Inside Bitfinex's Comeback From a $69 Million Bitcoin Heist - Bloomberg

Inside Bitfinex's Comeback From a $69 Million Bitcoin Heist

by Yuji Nakamura

18 May 2017, 7:00 am AEST

After hackers stole $69 million from Bitfinex last year, the bitcoin exchange’s fate seemed sealed: lawsuits, bankruptcy and years of liquidation proceedings.

That’s what happened to Mt. Gox, the high-profile marketplace for trading the virtual currency, which lost $480 million. There were also other smaller implosions such as Cointrader and Bitcurex.

But against the odds, Bitfinex pulled out of its spiral dive, announcing last month that all customers were repaid. The exchange posted its most profitable month and claimed its spot as the largest bitcoin venue for U.S. dollar trading. “We’ve demonstrated an alternative to bankruptcy,” said Phil Potter, 45, Bitfinex’s chief strategy off

Behind the turnaround, unusual in an industry with few safeguards, is a combination of an uptick in market activity that boosted fee-based income and a mostly successful effort to mollify angry customers with an innovative market-based solution to how everyone would be compensated. Assuming the strategy doesn’t unravel down the road, Bitfinex may prove to be a valuable template for how the bitcoin community deals with a crisis in the future.

On Aug. 2, as the U.S. presidential election got into full swing after the Republican and Democratic conventions, Potter got an early morning phone call at his beach home in Long Island saying hackers had breached security and were draining customer deposits. Bitfinex’s executives don’t work in a single location, but are peppered throughout the U.S., Europe and Asia. Its parent company iFinex Inc. is incorporated in the British Virgin Islands, while back office functions are done in Taiwan, technology support is concentrated in London and the compliance team is run out of Hong Kong.

While the exchange succeeded in protecting U.S. dollar and other currency deposits, by the time they could block access, thieves had walked away with about 57 percent of bitcoin deposits. Even though the virtual currency exists as software, it can be stolen and transactions are irreversible. In the aftermath, bitcoin briefly slumped 15 percent against the dollar.

“The first thought we all had was, ‘Oh my god, is this another Mt. Gox?’" said Harry Yeh, managing partner at digital currency dealer Binary Financial and a large Bitfinex customer.

A key concern was whether another large bitcoin exchange implosion would undermine the virtual currency’s ecosystem and trigger a bear market like the one that followed Mt. Gox’s demise in 2014.

After hackers stole $69 million from Bitfinex last year, the bitcoin exchange’s fate seemed sealed: lawsuits, bankruptcy and years of liquidation proceedings.

That’s what happened to Mt. Gox, the high-profile marketplace for trading the virtual currency, which lost $480 million. There were also other smaller implosions such as Cointrader and Bitcurex.

But against the odds, Bitfinex pulled out of its spiral dive, announcing last month that all customers were repaid. The exchange posted its most profitable month and claimed its spot as the largest bitcoin venue for U.S. dollar trading. “We’ve demonstrated an alternative to bankruptcy,” said Phil Potter, 45, Bitfinex’s chief strategy officer.

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Behind the turnaround, unusual in an industry with few safeguards, is a combination of an uptick in market activity that boosted fee-based income and a mostly successful effort to mollify angry customers with an innovative market-based solution to how everyone would be compensated. Assuming the strategy doesn’t unravel down the road, Bitfinex may prove to be a valuable template for how the bitcoin community deals with a crisis in the future.

On Aug. 2, as the U.S. presidential election got into full swing after the Republican and Democratic conventions, Potter got an early morning phone call at his beach home in Long Island saying hackers had breached security and were draining customer deposits. Bitfinex’s executives don’t work in a single location, but are peppered throughout the U.S., Europe and Asia. Its parent company iFinex Inc. is incorporated in the British Virgin Islands, while back office functions are done in Taiwan, technology support is concentrated in London and the compliance team is run out of Hong Kong.

While the exchange succeeded in protecting U.S. dollar and other currency deposits, by the time they could block access, thieves had walked away with about 57 percent of bitcoin deposits. Even though the virtual currency exists as software, it can be stolen and transactions are irreversible. In the aftermath, bitcoin briefly slumped 15 percent against the dollar.

