Category: Thomas Levene

Do you feel lucky, punk?

Tales of Macau, the biggest poker game in the world

By Thomas Levene

This article is, in part, my personal poker journey and, partly, an insight into the mysterious and secretive world of nose-bleed cash games that just get bigger and bigger.

The elegant Wynn, in Macau Cilade de Sintra, Macau, overlooking Nam Van Lake, is where the biggest poker cash games in the world took place over the last decade. Vegas doesn’t even come close to the legendary stakes at the Wynn. Even on a Monday, the Wynn had bigger games than in the famous Bobby’s Room in Las Vegas!

The elegant Wynn, in Macau Cilade de Sintra, Macau, overlooking Nam Van Lake

For the sake of privacy, I have changed some names. All else is based on real events; stories that I have gathered over the years. I played at the same card room for over a decade – mainly at the $1000 table. Sadly for me, at of the time of writing, poker is not available in Macau. The general feeling is that those Uber high stakes games are a thing of the past.

nose-bleed cash games that just get bigger and bigger

Although Macau is officially part of China, its more recent historical roots are in Portuguese colonialism. The street names are Portuguese and the architectural style of the churches and houses. Even the food has a strong Portuguese flavour. Macau feels more laid-back, and safer, than Hong Kong. Hong Kong is just a ferry ride away. 

My friend Cody, a long-term crusher in the Pot Limit Omaha game, claims Macau is the only place in the world where he feels comfortable when his wife goes grocery shopping, without worrying about her safety.

The reason Macau became the host for Big games in the first place, is that after three decades, a few Chinese people from China have accumulated enormous wealth and nearly all of them love to gamble. We call them whales.

The whole poker economy revolves around these whales

The whole poker economy revolves around these whales. Each VIP is assigned a handler by the casino. The handlers are there to serve the VIPs and satisfy their every whim both inside and outside the casino.

A whale is easily spotted by his, or her, chips. These are horizontal elegant, thick plaques, with HKD100,000 or HKD$50,000 embossed onto a marble like surface. The majority of whales have a private junket table cordoned off so they can’t be spotted. But some are still seen from time to time, especially in the yellow room. This was a public Baccarat room within the Wynn complex known for its high stakes.

The game of choice for the whales is Baccarat. When you are at the poker table, you can hear the people in the private junket rooms shriek with excitement, or moan in disgust. The sound carries across the gaming floor. The shouts interrupt the serene background music. The casino plays songs like Sade’s Smooth Operator.

But, the VIPs sometimes also wish to play poker with the pros. In the poker room, a VIP seat is always left open. One of these wealthy players can join in at any time in the big game. The poker players are for them. Games are specifically set up around the Big Whale. Regulars may set up the biggest stakes games and play for hours amongst themselves, until the VIP eventually decides to show up, if at all.

Games are specifically set up around the Big Whale

The usual advertised highest stake game is 1000/2000 Hong Kong Dollars with players buying into the poker games with a stake of up to three million HKD. That’s equivalent to from $120,000 to $400,000. They get 10 shiny 100,000 HKD to start with as a minimum.

But of course the whales come in different shapes and sizes. There are different tables to suit each wealth bracket and bankroll. For example, whenever the Chinese entrepreneur, known as The Unicorn plays, he likes to play with 10,000 HKD big blind chips and a straddle* of HKD$20,000.

But the biggest electrical supplier in China, plays 10,000 – 20,000HKD blinds. At these levels, the lowest buy-ins would be around $US1 million. That’s a lot to lose on a single hand. Nevertheless, a seat or two will always be open, waiting to tempt a VIP onto the top two tables.

the lowest buy-ins would be around $US1 million. That’s a lot to lose on a single hand.

 The enormous flow of wealth was the reason why the very best online and live cash game players in the world stayed to play poker in Macau; from the phenomenally good online Russian, Tomofey Kuznetsov, Trueteller, widely acknowledged as the best online cash player in the world, to the famous TV American poker star and the most feared live player in the world at the time, Tom Durr Dwan, who regularly played at the Wynn and at private games around town.

