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Stories I’d like to see

A fair view of the Koch brothers, and explaining bitcoin

By Steven Brill
March 25, 2014

1. Getting a full, fair view of the money behind the Democrats’ prime enemies:

Their company makes everything from Dixie Cups to Brawny paper towels to Lycra swimwear to a huge share of the plywood, lumber and other products used in construction. It operates 4,000 miles of energy pipelines, according to its website, and an array of oil refineries that can process 670,000 barrels of oil a day.

Other subsidiaries are leading producers of chemicals, fertilizer and electronic and fiber optic systems. Still another unit trades energy products such as crude oil and natural gas. Apparently (the website is vague) it even has a business buying and selling the emission allowances related to pollution control efforts throughout the industrialized world.

The website takes pains to note the company’s stunning economic success — its value has grown “more than 3,500 fold since 1960” — “has supported education and social progress. These philanthropic efforts include support for educational institutions, foundations and programs that study and promote market-based solutions to societal problems. [The company] also works to protect, conserve and enhance natural resources. [Its] companies around the world have earned nearly 800 awards for safety, environmental excellence, community stewardship, innovation and customer service.”

In fact, there’s a separate section on the website detailing the company’s multiple environmental protection efforts and awards.

What company is this that’s supporting all these seemingly good works with its profits? It’s Koch Industries, controlled by Charles and David Koch, the billionaire brothers who are funding hundreds of millions of dollars’ worth of ads attacking Democrats this year — mostly aimed at putting conservative Republicans in control of the Senate.

This article in the Washington Post last week tried to link the Koch brothers’ support for the Keystone energy pipeline to their company’s economic interests. But it was so lame — none of their products is due to go through the pipeline — that it made me want to read a complete article, full of unbiased reporting across the range of their business interests. I want to know just how self-interested the brothers’ political spending spree actually is.

Sure, any political activism by rich people to limit taxes and government regulation is bound to be in their interests generally. But do the Koch brothers have a more specific agenda, as the Post article tried to prove? Or could it be that Charles and David Koch just happen to believe a conservative government is good for their country?

The brothers and their foundation have also given hundreds of millions to multiple charities that have nothing to do with politics. As this article in the Indianapolis Star points out, the Charles Koch Foundation “underwrites research and teaching at Brown, Mount Holyoke, Sarah Lawrence, University of Wisconsin at Madison, Vassar and some 245 other colleges.” The New York State Theater at Lincoln Center has been renamed the David H. Koch Theater because he’s such a generous benefactor.

These are not beneficiaries associated with hard right causes.

As the Star also notes, “Koch Industries (which offers same-sex spousal benefits to its legally married employees) also donated $814,000 to the Kansas State University Office of Diversity to assist ‘historically under-represented students.’”

Is this all part of a plot to camouflage the brothers’ master plan? Or could it be that their outsized effort to buy results at the ballot box is, to them, no different from their outsized gifts to Lincoln Center or cancer care or anything else they think is good for the world?

Much of the media and punditry seems to have entertained that more generous view when another billionaire, Tom Steyer, decided to give millions to anyone willing to block the Keystone pipeline. But the Koch brothers have not enjoyed that benefit of the doubt.

For a few individuals on either side to try to dominate the agenda this way in a supposed democracy raises its own fundamental questions — and arguably shows a cavalier disregard for democracy itself. But the opposition to the Koch brothers has pushed beyond that, to accusations, in Senate Majority Leader Harry Reid’s words, that they are “un-American” and are “trying to buy America … to benefit themselves.”

As a private company, not much is known about Koch Industries, although its website says it has 60,000 employees and annual revenues of “about $115 billion” — which would make it 16th or 17th on the Fortune 500 list of public companies, just ahead of IBM or JPMorgan Chase.

A full-bore look inside the conglomerate would produce all kinds of interesting angles before we even get to the question of whether the brothers’ political spending is a wholly self-interested investment by people who care only about themselves. To take one narrow example, what kind of health insurance do employees get at the company owned by the brothers who have financed tens of millions of dollars of attack ads on Obamacare, using fictitious accounts of people victimized by the law?

But the larger question, answered only by a complete look at their businesses and the link between them and the political causes they are funding, is whether the Koch money firehouse is, at its core, their version of an investment in a better planet or, as opponents like Reid charge, a better profit and loss statement.