“The first thought we all had was, ‘Oh my god, is this another Mt. Gox?’" said Harry Yeh, managing partner at digital currency dealer Binary Financial and a large Bitfinex customer.

A key concern was whether another large bitcoin exchange implosion would undermine the virtual currency’s ecosystem and trigger a bear market like the one that followed Mt. Gox’s demise in 2014.

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As Potter, who once worked in Morgan Stanley’s wealth-management business, and other Bitfinex executives assessed the damage, they spoke to bankruptcy lawyers. After four sleepless days, they decided against shutting down the exchange and bet they could pull out of the mess.

The first step was the toughest. Bitfinex decided to ‘socialize’ losses evenly among all customers and apply a 36 percent haircut to every account. Even though some people’s bitcoin weren’t stolen, the exchange had a margin lending system that affected almost everyone. Unsurprisingly, users whose accounts weren’t breached were outraged and began rounding up allies to file class actions.

“We thought we might still have had to go in to bankruptcy, and if we did, this is likely how it would have had to work out: everyone takes an equal hit," Potter said.

On the whole, however, the community saw the benefits of avoiding a drawn out bankruptcy with their money locked up indefinitely, and were relieved to receive at least 64 percent of their money back.

Next, Bitfinex sweetened the deal by issuing IOU tokens to each customer equal to the 36 percent that was taken from their accounts. Management promised the tokens would eventually be exchanged for cash or equity in Bitfinex’s parent company.

In another clever move, Bitfinex said users could trade the tokens and let the market decide how much they were worth. Customers who wanted nothing more to do with Bitfinex could sell the instruments at a discount and walk away. Those who believed they would be repaid could gamble on a recovery by snapping up more tokens, although U.S. customers were given fewer options in order to comply with local regulations.

Initially, the price of each token plunged to around 15 cents on the dollar, indicating that traders thought there was only a one-in-eight chance the exchange would make good on its promise to pay back losses.

Then, the value of each token began to pick up as Bitfinex’s big customers started buying. Within a month, prices were at about 50 cents on the dollar. Potter said Bitfinex insiders and employees were barred from trading tokens.

Eventually, a virtuous cycle kicked in. As the tokens rose in value, confidence swelled and traders returned, boosting earnings from transaction fees and the likelihood of a successful turnaround. In mid-October, customers agreed to convert about a third of all tokens into equity. The deal valued the parent company at $200 million, underscoring the recovery in confidence.

A bitcoin rally that began last year, with prices more than doubling since August, also lifted market turnover. Bitfinex used the profits and drew down reserves to exchange more of the tokens for cash each month. The cycle continued until March when, with income at an all-time high and tokens trading at more than 90 cents on the dollar, management redeemed the remaining tokens and announced the recovery complete.

“They didn’t go into receivership, nobody lost money and now if anything they’re back and bigger and more profitable than ever,” said Binary Financial’s Yeh.

Not everyone was happy. Some smaller customers sold their tokens early, failing to recoup most of their losses. Essentially, the token market inherently favored bigger customers, whose close relationship with Bitfinex gave them a better idea of their potential. That also made it harder for disgruntled users to find allies to sue the exchange.

Still, it might be too early for Bitfinex to celebrate. Two weeks after announcing the $69 million was paid off, Bitfinex was forced to halt withdrawals and deposits of fiat currencies after its banks stopped processing payments. Potter said the situation is improving, but it remains unclear when access to fiat funding will be restored.

Meanwhile, Mt. Gox’s customers are still waiting for details on when and how much money they’ll get back. The trustee overseeing the liquidation told creditors in March that the investigation "is still on-going."

While it’s not clear whether Bitfinex’s recovery strategy is one that will be adopted for another crisis, the idea of using tradeable tokens is catching on. Used as derivatives that represent a share of future profits, equity or any other underlying asset, the tokens are gaining in popularity because they are unregulated and can be immediately bought and sold.

“Bitfinex’s recovery is an example of people starting to get creative with how to utilize tokenized systems to engineer solutions or mechanism that previously didn’t exist,” said Brian Lio, who runs research firm Smith + Crown. “Groups are going to step forward and try and come up with solutions in the absence of regulations.”