It’s not always plain sailing. Tom Dwan disappeared off the scene while in Macau one time. No one knew what had happened to him. Rumours of multi-million-dollar losses in private games and disgruntled backers with ties to Triads meant concerns were raised for his safety. But he emerged a year later. I guess the rumours were just rumours, after all. Well, probably…

Timofey Kuznetsov, at the top of his game

Most poker players stay in plush, shared, poker-player apartments, overlooking a causeway. They have stellar views. Gyms, pools, spas and even tennis courts are available. Slumming is out of the question. Rent can be paid in poker chips, which helped. Jake Cody was the UK’s most successful tournament player at the time, racking up millions in winnings. Once he turned to me said: You’re staying with Jake this time. Some poker players even set up a side business at the hotel where they operate a revolving door that lets transient players into the action.

As you only have 10 minutes after registering interest for a game level from the time you receive a text to the time you claim your seat. So, poker players must live within 10 minutes of the Wynn.

One Central or the even more luxurious Mandarin Oriental, (which is directly opposite the elegant Wynn Casino) are really the only two choices of hotel available to poker players.

You only have 10 minutes after registering interest for a game from the time you receive a text to the time you claim your seat. So, poker players must live within 10 minutes of the Wynn. If you miss your seat you miss a chance to play with a VIP or a wealthy tourist. If you don’t arrive on time you lose your seat. You are just leaving money on the table, as they say. No one stays at the Wynn itself, for some reason.

It’s important for a poker player’s rating (their expected value) that they participate in those games, come what may. High stakes players sometimes stay up all night because they are on a waiting list, either that or they play for lower stakes, for hours. All this just for the chance to claim their real seat, even if it means starting at 5 or 6am,

If a professional Poker player knows a VIP is playing, it’s worth it to them. One time I saw Trueteller bolt past me sprinting from One Central towards the Wynn, as he obviously had not read his text message on time and was about to miss his seat with a VIP.

Although overall I made good money when I played in Macau, it was never easy or stable

Trueteller was a fast runner, but not faster than Australian Mike. Australian Mike is a tall slim medium to high stakes regular. They once had a bet about who could run the fastest 100 meters by the lake outside. The whole poker community took bets on the outcome. Prop bets were not uncommon. Trueteller was convinced he would win, boasting that he won his school sprint competition. But I had seen Australian Mike train for this event and my money was most definitely on him. Poker players are highly competitive people. It was a forgone conclusion that Australian Mike would win. This begs the question: Why did Trueteller take the bet in the first place?

Trueteller wore normal sports Nikes and a pair of shorts and T-shirt, for the race, while Australian Mike appeared with spiked running shoes. Australian Mike had the outfit and demeanour of a seasoned professional athlete and won, of course. It wasn’t even close. When it came to running, they were in different leagues. Sometimes players’ egos really do get the better of them. Even top pros like Trueteller.

Opposite the dealer

As for me, I came and went for over a decade. In the past, I would only stay around a week or less at the Wynn Macau to play cards.  I had a full-time job in Taiwan as a teacher at a local university. Taking the plunge as a professional card player just wasn’t a step I was ready to take. Although, overall I made good money when I played in Macau, it was never easy or stable. I was always in that predicament; between giving up a stable comfortable job, or going pro and risking bankruptcy.

It’s early 2017. My situation was different. I’d be there for a month. I had been working for 3 years as a teacher in an oil company in the Middle East, so I had a bankroll together, ready to give myself a shot at leaving the teaching world behind.

I had around $75,000. This sounds like a lot but it’s a pittance compared to the real money being wagered. Even for the games I play you need 10,000 HKD to buy in. I should really have had 100 buy-ins ($125,000), in order to deal with the swings in fortune, so was basically under rolled.

I can remember it well: the money has already been wired into the casino and a balance converted into HKD is accessible for me at any time behind the cage. The unnerving thing is, that I can, potentially, lose all of my savings in one hand, if I had a moment of madness and decide to take a shot at the big game.

On the first day a French VIP fish arrives called Jean Pierre (not his real name). Jean-Pierre wanted to play higher stakes PLO (Pot limit Omaha).

He was a successful French garment producer on his way back from mainland China to France. He liked to play all night until his flight back home the next afternoon. I lost $6000 that night to him and decided to quit. So I give my seat away. All the money went in when I had three Aces and by far the best hand with one card to come. He hit.

