Deon Opperman

Deon Opperman
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Sunday, 28 April 2013


Who in their right mind would take their hard-earned cash and convert it into a unit of supposed value that is:
·         not insured;
·         not backed by gold or silver or any commodity of any kind;
·         extremely volatile in its price movements, so much so that its daily movements would be considered insanity on any stock market in the world (including those in the Third World);
·         traded on exchanges of which nearly 50% have been shut down and its largest exchange brought to a halt by hackers, traderbots and DDOS attacks;
·         kept in digital “wallets” of which some brands have been hacked, and others simply closed down;
·         and which poses the biggest threat to central bank power since…well, since central banks were invented, making it a prime target for the banking monopolies (and their friends in government) that dominate world finance?
Who in their right mind would do this?  One would hope very few, except that more than a few, normally right-minded people around the globe have done just that (this author included).

The question is:  Why?

A thought experiment:  Imagine you are standing with your back to the edge of a cliff.  A river courses through the bottom of the ravine two hundred feet below.  In front of you a pack of twenty wolves slowly advances in a semi-circle. There is no escape.   If you stay where you are, there is 100% certainty that you will die.  If you jump, there is a 95% chance that you will die, and a 5% chance that you will survive after plunging into the river.  Would you jump?

The behavioural psychologists Kahneman and Tversky, in their research paper Prospect Theory: An Analysis of Decision under Risk (1979), showed that most people would jump.  In the summary/abstract to their paper, Kahneman and Tversky summarised a key finding as follows:
“In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty.  This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses.”  (Kahneman and Tversky, 1979)
In summary:  sure gain = low risk appetite;  sure loss = high risk appetite.  In other words – standing on that cliff, faced with the ‘sure loss’ of your life in the jaws of 20 wolves, you will look down at that river two hundred feet below and most likely come to the conclusion that you have got quite a good chance of surviving  – better than 5% - and jump.  You will probably also be thinking something along the lines of: “If I don’t jump I’m dead anyway, so any chance of survival is better than none.” Kahneman and Tversky called this phenomenon “loss aversion” – the willingness to take high risks when faced with certain loss. 

I would argue that a significant portion of the world’s population is either certain, or at least strongly suspects, that the world’s financial system is in trouble. Deep trouble. This portion of the world’s population knows with 100% certainty, that sooner or later (and probably sooner) there will be a catastrophic collapse of financial markets that will be worse than the crash of 2008.  It also knows that in the event of such a collapse, the vast majority of the world’s population will feel very serious pain, something akin to (or worse than) the pain of the Great Depression of the 1930’s, which only came to an end with the gigantic public works project remembered as the 2nd World War.  Except this time many of the governments of the West and East are already so indebted and have already printed so much money that they would not be able to pay for a public works program on the scale of the 2nd World War to pull the world economy out of its mire.

So to return to the thought experiment:  The wolves are the “real crash” that’s coming  (to use Peter Schiff’s phrase), and the river in the ravine two hundred feet below is Bitcoin. Under normal circumstances, i.e. when not faced with certain death-by-pack-of-wolves, no right-minded individual would jump.  But these are not normal circumstances, and so, standing on the edge of the current economic cliff, usually sane people conclude that while jumping into the Bitcoin river may very well prove to be fatal, not jumping certainly will.

Wednesday, 17 April 2013


I recently had a conversation with a friend that went something like this:

FRIEND:          Bitcoin…?  What the hell is that?

ME:                 It’s a crypto-currency.

FRIEND:         (blank stare) Crypto-what?

ME:                  Well it’s a seriously encrypted protocol that exists only in the internet cloud that generates units of value called bitcoins (lowercase “b”) that you can buy and sell on an exchange just like shares, except they’re not shares, more like forex, except they’re not  forex because they’re not a fiat currency like a dollar or a pound, more like gold, except that they’re not  gold because you can’t hold them in your hand or lock them in a safe.  You keep them in a wallet that doesn’t really exist except as an encrypted algorithm , and if you lose your wallet you’ve lost your bitcoins, just like cash. But they’re not cash.

FRIEND:        (after a long pause)  What have you been smoking?

ME:                 No, seriously, there’s really a new internet currency that people from around the world are buying and selling and using to buy stuff, although the “buying stuff”part is in its infancy.  Not many places accept bitcoins as payment. Yet.  And just like a dollar can be fractionalised into a hundred pennies, so a bitcoin can be fractionalised into satoshis, hundred million per bitcoin.  And the really cool thing is that Bitcoin is a world currency that no central bank or government controls.

FRIEND:         You’re  shitting me?

ME:                  No, I’m dead serious.

FRIEND:         Let me get this straight.  Are  telling me that you have spent some of your own, real money to buy some of these bitcoin things that don’t exist?

ME:                 Yes.

FRIEND:         And keep them in a “wallet” that doesn’t exist?

ME:                  Yes.

FRIEND:          You’re out of your mind.

ME:                   Maybe, but I don’t think so.

FRIEND:          (realises that I really am dead serious) Well…where does this “encrypted protocol”    come from?

ME:                  Apparently it was written by a person…or persons… called Satoshi Nakamoto.