2. Someone please explain bitcoin:

Okay, I admit it. Although I consider myself a fairly sophisticated businessperson and reporter, and although I have read a ton about bitcoins, I have no understanding of what they are, how they work or are supposed to work.

Please, don’t tell me it’s “virtual money,” or some such thing. Tell me exactly how a bitcoin system is supposed to operate. What is virtual money? Yes, I know that the dollars in my pocket are virtual money — because they’re just pieces of paper. But I also know that they’re universally recognized and guaranteed by a signature from the Treasury secretary to be “legal tender.”

Who is supposed to be standing behind bitcoin and why would anyone believe it’s worth anything?

This New York Times story last Saturday about the “miraculous discover of about $116 million in missing Bitcoin” got me frustrated all over again.

Here’s the key sentence:

“In a posting on its website in both Japanese and English, the now-defunct Bitcoin exchange Mt. Gox announced that it had found the coins in an ‘old-format wallets,’ the virtual currency equivalent of finding money in another pair of pants.”

Do you know what the means? Or do you just think you should because it’s in the Times?

It’s time for a sophisticated journalist who can write and speak jargon-less English — like Floyd Norris of the Times, or Jim Cramer of CNBC, or maybe even Michael Lewis — to help us.

PHOTOS: David Koch, executive vice president of Koch Industries, attends the Economic Club of New York luncheon in New York, December 9, 2013. REUTERS/Shannon Stapleton POLITICS

An employee of a bitcoin exchange company displays bitcoin vouchers, which are worth around HK$9 (US$1.15), in Hong Kong February 11, 2014. REUTERS/Bobby Yip 

 

 

 

 

 

 

 

Comments
9 comments so far | RSS Comments RSS

The problem with the Koch brothers is not the Koch brothers, but rather the kind of society they represent – one where the primary purpose is to earn the best return for providers of capital. This philosophy has served the world (an in particular America) well in the past but is for far too many people it has reached its expiry date. Equality, sustainability, quality of life without wealth. These are the new way of thinking. If they sound like communism its because you are refusing to listen properly.

Posted by BidnisMan | Report as abusive
 

Bitcoin – the problem is not with your understanding of Bitcoin but of your understanding of currencies in general. The US dollar is not valuable because the treasury said its legal tender. Many legal tenders have been completely worthless – see Weimar Republic. Something has value because people accept it has value – and people accept that both dollars and Bitcoin have value. The main difference is that the dollar is distributed and tracked by a network of computers owned by banks and Bitcoin is distributed and tracked by a network of computers owned by private individuals. In other words, Bitcoin is simply a currency run by the people as apposed to the dollar which is a currency run by the government elected by the people. As the difference is very slight it is no surprise that bitcoin can readily be exchanged for dollars and vice versa.

Posted by BidnisMan | Report as abusive
 

Mt.Gox wallets – simply a very badly run member of the bitcoin community. Think of bankers who scrawl accounts on the back of strip club receipts. That they found the money in the wallet is simply a function of that they looked for it in there. Remember: unlike the wallets in your pants these wallets require encryption passwords to access the bitcoin – so its like forgetting your pin on your cash card.

Posted by BidnisMan | Report as abusive
 

Bitcoins are virtual tokens that can be traded freely between individuals and businesses that accept them. Exactly like how dollars are physical tokens that can be traded freely between individuals and businesses that accept them.

Bitcoins aren’t back by anything except trust in Bitcoins. Exactly like how the US Dollar isn’t backed by anything except trust in the US Dollar.

Bitcoin values in relation to ‘real’ currencies are more volatile, solely because Bitcoin isn’t a very widely accepted form of currency.

Bitcoin ‘wallets’ are collections of encryption keys stored in files specifically formatted to work with the Bitcoin program. Without the encryption keys, there is no method to prove ownership of the Bitcoins associated with that ‘wallet’. That keeps the Bitcoins more secure than physical currency, because you have to be able to prove you own that Bitcoin and provide the encryption key to access it.

The New York Time’s analogy is almost entirely accurate; if you don’t have the wallet file, you don’t have access to the Bitcoins. If you don’t know where your wallet is, you don’t have access to the credit cards and money you put into it. These Bitcoins weren’t actually lost, though, only access to them was lost until the wallet file was rediscovered.