Players stay at luxury apartments less than ten minutes away from the tables

When I arrived the next day around 3 pm, Jean Pierre was still playing, although half asleep. Huge stacks of chips were beside the guy who had taken my seat. He only bought in for the minimum and now had around $30,000 US. Jean Pierre had lost it all, and then some. But, unfortunately, he didn’t lose to me.

Nevertheless, I was feeling optimistic, as I had recently won the biggest score of my life in Australia at the Aussie Millions poker festival held in Melbourne. I was hoping that poker would free me from lesson plans, marking homework, and unwilling students.

My gambling chips

The unnerving thing is, that I could potentially lose all of this in one hand if I had a moment of madness

Surprisingly, the casino had a 99 Noodles restaurant that was reasonably priced by Wynn standards. Eating a bowl of noodles and watching a few minutes of the crazy action was a nice diversion.

These large plaques of HKD$100,000 are also the hallmarks of the high stakes poker players, where the very best poker player and the richest people with the deepest pockets in the world duke it out.

It’s one thing to put $10,000 down and win the World series tournament for a few million. It’s quite another to bet $10,000 of your own money on a pure bluff. And that’s only the first round of betting. This is why the Macau tournament players tend to be the biggest fish in the high stakes cash games. And any cash games, come to think of it.

every small mistake on any street is amplified by increments of average yearly western salaries or on the river average lifetime total salaries, for the big games.

Some players may be flush with cash from their recent tournament score, but still be without the finesse needed to play deep stack, where every small mistake on any street is amplified by increments of an average yearly western salary, or the river average of lifetime total salaries.

I’ve added a rare photo down below, as photography is strictly prohibited. It’s a very big game and it has the 100,000HKD plaque that epitomises a high stakes game at its very highest. The players around the table have a combined total in the millions of dollars. The empty seat has well over a million, by the looks of it.

The top table

So, in the photo the man with the glasses and black jacket is Paul Phua, a successful Singaporean businessman turned Uber high stakes pro. Seat 1 next to him is Vietnamnese BB. The older guy in the black shirt on the right photo, is Yang Xa, who, despite his age, was surprisingly  able to play on equal terms with the Western pros.

To the right of the dealer, in the white top, is Pat Pat Panda. Pat Pat Panda, famously, lost millions on Pokerstars online (7-10$M). But he did well in the live games here. Chang Lat Zoo in the black hoodie, out of shot, was a high stakes regular who won frequently. Finally, the western guy in seat number two, is Romain Arnaud. He was one of the first trailblazing poker players from the West to play in Macau. He’s the person sitting opposite, wearing red, nearest to the dealer.

You’d know if the slim figure with black frizzy hair, Israely Efra, was in the poker room, when hearing the strange almost comical outbursts and noises he made. It’s not entirely clear why he did this. Some say it’s a way to put his opponents on tilt and confuse them. Others say he’s just been in Macau too long. Macau can take its mental toll on you, after all.

Full-time poker in Macau wasn’t for me then, although I will go back to it at some point. By the end of that month, I had made just under $5000, but had lost a couple of $5-$12K pots where I was a clear favourite.

It could have been a lot worse. I count myself lucky though, as I decided the better bet for me was to wire 75% of my bankroll back to the UK to buy Bitcoin. This ended up being a great decision as it was mid 2017, midway through Bitcoin’s ride up and the earnings from Bitcoin helped me buy a small flat.

Although the reality and dream of being a professional poker player were not a match for me, that’s okay. Maybe the reason I got into poker was because I just didn’t want to be a full-time teacher anymore.

On that front, mission successful. I no longer teach. But Poker is still a love of mine. That’s not to say I won’t make money from it. In future, perhaps I will, and maybe large amounts of money. But poker is just not something I want to do full time…

Blinds – are the compulsory bets, before any betting.
Straddle – is a voluntary blind that’s added to increase the pot size before betting.

Thomas Levene

Thomas Levene, has been a long-time teacher, and in the last few years, a passionate expert and investor in Bitcoin and Blockchain technology. He has completed, a ‘Blockchain Applications’ course with distinction, from Oxford University Said School of Business in 2018. Tom is also an expert poker player.

Thomas has given presentations on Bitcoin and Blockchain, internationally to young entrepreneurs on the digital Nomad Cruise in Greece and the DNX Digital Nomad Festival in Lisbon. He currently lives in Taiwan.

