a position on the fast-moving Bitcoin train or of a hedging position to manage the inflationary risks of Fiat by storing some capital in precious metals. The interest charged to oneself, or one’s family, in the P2P loan can be captured for use to increase the family’s estate. Doing so enables a totally sovereign banking arrangement that’s been diversified, and hedged without compromising liquidity or missing out on long term capital gains.

Crypto security requires disciplined use of software, hardware, and platforms

As cryptocurrencies are basically a form of language, protecting it requires securing communication channels, your devices, and your passwords. This can be done by carefully using encrypted email solutions like Protonmail, texting Apps like Telegram and Signal, and physical multi-factor keys as provided by Yubikeys and the Librem Keys. With all the different accounts and devices to be used in managing a Bitcoin Banking arrangement it becomes essential to use a password manager like LastPass, Blur, or OnePassword. It is also advisable to subscribe to a malware protection service like Bitdefender or CryptoDefender, that will protect against keyloggers, screen capturing, and more.

Confidently operating a Bitcoin business requires first, an investment in education, then in the proper hardware, and of attention to steering these many moving parts. Monetary sovereignty doesn’t come cheap, it costs time, mental bandwidth, and money. Sailing the crypto seas as a self-sovereign merchant mariner is not for the fearful, lazy, or dependent. This realm is only accessible to the brave, industrious, and independent business operators. But that’s also why the potential for creation of multigenerational wealth exists right now. These potential rewards will be gone once it is easy and everyone is doing it.

“You cannot discover new oceans, if you are not willing to lose sight of shore”…

Operating a Bitcoin business requires bravery enough to take the risk of leaving known safe harbors in order to discover new possibilities for monetary sovereignty.

Privacy Matters

Privacy is hard-won, easily lost, and once lost often never regained. Our privacy is fragile and can be lost in many ways and inadvertently expose details that we don’t mean to, i.e. our devices, our location/s, our identities, our wallets, etc. Keeping our privacy regarding any and all of these data points requires not only disciplined operational practices, but also the right software and hardware tools.

Many new hardware tools have become available due to the marketplace’s demands for trusted solutions that will protect our privacy. These may take the form of identity verification keys, offline storage devices for our crypto keys, and both mobile or desktop devices that provide physical shut off switches for the camera, microphone, WiFi, and Bluetooth capabilities.

A problem that currently exists for all Bitcoin Bankers is that many of these privacy solutions are only available for purchase with Fiat payments that require the exposure of our banking information at every website that we use to purchase our hardware for use in managing our private banking arrangements. Information that is tied to our personal identities, bank accounts, and residences which can be used to not only steal our identities and to remove the pseudo-anonymity of our crypto wallets.

A basic Bitcoin Banker’s arrangement should include a trusted password manager and a physical authentication key, with a hardware wallet, a metal paper wallet, and a form of off chain bearer crypto device. The password manager and multi-factor authentication key provide security by requiring one to both know something and have something in order to spend the funds. The hardware wallet acts as a savings account for use to top-off the software wallet “checking accounts”. The metal paper wallet protects against loss of the hardware wallet enabling recovery of funds if it ever becomes necessary. The perpetually offline bearer crypto device becomes a form of long-term investment for HODLing for retirement or estate planning that avoids both probate and inheritance taxes.

This basic Bitcoin Banking toolkit prepares you for becoming an active trader which will require malware protection, a physical mobile authentication key, a privacy-centric mobile device, a perpetually air gapped hardware wallet, and an easily spendable form of crypto bearer bond. The anti-malware protects key logs and clip boards on your devices. The mobile MFA key protects your mobile devices against remote hacking and Sims porting. The privacy phone adds another level of obscurity to your mobile defenses keeping anyone from connecting the device to your identity and from gaining access to the microphone and camera or bluetooth and WiFi antennas. The air gapped hardware wallet keeps the private keys available for reloading the hotwallets while allowing for direct spending on large purchases when desired. The easily accessed bearer bond provides an easy means of providing liquidity that can be easily be reloaded as a form of crypto pre-paid debit card.

All these items work together to compartmentalize and segregate your funds as a form of risk management. While establishing security that protects against remote access armoring-up your devices that are best used only for Bitcoin Banking purposes. Each of the devices requires appropriate operational security practices as every website visited and every time the phone number is shared the surface area exposed to threats increases. Even the strongest armor and most effective weapons require discipline and training in order for them to work as intended. The human element is the weak link in blockchain technology, so the wise will first invest in their own education, both time and money. As is well known, a fool and his money are soon parted and a little bit of knowledge is a dangerous thing.

Just as you wouldn’t buy a sailboat and venture into the deep blue sea of international waters, it would be a foolish risk to venture into the crypto seas without mentoring under an experienced Captain. The international waters of the crypto seas are unpredictable, unsupervised, and unforgiving of mistakes. There are no take-backs in crypto, prepare accordingly. Trust no one, not even yourself. All information is to be independently verified in this trustless realm.

Sail safe my friends… and remember, calm waters do not make a great Captain. Certainty is unattainable, confidence is the best one can achieve. We are here to help you get there.