Digital Disincentives

Security in the digital realm can seem very abstract. Anytime you lock up something in the physical realm, you have a tangible object to be locked up, an equally tangible lock, and the key for that lock. The key can be physical or not – contrast a key you slide into a door lock with a series of numbers in combination that opens the chain lock around a bicycle. In the digital realm you secure data, or stored information. The lock itself is a computer algorithm. The key is a series of numbers, letters, and symbols known only to you. Each of the digital components of security is more abstract than its physical counterpart, with the possible exception of the key, which we can conceptualize as a combination for a combination lock.

However, digital security uses economic principles which are very similar to those used by physical security. In both cases, the foundation of the security is to provide two disincentives to potential thieves: first, make it difficult to take your stuff by locking it up; second, reduce the perceived payoff for successfully breaking your lock. How well your security measures work depends on how well it performs each of these tasks.

For example, having a single, simple password shared among all of the computers and computer users in a household provides a weak level of security. A simple password, such as a short word out of the dictionary, is relatively easy to “break” using brute force – trying each word in the dictionary, for example. The payoff in this situation is also larger than it could be, since that single password is all that is needed to provide access to several systems and several users’ data on them. Overall, this is very much like using a single cheap bike lock to lock up the whole family’s bikes; a little brute force with a bolt cutter later, and all the bikes are gone.

This is why security professionals advocate difficult passwords that combine letters, numbers, and symbols; it’s why they say passwords should be changed often and should never be shared. If your lock is sufficiently difficult and time-consuming to break and it protects a small enough set of information, the payoff won’t be worth the time and the risk – and your potential thief will look elsewhere.

Armenian Currency Goes Poof

On 3 March 2009 in the space of a few hours the Armenian dram evaporated from about 300 per dollar to about 400 per dollar and 275,000 drams per ounce of gold to approximately 365,000 drams per ounce of gold.  This rapid 30% currency poofing is like when the Kazakhstan currency went poof but without the strategic geo-political considerations.  Nevertheless, extremely ominous financial troubles stir in Eastern Europe.  One knows the conditions are dire when Armenian Prime Minister Tigran Sargsyan advocates using the Russian ruble as a stable currency.

As fiat currencies represent the common stock of nations; Armenia’s future is omnious.  Trend Capital has reported that Ogtay Hagverdiev, of the Azerbaijani Cabinet of Ministers Economy and Finance and Credit Policy Department head, said. ”It will take time to restore the country’s economy. A revolt among the people may begin in the meanwhile.”

The Armenian government may soon default.  Rising prices, the effects of inflation, will soon begin.  Shortages, a common effect of currency problems, may appear.  Civil unrest may follow like in Iceland, Greece and China.


Large buildings in urban environments are often constructed in such a way to reduce the effects, such as sound, of the outside. It can be inspiring to sit in perfect silence without any sound to be heard coming from the bustling outside streets. How is this silence possible with the hustle and bustle of a metropolis only a few yards away?

The answer lies in the construction. For example, an inner building can be built within the walls of an existing building with the walls of the inner building connected to the outside building at only a few junction points. This will greatly limit the effects of the hustling and bustling metropolis.

The investor can learn a lesson. The reduction of junction points with businesses, organizations and governments can greatly reduce various risks to one’s capital and their effect on one’s personal life. If the relationship is no longer mutually advantageous then any attachment through junction points should be easily severed.

Defining one’s throughput and then implementing the Theory of Constraints thinking process can be extremely helpful in developing the Four Hour Workweek.  This may allow one the freedom to live where, when and how they want. The transitions accompanying the great credit contraction will provide tremendous opportunity for wealth generation and accumulation. Being able to understand the environment will allow one to swim with, not against, the current.

As the great credit contraction grinds on more fiat currency illusions, like the Armenian dram, Kazakhstan tenge or British Pound, will evaporate either wholly or partially.  As poet John Greenleaf wrote, “For all sad words of tongue and pen, The saddest are these, ‘It might have been’.”

I am sure many Armenians, Kazaks and British, who had their life savings evaporate, wish they had a last plane account with an institution like GoldMoney where they could have kept their cash balances in a tangible asset because no matter what happens with its fiat currency price the gold or silver is still there.  When these currency devaluation events happen, and a golden sword of Damocles hangs over the US Dollar, it is extremely fast.