Why the Asian Century for China, may never arrive

group of persons wearing yellow safety helmet during daytime

By Tobias Devene

When China Rules the World, China: The Emerging Superpower, How Economic Reform is creating a New Superpower, and China, the Remaking of the World Order. These are all titles of books about China and how it will rise, inevitably to be the next global superpower. The idea of China’s 21st century dominance has been embraced by so many pundits to such a degree after snowballing predictions, optimistic models and best-selling books, that it has almost become a cliché. So that’s a wrap; China will be the next global superpower.

If the 18th and 19th centuries belonged to Europe, the 20th to the United States, and the 21st century must surely belong to China, right? It’s their Asian century. Hasn’t China, over the last 30 years brought hundreds of millions of its citizens out of grinding poverty. These millions now have a higher standard of living, though the standard isn’t comparable to the those of the majority of people living in advanced capitalist countries.

The sheer scale and speed with which monumental infrastructure projects have been completed successfully, with ruthless efficiency, in China, is something democracies can only marvel at. At breakneck speed, China has built a vast web of roads, huge dams, power plants and high-speed rail networks. It builds whole cities, brand new, to order. They appear like magic out of the land. Hyperbole aside, China has thrust itself into the economic front rank by generating the most rapid economic and technological development ever seen in the history of humankind. They even have their own space station. China seems to be marching forward on all fronts, even the creative industries.

lighted buildings during nighttime near body of water
Photo by Ágoston Fung on Pexels.com

China has invested heavily in digital, artificial intelligence (AI) and in establishing broadband and digital payment infrastructures like broadband and digital payment systems. It has done this to such a level that now it is almost unheard of for people to use cash in many parts of the China. Its citizens have truly embraced the internet age. 

All-in-one apps like WeChat and Alipay, can provide any legal service imaginable to tech savvy citizens, from booking a home pet groomer service for their dog, to ordering a Californian sushi roll for dinner. Added to this, is the fact that China will probably be the very first country to bring out its own Central Bank Digital Currency (CBDC). In this respect, China is ahead.

         

China’s new Silk Road Infrastructure projects,  Banco Asiático de Investimento em Infraestrutura

There is more: since 2013 has been rolling out the Belt and Road Initiative (BLI) or New Silk Road, to help it carve out new, efficient trading and supply routes across the world. This means Chinese  construction projects in foreign countries, and the creation industrial zones, transport links, power plants, ports and infrastructure projects that, right now, are some of the biggest in the world.  The New Silk Road is a huge undertaking with 16 massive projects in the process of being completed, running as across multiple countries in Africa and Asia – even parts of Europe.  China, no doubt hopes that this spiderweb will provide it with the resources and the economic ties it needs to prosper long into the 21st century.

So, is it surprising that the advanced capitalist countries now feel they are playing catch up with China?

Phoenix7777 – Own work Data source:　National Bureau of Statistics of China: China Statistical yearbook

Hold on just one moment!

Ironically, people power, the very thing that has helped China become the manufacturing global powerhouse economy is now turning ugly.  On this metric alone, China will probably never live up to its promise. That problem is a monumental issue which may only prove tractable over decades, if at all.  It’s the D word – Demographics. Put simply, China is running out of working aged people to drive its economy and growth, into the future.

The problem has been decades in the making. China, in the 1970’s already had falling fertility rates. The one child policy, originally called The Family Planning Policy was implemented as a way to alleviate the potential social, economic, and environmental  problems caused by perceived over population. The government enforced this policy through tough financial, penalties. The government promoted and arranged for mass sterilisations and free contraception. As a result, between 1980 and 2014, 324 million Chinese women received Intrauterine Contraceptive Devices (IUDs) and 108 million women were sterilised. China’s fertility restrictions prevented around 400 million births between 1980 and 2015.

For any population to sustain itself at least 2.1 children per couple need to be born on average. But, for China, births fell to 1.22 in 1991 and 1.05 in 2015. Fuxian Yi, a senior scientist at the university of Wisconsin Madison, claims that in 2020, the number fell to one child per couple. This is despite, the policy’s change in 2016 to a 2-child policy,

China’s Window window closed 10 years ago.

China had a demographic dividend. Chinese people between the ages of 30 and 64, are all known as the producers. They produce the most of China’s wealth and prosperity. This demographic dividend is a moment in time whereby the country has more producers than it usually does.  If governments can utilise a demographic dividend when they have a predominantly productive bulge in the population then these governments can stimulate much prosperity.