(An earlier version of this story was corrected to show that employees were barred from buying or selling tokens.)

The 5 Habits That Will Make You Happy, According to Science - TIME

The 5 Habits That Will Make You Happy, According to sscienceScience

Eric Barker

Dec 16, 2015

So what’s going to make you happy? Let’s get more specific: what’s going to make your brain happy? And let’s focus on things that are simple and easy to do instead of stuff like winning the lottery.

Neuroscience has answers. I’ve discussed this subject before and it was so popular I decided to call an expert to get even more dead simple ways to start your brain feeling joy.

Alex Korb is a postdoctoral researcher in neuroscience at UCLA and author of The Upward Spiral.

So let’s get to it. Alex has some great suggestions for simple things you can do to feel happier every day…

The 5 Habits That Will Make You Happy, According to Science

Eric Barker

Dec 16, 2015

So what’s going to make you happy? Let’s get more specific: what’s going to make your brain happy? And let’s focus on things that are simple and easy to do instead of stuff like winning the lottery.

Neuroscience has answers. I’ve discussed this subject before and it was so popular I decided to call an expert to get even more dead simple ways to start your brain feeling joy.

Alex Korb is a postdoctoral researcher in neuroscience at UCLA and author of The Upward Spiral.

So let’s get to it. Alex has some great suggestions for simple things you can do to feel happier every day…

Play Video

1) Listen To Music From The Happiest Time In Your Life

Music affects the brain in an interesting way: it can remind you of places you have listened to it before.

Were you happiest in college? Play the music you loved then and it can transport you to that happier place and boost your mood. Here’s Alex:

One of the strong effects of music comes from its ability to remind us of previous environments in which we were listening to that music. That’s really mediated by this one limbic structure called the hippocampus which is really important in a thing called “context dependent memory.” Let’s say college was the happiest time of your life. If you start listening to the music that you were listening to at that time, it can help you feel more connected to that happier time in your life and makes it more present.

I hope you weren’t happiest in elementary school because it’s going to be weird if you’re playing the Barney song or the Sesame Street theme around the house.

(To learn more about what the music you love says about you, click here.)

Now you can’t listen to music everywhere you go. What does neuroscience say you should do when you have to take those earbuds out?

2) Smile — And Wear Sunglasses

The brain isn’t always very smart. Sometimes your mind is getting all this random info and it isn’t sure how to feel. So it looks around for clues. This is called “biofeedback.” Here’s Alex:

Biofeedback is just the idea that your brain is always sensing what is happening in your body and it reviews that information to decide how it should feel about the world.

You feel happy and that makes you smile. But it works both ways: when you smile, your brain can detect this and say, “I’m smiling. That must mean I’m happy.”

So happiness makes you smile, but smiling can also produce happiness. Feeling down? Smile anyway. “Fake it until you make it” can work. Here’s Alex:

That’s part of the “fake it until you make it” strategy because when your brain senses, “Oh, I’m frowning,” then it assumes, “Oh, I must not be feeling positive emotions.” Whereas when it notices you flexing those muscles on the side of the mouth it thinks, “I must be smiling. Oh, we must be happy.” When you start to change the emotions that you’re showing on your face, that changes how your brain interprets a lot of ambiguous stimuli. Since most stimuli that we experience is ambiguous, if you start to push the probability in the positive direction then that’s going to have a really beneficial effect.

fIFQFETZHKXUM

Getty Images

PSYCHOLOGY

The 5 Habits That Will Make You Happy, According to Science

Eric Barker

Dec 16, 2015

So what’s going to make you happy? Let’s get more specific: what’s going to make your brain happy? And let’s focus on things that are simple and easy to do instead of stuff like winning the lottery.

Neuroscience has answers. I’ve discussed this subject before and it was so popular I decided to call an expert to get even more dead simple ways to start your brain feeling joy.

Alex Korb is a postdoctoral researcher in neuroscience at UCLA and author of The Upward Spiral.