FRIEND:          What do you mean “or persons”?

ME:                  Well, nobody really know if it’s one or more people, male or female.

FRIEND:          Dear God! And this algorithm that this…whatsisname…?

ME:                  …Satoshi Nakamoto….

FRIEND:          …this algorithm he, she or they wrote gives out bitcoins to anyone who wants them.

ME:                  No. Only to miners.

FRIEND:          Miners?!   You said bitcoins don’t exist, except in the cloud.

ME:                  Yes.  As encrypted algorithms.

FRIEND:          Then what the are the miners mining?

ME:                  It’s a bit complicated, and I don’t really understand it myself, but the miners are like serious maths boffin geek guys who use hardcore computing power to do these really complicated sums called a hash,  that are easy to reproduce but impossible to reverse so  a hacker cannot easily reverse-engineer the sum from its answer.

FRIEND:         Okay, you lost me there.

ME:                  The point is that the sums that these miners “mine”are really hard to do and take a lot of energy and time.  So when the miners (the maths boffin geek guys) finally do a hash (sum) that the Bitcoin protocol (uppercase “P”) accepts as valid according to the rules it has laid down,  it (the Bitcoin protocol) then “pays”the miner some bitcoins (lowercase “b”) that the miner then can sell on for dollars or pounds.

FRIEND:          So the miners get real money for these sums.

ME:                  No, the miners get bitcoins.

FRIEND:          That they then sell for real money.

ME:                  Yes.  But don’t forget  that “real”money is just paper with a picture printed on it that everyone agrees has a certain value.  Just like bitcoins.

FRIEND:          At least I can put paper money in a real wallet.

ME:                  So you keep all your paper money in your wallet?

FRIEND:          Obviously not.

ME:                  Exactly.  Most of your money is an encrypted algorithm  in your bank account that is also just an encrypted algorithm…just like a bitcoin wallet.  So what’s the obsession with “real”? 

FRIEND:          At least I can go to the bank and take it out when I want to.

ME:                  Only if the bank allows you to, as the Cypriots recently discovered.  The cool thing about bitcoins is that they cannot be confiscated by a bank or government or anyone alse.  There’s no bitcoin “bank” where you keep your bitcoins, only your wallet.  And you are the only person on earth with access to your wallet. It’s like being your own bank.  That’s why you lose everything if you lose the password/key to your wallet.

FRIEND:          (after another long silence) Okay, suppose I get me some of these bitcoins,  what can I buy with them?

ME:                  At the moment, not much. But more and more shops and places are accepting them as payment .  But I’m not buying bitcoins to use to buy things.  I’m buying them as a hedge.

FRIEND:          Against what?

ME:                  The world economic depression.

FRIEND:          What depression?

ME:                  The one we’re in.

FRIEND:          We’re in a recession, not a depression.

ME:                  We’re in a depression disguised to look like a recession by the printing of trillions of dollars and pounds and yen and God knows what other currencies.  Sooner or later (and I believe it will be sonner) those trillions are going to bite the world economy in the arse because there’s no way that we can pay them back.  It’s like the God of all bankers somewhere in the universe is calling in the loan and our governments who borrowed those trillions on our behalf cannot pay, so he’s coming to repo whole economies. And then we'll see this "recession" will show its true colours.

FRIEND:          And that’s why you’re buying bitcoins?

ME:                  Exactly.

FRIEND:          What’s stopping the God of all bankers from taking your bitcoins?

ME:                 The only way he can do that is to put a gun to my head for the key to my bitcoin wallet.  By the time it comes to that the world will be in such chaos already that my bitcoins will be the least of my worries. Until then I’m buying bitcoins.  They’re very cheap now because so few people in the world are buying them, but when the crunch comes there’s a very good chance that lots more people will want to buy them and because the supply of bitcoins is limited and cannot be expanded by any government, they could be worth a lot.

FRIEND:          How much?

ME:                  No idea.

FRIEND:          This Bitcoin business  sounds  risky to me.

ME:                  It is.  But how safe are you feeling about the world economy at the moment?

FRIEND:          You could lose everything on Bitcoin.

ME:                  Sure, but only if I put everything into Bitcoin. I might be mad, but I don’t put all my eggs in one basket.

FRIEND:          So you’ve still got some of that paper money that you don’t trust.

ME:                  Yes, but I’ve also got bitcoins. All you’ve got is paper money.

(Longest pause of the conversation)

FRIEND:          Sounds too complicated to me.  Can I have another beer?