China’s Window window closed 10 years ago. It is estimated that China’s population peaked around 2011. China’s meteoric growth figures have been slowing ever since. So, this time of reckoning is upon China now. Put simply; China’s people are ageing and there is no new age cohort to replace the older people – simply, not enough babies have been born.

This trend is not likely to change either. To exacerbate this issue, the current, large Chinese working population will become retirees. One only has to look to Japan to see what happens in this situation. Japan was the darling economy of the 1980’s and then it ran into a demographic brick wall. It fell into an economic crisis in the 1990’s which it still hasn’t fully recovered from. 

The situation will be worse for China, as Japan has a more sophisticated health care system, a much higher average yearly wage, and pension schemes. China’s health care and pension systems won’t support retirees to nearly the same extent. Moreover, the average wage in China, is still relatively low at $10,231 per year. (Comparable to Mexico and the Maldives) That’s not much to live off in an increasingly expensive country, with minimal financial, or healthcare, support from the Chinese government.

China’s demographic now, is like Japan’s in 1992 just before the Japanese economy nose- dived. This means China is likely to experience Japanese style stagnation. In fact, ageing has already slowed China’s economic growth down from 9.6% in 2011 to 6% in 2019. 

The World Economic Forum points out that in 2020, China had 4.9 workers between 20-64 supporting 1 senior. In 2035 this number will be halved to around 2.4 to 1 senior. Under the current system, there is not the resources or safety nets sufficient to support all Chinese. There are less women because couples prefer to have sons. One researcher said, for all these reasons, China will grow old before it grows rich.

Confucius, The Granger Collection.

So, what can China do? They could do what the West has done and encourage immigration, to make up the shortfall in domestic births. However, Vloggers in China have commented on an increasingly anti-foreigner atmosphere generated by the government. China seems to be openly racist – this is especially true if their adverts are anything to go by. Mass immigration seems to be off the cards.            

                             China will grow old before it grows rich.

Bradford Wilcox and Fuxin Yi suggest that, to help them solve their problem, the Chinese government take a drastic U-turn on the question of religion – in particular, Confucianism. It could revive traditional values and one of those is fertility. Confucianism promotes the idea of family. It welcomes children as gifts, as links in a great chain that unites generations past and future.

Without this major shift of in cultural emphasis, China seems destined to follow the same path as its Asian counterpart. For China the demographic situation may get a lot worse. Even if the Chinese government does mange this demographic time bomb well, there’s another crisis looming on the horizon for China.  This will be the topic of the second article in this series.

It was Dung Xao-Ping who cautioned The Asian century, for China, may never arrive.

So, is London finished as a leading financial hub?

Not so fast!

By Thomas Levene

The City of London is the goose that laid the golden egg. Not even the left in the UK want to kill it. Ken Livingstone, a great hero of the left and the former leader of the GLC, advocated for The Square Mile because he knew that, realistically, the fortunes of all Londoners are tied to the success and influence of the City. The City provides the UK with  £75.5 billion in tax revenue every year. Although, the need for greater financial regulation seems imperative to humane socialists, at the same time it would be a disaster if financial companies migrated in numbers out of London. Thomas Levene discusses the prospect of that migration happening, now that Brexit is a reality.

One of the biggest arguments for staying in the EU was the fear that if we left it,  there would be catastrophic financial implications for the UK. Will the city of London, post Brexit, be able to keep its seat as the financial hub of Europe? Will it keep its status as one of the three main financial hubs of the world, alongside New York and Shanghai? There are serious fears that The City of London, or ‘The Square Mile’, as it is affectionately called, will lose its position. After all, why stay if London is no longer the gateway to the rest of Europe?

Since Brexit, what exactly has happened? In a recent survey, since Brexit, around 400 UK – based financial service firms have moved all, or some part of their business to somewhere in the EU. 10,000 financial jobs have already left the city and Some say the total number could rise to around 70,000. Amsterdam has now become the center for share dealing in Europe–taking a whopping 80% of the revenue from London’s control and costing the City of London an estimated £10 Billion in a year.