So let’s get to it. Alex has some great suggestions for simple things you can do to feel happier every day…

Play Video

1) Listen To Music From The Happiest Time In Your Life

Music affects the brain in an interesting way: it can remind you of places you have listened to it before.

Were you happiest in college? Play the music you loved then and it can transport you to that happier place and boost your mood. Here’s Alex:

One of the strong effects of music comes from its ability to remind us of previous environments in which we were listening to that music. That’s really mediated by this one limbic structure called the hippocampus which is really important in a thing called “context dependent memory.” Let’s say college was the happiest time of your life. If you start listening to the music that you were listening to at that time, it can help you feel more connected to that happier time in your life and makes it more present.

I hope you weren’t happiest in elementary school because it’s going to be weird if you’re playing the Barney song or the Sesame Street theme around the house.

(To learn more about what the music you love says about you, click here.)

Now you can’t listen to music everywhere you go. What does neuroscience say you should do when you have to take those earbuds out?

2) Smile — And Wear Sunglasses

The brain isn’t always very smart. Sometimes your mind is getting all this random info and it isn’t sure how to feel. So it looks around for clues. This is called “biofeedback.” Here’s Alex:

Biofeedback is just the idea that your brain is always sensing what is happening in your body and it reviews that information to decide how it should feel about the world.

You feel happy and that makes you smile. But it works both ways: when you smile, your brain can detect this and say, “I’m smiling. That must mean I’m happy.”

So happiness makes you smile, but smiling can also produce happiness. Feeling down? Smile anyway. “Fake it until you make it” can work. Here’s Alex:

That’s part of the “fake it until you make it” strategy because when your brain senses, “Oh, I’m frowning,” then it assumes, “Oh, I must not be feeling positive emotions.” Whereas when it notices you flexing those muscles on the side of the mouth it thinks, “I must be smiling. Oh, we must be happy.” When you start to change the emotions that you’re showing on your face, that changes how your brain interprets a lot of ambiguous stimuli. Since most stimuli that we experience is ambiguous, if you start to push the probability in the positive direction then that’s going to have a really beneficial effect.

https://adclick.g.doubleclick.net/pcs/click?xai=AKAOjssT752BgTqXE2HckwTfe-gU1u3wJRNVJYtKtTiqyUWQRN338w78-AKbp8bnQNkVabf5eAxn9BTyy0lF8KkS1M2uqAn2UveN_gEkckjzvJ9mrm2hdp7Edelg2yHTF3gDPsVxTB5aehmx2oFOLeC9c3VbMwLD06kYSLKYcZi95kg466NMCpXKMBoScrtpsaIOzsuszMXeVB7lzw_UdDvj22cvZy0&sig=Cg0ArKJSzE6a3r0RiQm6EAE&urlfix=1&adurl=https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=brd&FlightID=20529541&Page=&PluID=0&Pos=1257849450" target="_blank">https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=bsr&FlightID=20529541&Page=&PluID=0&Pos=1257849450" border=0 width=300 height=250>

In fact, research shows smiling gives the brain as much pleasure as 2000 bars of chocolate, or $25,000.

And so what’s this about sunglasses? Bright light makes you squint. Squinting looks a lot like being worried. So guess what biofeedback that produces? Yup. Your brain can misinterpret that as being unhappy.

Sunglasses kill the squint and can help tell your brain, “Hey, everything is okay.” Here’s Alex:

When you’re looking at bright lights you have this natural reaction to squint. But that often has the unintended effect of you flexing this particular muscle, the “corrugator supercilii.” Putting on sunglasses means you don’t have to squint and therefore you’re not contracting this muscle and it stops making your brain think, “Oh my God, I must be worried about something.” It’s really just a simple little interruption of that feedback loop.

So smile. And wear those sunglasses. They can make you look cool and make you happier.

(For more on how to be happier and more successful, click here.)

So you have your music playing, you’re smiling and wearing your sunglasses. But you can still be stressed about things. What should you think about to kill your worries and keep yourself happy?

3) Thinking About Goals Changes How You See The World

And I mean, literally. Researchers flashed a bunch of circles on a screen in front of study subjects. One of the circles was always slightly different than the others. It was brighter or smaller, etc.