Sunday, 14 April 2013


I’m a white man in Africa a survivor in the south
we got one man one vote but we live from hand to mouth
apartheid was a fuck up now we free, free at last
but some of us are paying for the sins of the past
they learned their lesson well the anger and the hate
when it comes to revenge it never is too late
it’s the spirit of the age redistribution retribution
reverse apartheid is all the rage - after action affirmative satisfaction

but this continent is cool, a place of plenty, abundant riches
we still believe in witches and treat our wives like bitches
we use cell phones to tape a friendly gang rape
and if you get AIDS spend an hour in the shower
but if it’s HIV drink garlic in your tea
welcome to Africa it’s the coolest place to be

don’t get me wrong I’m happy in this new bureaucracy
the blacks learned from the whites how to do democracy
if they lose the election don’t get an erection
it’s the basic supposition – kill the opposition
ask Robert Mugabe from Zimbabwe
Rwanda Somalia Liberia Ethiopia
Angola Uganda welcome to utopia

our misery is custom made to suit your every need
this place is a paradise with billions to feed
some graft and corruption an occasional disruption
but better than that we’re on our backs flat, check our welcome mat
unexploited mineral wealth enough for a thousand years
and a labor force to mine it with their hopes their dreams their tears

and fuck the bleeding hearts who curse the corporations
economic liberation, without them starvation
come on be rational no-one cares like a multinational
they can help you self-destruct if you got diamonds in the ground
or force-remove your locals if you got oil lying round
in your Swiss account any amount
that’s what World Bank debt is for
and if you still want more they can start a  war
nothing second rate, it will escalate
‘till all your citizens are killing each other
AK47’s for you and your brother
you can run my friend but you cannot hide
the first world will provide
especially genocide

and don’t forget the kindness of our European friends
in fact the list of good deeds is so long it never ends
the pommies and the krauts and the porras and the frogs
thank God they insisted when the heathens resisted
okay there was some slavery and they treated men like dogs
and some random orders moved a shitload of borders
which caused some double bubble toil and trouble
and reduced the continent to ashes and rubble
but they brought education medication conservation
preservation…with just a touch of deprivation
small price to pay for civilization

and besides…the Africans learnt an important lesson –
a civilized man doesn’t bring a spear to a gun fight

you can run my friend but you cannot hide
the first world will provide
especially genocide

but this continent is cooking though it might look tattered and torn
we got elephants and lions and a lot of rhino horn
our poachers are all innocent they just working for the Japs
whose cocks are all so tiny they can’t find them without maps
but hey those pricks got dollars - international currency
hallelujah Mammon and the USA – the gods that keep us free

don’t get me wrong I’m happy, at least I’m still alive
and as long as I don’t argue I reckon I’ll survive
it’s a garden of Eden owned by the ANC
I can say what I like as long as they agree
just ‘cause you can vote doesn’t mean you free
but it does mean you can live in abject poverty
oh say can you see our monopoly

it took a revolution to get this constitution
no-one is rejected all of us protected
the Party is so clever it’s going to rule the roost forever
it’s an African tradition -  we don’t like competition
but we like to trade for international aid so our leaders can get paid
and we like to fight for human rights but go to China to get laid

I’m a white man  in Africa from sixteen fifty-two
I’m stuck here can’t get out,  nothing I can do
I’ve got my dobermans, electric fence, machete and a gun
they’ll get me in the end but ‘till then I’m having fun
I’m a white man in Africa at least I got a tan
I’m feeling pretty lonely ‘cause the rest all cut 'n ran
Perth Sydney London Vancouver Quebec Montreal
they saw the writing on the wall - the colonies will fall
like rats off a ship ‘cause they saw what was coming
there were jujus in the night and they heard the distant drumming
and lucky for them they had the cash so they all ducked
but me?  I’m a white man in Africa…and I’m fucked
then again…aren’t we all.


STEP 1: Get to understand the macroeconomic realities of the world you are living in. Decide whether you feel comfortable with where things are headed. Bitcoin may turn out to be a place where, in the event of a very severe world depression, hyper inflation and the hardcore depreciation of paper money worldwide, you could safeguard some purchasing power.  But remember: Bitcoin is new, uncertain, volatile, high risk.  I recommend you have this attitude:  "I'm going to put some cash that I can afford to lose in bitcoin as a backup plan that might work in the event of world economic collapse."  I am of the view that the global economy is going to get much, much worse before it gets better.

STEP 2:  Go online and do some proper research so that you have a good idea what Bitcoin is all about.

STEP 3:  Decide whether you think Bitcoin is the madness of crowds or the wisdom of crowds.  If you think it is wisdom…see STEP 4:

STEP 4:  Set aside an amount of cash that you are willing to put at risk because Bitcoin is relatively new technology. Much volatility lies ahead I believe.  Remember:  you don't have to buy a whole bitcoin every time.  You can buy fractions of a bitcoin.  So you could buy R100 worth of bitcoin if you so wish.

STEP 5:  The South African bitcoin exchange is at   Sign up and follow instructions.


PS: Apart from the bitcoin wallet that you automatically get on BitX, you can also download other wallets from other providers.  I believe it is prudent to spread your bitcoins between wallets, so that all your eggs are not in one basket. I have three wallets - one on the BitX exchange, and two wallets with  Blockchain Wallet 

PPS:  I personally do not attempt to day-trade on bitcoin.  I am a buy and hold bitcoiner, given the view I have taken that the bitcoin price will be much much higher five years from now.

PPPS: high volatility = high risk/reward. Bitcoin crashes and bubbles WILL happen from time to time.  When the bitcoin price takes a dive, I buy.  But that's just me.  Cum est sanguis in plateis, emite!