The financial sector is the biggest taxpayer in the UK, so the flight of large financial corporations is disastrous for the country. According to the Corporation of London, the City paid  £75.5 billion in tax for the financial year 2019 to 2020.

Amsterdam has now become the center for share dealing in Europe–taking a whopping 80% of the revenue from London’s control and costing an estimated £10 Billion in a year…

To make matters worse, London may lose more financial business in the future because EU countries want a piece of the pie, and are aggressively incentivising financial companies, brokers and investors to relocate. For example, President Macron of France has given a huge 70% tax break to those entities who may wish to move from London to Paris. Italy and Spain are offering similar deals. These are not the actions of enlightened European social democrats eager to make corporations pay their way, they are the actions of cut-throat neoliberal competitors.

EU countries want a piece of the pie

This situation has been further exacerbated because the EU has not given ‘equivalence free’ financial ‘passporting’ rights between the UK and EU to sell their financial products across the 28 member states.

Right now the UK allows EU companies to operate within their shores, but not vica versa. The trade is not on equal regulatory terms. And in yet another ruthless effort to squeeze even more business away from London, the EU has decreed that all EU–listed equity exchanges must take place solely in EU regulated exchanges.

So, is London finished as a leading financial hub? Not so fast. Daniel Hodson, former head of the London futures exchange says: ‘Yes, you have good financial centres like Paris, Frankfurt and Milan, but they are not, and never will be, the size of the City of London.’

‘Yes, you have good financial centres like Paris, Frankfurt and Milan, but they are not, and never will be, the size of the City of London.’

Daniel Hodson continues: ‘The City is too big, too liquid to fail. The EU needs London’s vast pools of capital.’ It’s logical to make the observation that, if the EU insists on barricading itself its own system, then companies and investors outside the EU may want to keep their Euros outside the EU and look for cheaper, more established, alternatives. ‘This is where London can facilitate and offer cheaper options’. Of course, additionally, London offers a great agglomeration of services to financial institutions that are not available anywhere else in the EU.

‘The City is too big, too liquid to fail. The EU needs London’s vast pools of capital.’

London has always been a buccaneering innovator. The City has been willing to adapt and capitalise on financial opportunities and change. After all, that’s how The Square Mile came to prominence as a key financial center in the first place in the 1960s. During that period the US created similar financial walls to the ones the EU seem to be intent on erecting right now. All that happened is that people eventually looked for cheaper, better alternatives for places where they conduct business. In the 1960s, that place was the City of London.

London has always been a buccaneering innovator. The City has been willing to adapt and capitalise on financial opportunities and change.

When it comes to regulation and taxation, London should be careful. However strong the cachet is for a company that locates in the City of London, no place is immune. Rash measures could result in financial businesses relocating to countries inside the EU, or even moving online altogether – especially in the time of a pandemic. Even The NY Stock Exchange, after the election of Joe Biden to the US presidency, has recently threatened to leave New York in the face of a proposed Stock transfer tax and increased regulations. 

If [to the resigned despair of the left in Britain] London goes the opposite way, and, strategically reduces taxes and if it makes regulatory hurdles even lower, then it is likely that money will flow to where it gets treated best. In this case, London will continue to thrive as the dominant financial hub, not just of Europe, but of the whole world,

… it becomes clear that London is still in the driving seat

The financial landscape is changing faster than it ever has. With the rise of Bitcoin and decentralised finance parallel industries, now worth $2 trillion and rising, there are more attractive, emerging opportunities for businesses and companies who operate in the financial sector, for those finance based businesses nimble enough and open-minded enough to capitalise on these opportunities, and for those financial hubs which willing to innovate.

Luckily, according to one report, London is the premier location in in Europe for local ‘sandboxes’ and innovation hubs. The City of London is a place that encourages innovation and Fintech startups. €2.1 billion in the UK vs €1.5 billion for the continent have been invested in Fintech startups in the City. Couple this with the fact that the current UK government has expressed a strong intention to back innovation; the huge talent pool from top universities in London that the Square Mile can draw on; the fact that The City is the leader in cyber security and green technology startups, and it becomes clear that London is still in the driving seat of Finance; at least for Europe.

In a recent PWC survey, post Brexit, The UK – and so London – was ranked ‘4th most attractive place to do business’ by CEO’s worldwide, despite Brexit. Surprisingly, investor confidence in the UK and in the Square Mile is, cautiously, high.