But when they told people to prepare to point at or try to grab the circles something crazy happened…

If they thought about pointing at the circles, they became better at noticing the brighter circle.

If they were told to think about grabbing a circle, it was easier for them to identify the smaller circle.

fIFQFETZHKXUM

The 5 Habits That Will Make You Happy, According to Science

Eric Barker

Dec 16, 2015

So what’s going to make you happy? Let’s get more specific: what’s going to make your brain happy? And let’s focus on things that are simple and easy to do instead of stuff like winning the lottery.

Neuroscience has answers. I’ve discussed this subject before and it was so popular I decided to call an expert to get even more dead simple ways to start your brain feeling joy.

Alex Korb is a postdoctoral researcher in neuroscience at UCLA and author of The Upward Spiral.

So let’s get to it. Alex has some great suggestions for simple things you can do to feel happier every day…

1) Listen To Music From The Happiest Time In Your Life

Music affects the brain in an interesting way: it can remind you of places you have listened to it before.

Were you happiest in college? Play the music you loved then and it can transport you to that happier place and boost your mood. Here’s Alex:

One of the strong effects of music comes from its ability to remind us of previous environments in which we were listening to that music. That’s really mediated by this one limbic structure called the hippocampus which is really important in a thing called “context dependent memory.” Let’s say college was the happiest time of your life. If you start listening to the music that you were listening to at that time, it can help you feel more connected to that happier time in your life and makes it more present.

I hope you weren’t happiest in elementary school because it’s going to be weird if you’re playing the Barney song or the Sesame Street theme around the house.

(To learn more about what the music you love says about you, click here.)

Now you can’t listen to music everywhere you go. What does neuroscience say you should do when you have to take those earbuds out?

2) Smile — And Wear Sunglasses

The brain isn’t always very smart. Sometimes your mind is getting all this random info and it isn’t sure how to feel. So it looks around for clues. This is called “biofeedback.” Here’s Alex:

Biofeedback is just the idea that your brain is always sensing what is happening in your body and it reviews that information to decide how it should feel about the world.

You feel happy and that makes you smile. But it works both ways: when you smile, your brain can detect this and say, “I’m smiling. That must mean I’m happy.”

So happiness makes you smile, but smiling can also produce happiness. Feeling down? Smile anyway. “Fake it until you make it” can work. Here’s Alex:

That’s part of the “fake it until you make it” strategy because when your brain senses, “Oh, I’m frowning,” then it assumes, “Oh, I must not be feeling positive emotions.” Whereas when it notices you flexing those muscles on the side of the mouth it thinks, “I must be smiling. Oh, we must be happy.” When you start to change the emotions that you’re showing on your face, that changes how your brain interprets a lot of ambiguous stimuli. Since most stimuli that we experience is ambiguous, if you start to push the probability in the positive direction then that’s going to have a really beneficial effect.

https://adclick.g.doubleclick.net/pcs/click?xai=AKAOjssT752BgTqXE2HckwTfe-gU1u3wJRNVJYtKtTiqyUWQRN338w78-AKbp8bnQNkVabf5eAxn9BTyy0lF8KkS1M2uqAn2UveN_gEkckjzvJ9mrm2hdp7Edelg2yHTF3gDPsVxTB5aehmx2oFOLeC9c3VbMwLD06kYSLKYcZi95kg466NMCpXKMBoScrtpsaIOzsuszMXeVB7lzw_UdDvj22cvZy0&sig=Cg0ArKJSzE6a3r0RiQm6EAE&urlfix=1&adurl=https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=brd&FlightID=20529541&Page=&PluID=0&Pos=1257849450" target="_blank">https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=bsr&FlightID=20529541&Page=&PluID=0&Pos=1257849450

" border=0 width=300 height=250>

In fact, research shows smiling gives the brain as much pleasure as 2000 bars of chocolate, or $25,000.

And so what’s this about sunglasses? Bright light makes you squint. Squinting looks a lot like being worried. So guess what biofeedback that produces? Yup. Your brain can misinterpret that as being unhappy.