Posted by Burns0011 | Report as abusive
 

Bitcoin is a decentralized digital currency. It is a network comprised of peer-to-peer protocols used to transmit “money” through the internet without the need for a centralized authority.

Traditional money is issued, controlled, and enforced by a centralized authority, such as a central bank or in the case of the U.S., the Federal Reserve. Bitcoin does not have a centralized authority but instead relies on a decentralized network of computers that run the Bitcoin client program and makes decisions based on consensus.

It is referred as “virtual money” because its protocol allows it to confer ownership (whether it be money, or other things) in the digital world. Because it has properties that allow it to transfer “value” across the internet, it can therefore act as “money”.

The basic principles needed for money to work digitally are the ability to transfer ownership over the internet and to prevent double spending.

Bitcoin (the network) uses public key cryptography (PKC) to allow the transfer of ownership of digital coins (i.e. Bitcoin, the digital currency) across the internet securely and anonymously. The use of PKC allows party A to digital sign a transaction for the transfer of X amount of Bitcoins to party B, thus ensuring that the transaction can only be done by party A (which holds the private keys) and that it can be verified by anyone to ensure the transaction’s integrity. Bitcoin also solves the problem of double-spending through the use of a public ledger called the Blockchain. This public ledger is a timestamped account of all the transactions that has taken place. Because it is public, anyone can see the transfer of Bitcoins from one party to another, thus ensuring that no double-spending of Bitcoins has occured. Because of these properties, Bitcoin allows transactions to occur digitally without the need for a third-party, such as a bank or payment processor. Trust is established through the use of cryptography.

There is nothing backing Bitcoin. The only thing that allows Bitcoin to act a “money” is the mathematics behind it and people’s faith that the mathematics allows it to work as it should.

Bitcoin is a system that allows it to act a digital money. But a system is only as strong as people’s faith in it. It has properties that allow it to transfer money digitally unlike any thing the world has seen yet, far cheaper and efficiently. Yet it will only work if people believes that it can come to represent their money.

Posted by UnsignedInt | Report as abusive
 

Charles Koch Foundation “underwrites research and teaching at Brown, Mount Holyoke, Sarah Lawrence, University of Wisconsin at Madison, Vassar and some 245 other colleges.” Is this a list of the universities that the Koch companies are able to manipulate what studies, research and teachings they produce by giving and taking money? These are not beneficiaries associated with hard right causes…unless your money can manipulate them.

Posted by Broken-Halo | Report as abusive
 

Let’s put it this way, Bitcoins are far less mysterious than the Koch brothers. Simply put, Bitcoins are like electronic script, whereby the developer creates a set amount of currency units for the currency and those units can be transferred to other users via a deposit hash code. That code is like a bank routing number (for deposit only) and identifies a particular “wallet id”, yet new deposit codes can be generated at anytime. These transactions are anonymous and cannot be tracked to a particular user. This allows for a global commerce using a single currency. Mt. Gox was one of many crypto coin exchanges much like Forex. The problems with Mt. Gox dealt with their own exchange software and not the Bitcoin platform. People leaving coins on deposit with Mt. Gox lost their coins because of this. Multiple crypto currencies exist and these exchanges trade these currencies much like any currency market. People are even participating in crypto currency arbitrage as these markets mature.

Posted by drummer185 | Report as abusive
 
 

“Who is supposed to be standing behind bitcoin and why would anyone believe it’s worth anything?”

Bitcoin is a hoax to get USD traded down to a third world currency that is not backed by anything except modern updated confederate propaganda. As it keeps growing in price of USD it will become backed by slavery if left unchecked. Bitcoin will turn the United States Dollar into the currency of global slavery as Bitcoin creates slavery that would never have existed without Bitcoin.

The Bitcoin hoax is played again on the Bitcoin itself with the purpose of intercepting USD by dumping Bitcoins onto exchanges faster than Bitcoin Merchant Service. Hundreds and soon thousands of hoax currencies are sold for Bitcoins to intercept those USD.

I don’t know what Bitcoin is really worth. I just know it is unfit for pure trade into gold or silver that you would be immediately be able to hold in your hand.

Posted by NealPalmquist | Report as abusive
 

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