Thomas Levene

Thomas Levene, has been a long-time teacher, and in the last few years, been a passionate expert and investor in Bitcoin and Blockchain technology. He has completed, a ‘Blockchain Applications’ course with distinction, from Oxford University Said School of Business in 2018.

Thomas has given presentations on Bitcoin and Blockchain, internationally to young entrepreneurs on the digital Nomad Cruise in Greece and the DNX Digital Nomad Festival in Lisbon. He currently lives in Taiwan.

Is Bitcoin really “rat poison squared”?

Bitcoin offers financial freedom and independence.

By Thomas Levene

If Bitcoin, is such a groundbreaking technology, why has it received such negative press? Bitcoin has been labelled ‘rat poison squared’ by Warren Buffett. It has been declared dead a whopping 401 times and counting. Well, one thing is for sure, Bitcoin isn’t dead and Warren Buffett missed out on Google and Amazon, so he may not be the best person to ask about tech based businesses.

Recently, social justice movements have had successes in fighting for equal rights for people of different genders, races and sexual orientations. But there is no equality in our current monetary system. The big banks and national governments are in control. Can Bitcoin offer financial freedom and independence?

One thing is for sure, Bitcoin isn’t dead.

In 2008, immediately after witnessing the financial crisis, Satoshi Nakamoto, the visionary behind Bitcoin dreamed up Bitcoin. Bitcoin started out as a white paper called: Bitcoin: A Peer-to-Peer Electronic Cash System.

A small group of idealistic and dedicated, IT visionaries read his white paper and collaborated in order to bring Satoshi’s dream into a reality. Satoshi’s breakthrough was that, masterfully, he had discovered a way to solve the ‘double spend problem’. In other words, a way to cut out the middlemen from financial transactions, organisations like banks. His ideas made transactions more ‘streamlined’.

Bitcoin started out as a white paper called: Bitcoin: A Peer-to-Peer Electronic Cash System.

Satoshi cut out the banks by creating a ‘time stamped sequential database’ that cannot be tampered with and is forever kept or ‘hashed’ into an ever-expanding online database as proof of payments between parties.

This database stores all past and present transactions that have ever been made in ‘blocks’ across computers spread out throughout the world. These computers and the people behind them, the Bitcoin ‘miners’, are given an incentive to verify and facilitate payments between people by charging fees and solving complex math problems. If they do this they are rewarded with a Bitcoin. This is what we now call the ‘Bitcoin blockchain’ ecosystem.

This database stores all past and present transactions that have ever been made in ‘blocks’ across computers spread out throughout the world.

For the first time in history money can be transferred across the internet without 3rd party approval from a government or any other organisation. This is a ‘permissionless’ way for 2 parties to exchange currency. Essentially, anyone can now send and receive value through the Bitcoin network. This, for me, is a true breakthrough in equality of finance.

A claim, that is constantly made against Bitcoin, is that it’s primarily used for illegal activities by criminals. While this may have been true in its early days it is not true today. Fidelity investments data show that most transactions are legal on the blockchain these days. After all, law enforcement can track activity on the blockchain easier than someone who uses cash, as you leave a large digital trail that is forever kept online, called the blockchain. In short, cash is better for illegal activities.

For the first time in history money can be transferred across the internet without 3rd party approval from a government or any other organisation.

Others say Bitcoin can be hacked into and is unsafe. In fact, Bitcoin has never been hacked. It’s the largest, most secure computer system in the world without any downtime since its inception, 12 years ago. No other computer system has achieved anything close to this.

Bitcoin has never been hacked. It’s the largest, most secure computer system in the world

When you own Bitcoin, you do become your own bank, and there lies the issue: How secure are you? Securing Bitcoin is as simple as writing a 12-24 backup phrase offline on a piece of paper or secure USB. Technically, you could store your entire net worth on one piece of paper. That piece of paper can cross any border, Then once you are across the border you reinstall your wallet and access your wealth again. Try doing that with gold.

Yes, exchanges get hacked, people get hacked, but never the Bitcoin network itself. So, the Bitcoin mantra goes ‘Not your private keys, not your Bitcoin’.