Sunglasses kill the squint and can help tell your brain, “Hey, everything is okay.” Here’s Alex:

When you’re looking at bright lights you have this natural reaction to squint. But that often has the unintended effect of you flexing this particular muscle, the “corrugator supercilii.” Putting on sunglasses means you don’t have to squint and therefore you’re not contracting this muscle and it stops making your brain think, “Oh my God, I must be worried about something.” It’s really just a simple little interruption of that feedback loop.

So smile. And wear those sunglasses. They can make you look cool and make you happier.

(For more on how to be happier and more successful, click here.)

So you have your music playing, you’re smiling and wearing your sunglasses. But you can still be stressed about things. What should you think about to kill your worries and keep yourself happy?

3) Thinking About Goals Changes How You See The World

And I mean, literally. Researchers flashed a bunch of circles on a screen in front of study subjects. One of the circles was always slightly different than the others. It was brighter or smaller, etc.

But when they told people to prepare to point at or try to grab the circles something crazy happened…

If they thought about pointing at the circles, they became better at noticing the brighter circle.

If they were told to think about grabbing a circle, it was easier for them to identify the smaller circle.

What’s that mean? Having a goal literally changed how they saw the world.

So when you’re feeling stressed or challenged, think about your long-term goals. It gives your brain a sense of control and can release dopamine which will make you feel better and more motivated. Here’s Alex:

The goals and intentions that you set in your prefrontal cortex change the way that your brain perceives the world. Sometimes when we feel like everything is going wrong and we’re not making any progress and everything is awful, you don’t need to change the world, you can just change the way you are perceiving the world and that is going to be enough to make a positive difference. By thinking, “Okay, what is my long term goal? What am I trying to accomplish?” Calling that to mind can actually make it feel rewarding to be doing homework instead of going to the party because then your brain is like, “Oh yeah. I’m working towards that goal. I’m accomplishing something that’s meaningful to me.” Then that can start to release dopamine in the nucleus accumbens and that can start to make you feel better about what you’re doing.

(To see the schedule the most successful people follow every day, click here.)

Sometimes you can try all these little tricks and it doesn’t feel like it’s making a bit of difference. That’s often because you’re missing something that’s really key to good brain function…

4) Get Good Sleep

We all know depression messes up how people sleep. But what’s interesting is it’s actually a two way street: bad sleep also causes depression. Here’s Alex:

fIFQFETZHKXUM

The 5 Habits That Will Make You Happy, According to Science

Eric Barker

Dec 16, 2015

So what’s going to make you happy? Let’s get more specific: what’s going to make your brain happy? And let’s focus on things that are simple and easy to do instead of stuff like winning the lottery.

Neuroscience has answers. I’ve discussed this subject before and it was so popular I decided to call an expert to get even more dead simple ways to start your brain feeling joy.

Alex Korb is a postdoctoral researcher in neuroscience at UCLA and author of The Upward Spiral.

So let’s get to it. Alex has some great suggestions for simple things you can do to feel happier every day…

1) Listen To Music From The Happiest Time In Your Life

Music affects the brain in an interesting way: it can remind you of places you have listened to it before.

Were you happiest in college? Play the music you loved then and it can transport you to that happier place and boost your mood. Here’s Alex:

One of the strong effects of music comes from its ability to remind us of previous environments in which we were listening to that music. That’s really mediated by this one limbic structure called the hippocampus which is really important in a thing called “context dependent memory.” Let’s say college was the happiest time of your life. If you start listening to the music that you were listening to at that time, it can help you feel more connected to that happier time in your life and makes it more present.

I hope you weren’t happiest in elementary school because it’s going to be weird if you’re playing the Barney song or the Sesame Street theme around the house.

(To learn more about what the music you love says about you, click here.)

Now you can’t listen to music everywhere you go. What does neuroscience say you should do when you have to take those earbuds out?

2) Smile — And Wear Sunglasses

The brain isn’t always very smart. Sometimes your mind is getting all this random info and it isn’t sure how to feel. So it looks around for clues. This is called “biofeedback.” Here’s Alex:

Biofeedback is just the idea that your brain is always sensing what is happening in your body and it reviews that information to decide how it should feel about the world.