But do governments ban Bitcoin, or make it hard for Bitcoin customers? Well, yes. Some do. But will that put Bitcoin out of operation? That’s unlikely? After all, the countries who have banned Bitcoin aren’t exactly socially progressive: China, Nigeria and India. And when these countries do ban Bitcoin, what happens? Bitcoin is just sold at a premium.

when these countries do ban Bitcoin, what happens? Bitcoin is just sold at a premium

Banning Bitcoin is like holding a sign saying: ‘Do not Enter!’ at the front gate. But all you do is go round the back gate, which is open.

Bitcoin doesn’t have a CEO a government might go after, nor employees. It doesn’t have a Head office to raid. If you shut down mining in one country, another operation will open up somewhere else to take its place. All you need is for one bank or country to accept Bitcoin.

Game theory suggests that it’s up to banks and governments to either get on board the Bitcoin train, or run the risk of being left behind by this new emerging financial system – by Bitcoin and the blockchain.

Nowhere in the world is the power of Bitcoin more evident than in Africa, where the poor unbanked can now store cryptocurrencies on their smart phones and transact globally with others, needing only an internet connection.

the poor unbanked can now store cryptocurrencies on their smart phones and transact globally

In my view, this is the beginning of economic financial freedom and prosperity. Cryptocurrency offers the poor who have been refused a bank account the chance to store wealth and transact with others without needing a bank, or relying on a failing national currency.

It seems to me, the really unjust system is the money system we are all included in today. Excessive money printing creates the biggest, most unfair tax of all: inflation. So, to understand the value of Bitcoin you need to understand how inflation works.

I would argue that inflation is actually a stealth tax that reduces your spending power. If a central bank injects more money into the system, eventually, your spending power will reduce in proportion with the amount of money injected into the economy.

to understand the value of Bitcoin you need to understand how inflation works

Enter Bitcoin: Why is Bitcoin priced at just under $50,000 at the time of writing? Well Bitcoin is deflationary with a capped supply of 21 Million. No more Bitcoins will be created. Furthermore, every 4 years, the supply of Bitcoin is halved. In May 2020, the number of Bitcoin created was cut from around 12 to 6.

Like clockwork, the price increased shortly afterwards. This is simple supply and demand mechanics at play. No one can create new Bitcoin and reduce your spending power, unlike ordinary money. Bitcoin is designed to go up in value, never down.

This is why Elon Musk has invested 8% of his cash at Tesla into Bitcoin. Regarding Bitcoin Elon Musk tweeted ‘I guess it was inevitable’. Michael Saylor from Micro Strategy, the CEO of NASDAQ listed company has also invested heavily. He goes as far to say that Bitcoin is a ‘The purest most pristine, scarce asset on the planet’. This is echoed by the Winklevoss twins, who were there at the inception of Facebook.

Elon Musk has invested 8% of his cash at Tesla into Bitcoin.

Bitcoin is an alternative. Anyone can take part, but no one can ever control Bitcoin. It is decentralised. This is a step towards integrating people into a fairer, global financial system. Bitcoin was designed with financial incentives for both holders and miners in mind. So, Bitcoin is a libertarian monetary system rather than a socialist one. That, I would argue is a very good thing.

Bitcoin is a libertarian monetary system rather than a socialist one.

Historically, purely socialist models, no matter how altruistic they are when they start out, often end badly, slipping into creating centralised, corrupt, impoverished societies. Take the example of Venezuela or Angola. We humans need a financial incentive to get us up in the morning.

People need more equality and personal control over the money they use and the financial system they participate in. Bitcoin provides hope as an alternative to the standard, flawed model. With Bitcoin you may not control the supply of money, but no one else can either. There is no ‘quantitive easing’ in Bitcoin.

With Bitcoin you may not control the supply of money, but no one else can either.

Long live the Blockchain! You can’t stop technology. In my view, the good news is that Bitcoin will grow exponentially, sooner rather than later.

Digital Nomad Festival ✰ DNX
Tome Levene

Thomas Levene, has been a long-time teacher, and in the last few years, been a passionate expert and investor in Bitcoin and Blockchain technology. He has completed, a ‘Blockchain Applications’ course with distinction, from Oxford University Said School of Business in 2018.

Thomas has given presentations on Bitcoin and Blockchain, internationally to young entrepreneurs on the digital Nomad Cruise in Greece and the DNX Digital Nomad Festival in Lisbon. He currently lives in Taiwan.

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