You feel happy and that makes you smile. But it works both ways: when you smile, your brain can detect this and say, “I’m smiling. That must mean I’m happy.”

So happiness makes you smile, but smiling can also produce happiness. Feeling down? Smile anyway. “Fake it until you make it” can work. Here’s Alex:

That’s part of the “fake it until you make it” strategy because when your brain senses, “Oh, I’m frowning,” then it assumes, “Oh, I must not be feeling positive emotions.” Whereas when it notices you flexing those muscles on the side of the mouth it thinks, “I must be smiling. Oh, we must be happy.” When you start to change the emotions that you’re showing on your face, that changes how your brain interprets a lot of ambiguous stimuli. Since most stimuli that we experience is ambiguous, if you start to push the probability in the positive direction then that’s going to have a really beneficial life.

And so what’s this about sunglasses? Bright light makes you squint. Squinting looks a lot like being worried. So guess what biofeedback that produces? Yup. Your brain can misinterpret that as being unhappy.

Sunglasses kill the squint and can help tell your brain, “Hey, everything is okay.” Here’s Alex:

When you’re looking at bright lights you have this natural reaction to squint. But that often has the unintended effect of you flexing this particular muscle, the “corrugator supercilii.” Putting on sunglasses means you don’t have to squint and therefore you’re not contracting this muscle and it stops making your brain think, “Oh my God, I must be worried about something.” It’s really just a simple little interruption of that feedback loop.

So smile. And wear those sunglasses. They can make you look cool and make you happier.

(For more on how to be happier and more successful, click here.)

So you have your music playing, you’re smiling and wearing your sunglasses. But you can still be stressed about things. What should you think about to kill your worries and keep yourself happy?

3) Thinking About Goals Changes How You See The World

And I mean, literally. Researchers flashed a bunch of circles on a screen in front of study subjects. One of the circles was always slightly different than the others. It was brighter or smaller, etc.

But when they told people to prepare to point at or try to grab the circles something crazy happened…

If they thought about pointing at the circles, they became better at noticing the brighter circle.

If they were told to think about grabbing a circle, it was easier for them to identify the smaller circle.

What’s that mean? Having a goal literally changed how they saw the world.

So when you’re feeling stressed or challenged, think about your long-term goals. It gives your brain a sense of control and can release dopamine which will make you feel better and more motivated. Here’s Alex:

The goals and intentions that you set in your prefrontal cortex change the way that your brain perceives the world. Sometimes when we feel like everything is going wrong and we’re not making any progress and everything is awful, you don’t need to change the world, you can just change the way you are perceiving the world and that is going to be enough to make a positive difference. By thinking, “Okay, what is my long term goal? What am I trying to accomplish?” Calling that to mind can actually make it feel rewarding to be doing homework instead of going to the party because then your brain is like, “Oh yeah. I’m working towards that goal. I’m accomplishing something that’s meaningful to me.” Then that can start to release dopamine in the nucleus accumbens and that can start to make you feel better about what you’re doing.

(To see the schedule the most successful people follow every day, click here.)

Sometimes you can try all these little tricks and it doesn’t feel like it’s making a bit of difference. That’s often because you’re missing something that’s really key to good brain function…

4) Get Good Sleep

We all know depression messes up how people sleep. But what’s interesting is it’s actually a two way street: bad sleep also causes depression. Here’s Alex:

They took all these people with insomnia and followed them for a few years and it turned out that the people with chronic insomnia were much more likely to develop depression. Depression causes sleep problems but sleep problems are also more likely to lead to depression.

So how do you improve your sleep? Alex has a number of suggestions:

Get bright sunlight in the middle of the day. At night, try and stay in a dimly lit environment. Having a comfortable place to sleep and having a bedtime ritual so that your brain can prepare to go to sleep are also good. Trying to go to sleep at the same time every night and keeping a gratitude journal can also improve your sleep.

(To learn everything you need to know about having the best night’s sleep ever, click here.)

All this little stuff to feel better is good. But if you’re not getting stuff done at work it’s going to be hard to stay happy. What’s neuroscience say about building good habits and conquering procrastination so you can stay smiling?

5) How Neuroscience Beats Procrastination

Your brain isn’t one big ol’ lump of grey goo that’s perfectly organized. Far from it. Think of it a little more like a bunch of your relatives arguing at the dinner table during a holiday get together.

When it comes to the choices you make and the things you do, Alex says there are 3 regions you need to be concerned with. You don’t need to memorize the names. It’s just important to realize they all get a vote:

• The Prefrontal Cortex: The only one thinking about long-term goals like, “We need to prepare that report for work.”
• The Dorsal Striatum: This guy is always voting to do what you’ve done in the past, like, “When it’s time to work we usually start by checking email 9 times, then Facebook, and then watching Netflix.”
• The Nucleus Accumbens: The party animal of the three. “Email, Facebook and Netflix are fun. Work sucks.”

So guess what you end up doing? Yeah… Ouch.

But when you exert effort, the prefrontal cortex can override the other two and do the right thing. Repeat this enough times and you rewire the dorsal striatum: “We usually start reports quickly. I vote we do that again.”

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That’s how the brain builds good habits. So why don’t we do that more often? Often the culprit is stress. Here’s Alex:

I have a friend who always says, “Stress takes the prefrontal cortex offline.” Stress changes the dynamics of that conversation. It weakens the prefrontal cortex. That part of your brain doesn’t have infinite resources. It can’t be eternally vigilant and so while it’s not paying attention, your striatum is like, “Let’s go eat a cookie. Let’s go drink a beer.” Anything that you can do to reduce stress can help strengthen the prefrontal cortex’s control over your habits.

So if you want to build good habits and stop procrastinating, the first thing to do is reduce stress. (The best ways to do that are here.)

Procrastination is often a vicious circle because you delay, then you have less time to complete the project, so you get more stressed, procrastinate more, have even less time, which makes you even more stressed and… well, you get the idea.

So what’s the answer? After a little something to reduce stress, find one small thing you can do to get started. This focuses you and prevents the overwhelm that knocks the prefrontal cortex out of the conversation. Here’s Alex:

When the prefrontal cortex is taken offline by stress we end up doing things that are immediately pleasurable. Instead of getting overwhelmed, ask yourself, “What’s one little thing that I could do now that would move me toward this goal I’m trying to accomplish?” Taking one small step toward it can make it start to feel more manageable.

(To learn 5 weird but effective ways to conquer chronic procrastination, click here.)

Time to round up everything we learned. Alex gave us six great…

Wait. Did I only say “5” in the headline? Okay, you’re getting a bonus. Keep reading for Alex’s #1 easy thing to do to cause an upward spiral of happiness in your life…

Sum Up

Here’s what you can learn from Alex about how neuroscience can bring happiness:

• Listen to music from the happiest time in your life: Let’s hope you had good taste when you were happiest.
• Smile and wear those sunglasses: You don’t have to wear them indoors. That would be dumb.
• Think about your goals: It changes how you see the world and releases happy chemicals in your noggin.
• Get your sleep: Depressed people don’t sleep well. And people who don’t sleep well get depressed.
• Beat procrastination by reducing stress and doing a simple thing to get started: Listen to those happy-era tunes and then assemble all the materials you need to get cranking.

And what’s that #1 thing that Alex says can start an upward spiral of happiness? It’s dead simple:

Go for a walk outside every morning, preferably with a friend.

Yup, that’s it. How can something so incredibly simple be so powerful? Here’s Alex:

I think the simplest way to kick start an upward spiral is to go for a walk outside every morning, and if possible, do it with a friend. The walk engages the exercise system and when you’re walking outside the sunlight you’re exposed to has benefits on the sleep systems and can impact the serotonin system. If you do it everyday, then it starts getting ingrained in the dorsal striatum and becomes a good habit. If you can do it with a friend, that’s even better because you get the social connection.

Right now: share this post with a friend and ask them to join you for a walk tomorrow morning. That’s it. (And wear your sunglasses.)

Go outside. Put one foot in front of the other. Smile with a friend.p 

 And you’re on your way to neuroscientific happiness.

Looks like it really is the simple things in life that bring us joy.