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Tag: cryptocurrency

The Internet of LOUD

On the way home from dinner, I wondered, “What am I gonna write about tonight?” Then I opened Twitter and faced this headline: “Hacker breaches the US agency that certifies voting machines” (only semi-confirmed).

So, ah, there’s that.

Cybersecurity is vital but hard and also the most important institutions seem to ignore it. Great!

Also, Adam Elkus said something funny:

This is 2016, so I should be able to back a secessionist kickstarter with bitcoins sent via virtual reality

It’s kinda possible if you donate to Liberland. Apparently a lot of their funds come through bitcoin.

Avalanche in progress. Photo by Sean Gillies.

Avalanche in progress. Photo by Sean Gillies.

Anyway.

What I really want to talk about is something else. I feel angsty. It’s a result of the cacophony. The unfettered flow of information that we’ve set up for ourselves, where people’s opinions about the news go straight into my face for hours on a daily basis. (What? I could choose not to do this? Preposterous.)

I like keeping track of what’s going on. But I hate putting up with the constant ambient wrongness.

Now, I’m a reasonable person, so I know that I’m not right about everything. I have natural biases, delusions engendered by tribalism, and often I must draw conclusions based on incomplete information. Some of these flaws will be discovered and fixed at some point, but others will continue to taint how I perceive and analyze the world. Just another stellar perk of being human!

Since I am human, even though I intellectually know that I’m wrong about some things, on an emotional level I think that all of my firm opinions are correct. It is extremely grating that everyone goes around disagreeing with me all the time. Especially since I have an agenda — a way that I want the world to proceed — and pesky other people never stop working against it.

This isn’t new, of course, but I can’t help but think that the volume has increased. There is so much of it. In the “olden days” did people with opinions have to restrain themselves from starting arguments left and right?

(Pun intended.)

Bitcoin Over Bolivar

Some places are closer to the bleeding edge than others. Most of the United States, where I live, is quite tame. After all, something called “the bleeding edge” can’t be safe or stable. (Relatively speaking, folks, relatively speaking. Yes, the US could still use some work.)

So anyway, Jim Epstein wrote a great story about renegade bitcoin miners in Venezuela:

Faced with growing threats of violent crime and government extortion, members [of Venezuela’s rapidly growing digital currency mining community] interface through secret online groups and take extreme precautions to hide their activities.

In a country where cash has lost much of its value, and food and other necessities are dangerously scarce, bitcoins are providing many Venezuelans with a lifeline. The same socialist economics that caused the country’s meltdown has made the energy-intensive process of bitcoin mining wildly profitable — but also dangerous.

Did you know that electricity is free in Venezuela? That makes mining bitcoin pretty cheap. On the other hand, power is only intermittently available. Venezuela’s government is incompetent, except that the word “incompetent” is much too kind.

Naturally that same government, which tanked the national currency and wrecked the economy, wants to shut down the bitcoin miners. They also have to contend with kidnappings and other extralegal threats.

This is why libertarians are a necessary part of the political ecosystem, however horrified I would be by a full-on libertarian regime. (Is “libertarian regime” an oxymoron?) We need them to supply tools of resistance. Like, y’know, bitcoin. God bless ancap programmers!


Related: Nathaniel Popper profiled an Argentinian bitcoin broker, and the cryptocurrency’s general popularity in that country, last spring.

Very loosely related: I recommend this 2014 profile of LiveLeak and interview with the public face of the website.


Header photo by Gabriela Camaton.

Two Kinds of Fallibility

Over the weekend I read cryptographer Peter Todd’s fascinating account of helping get Zcash off the ground. (Zcash is an altcoin which describes itself thus: “If Bitcoin is like http for money, Zcash is https. Zcash offers total payment confidentiality, while still maintaining a decentralized network using a public blockchain.”)

Todd’s story is a great overview of practical opsec, from the point of view of someone who’s skeptical about the whole endeavor he’s undertaking. Plus all the evasion tactics and burner tech are just… cool.

Read more

Neural Fintech x2

“Neural Fintech” got more responses than anything else I’ve ever asked you all about, so it’s back *TV infomercial voice* by popular demand! If you missed the beginning you don’t strictly need to read it, but you can if you want to.


In the examination room there was machine that looked like an old-school MRI unit — Sasha remembered them from the hospital shows her grandma used to watch, 2D video of handsome doctors clumsily enhanced for her parents’ RoomView.

Next to the machine stood a beaming nurse with sleek brown hair. Everyone working for Centripath seemed to smile all the time, Sasha thought.

Jake the recruiter exclaimed, “Becky! Help me welcome our newest participant!”

“It’s a pleasure to meet you, Sasha,” the nurse said in a warm voice. On the machine’s side screen, Sasha could see the permission form that she had signed with Jake a few minutes ago.

“You’re in Becky’s hands from here,” Jake said, winking at Sasha as he slipped back out through the door.

The next few hours were busy and regimented. Multiple tests, the first inside that big machine, and then more forms. Sasha was glad that she hadn’t made plans for the rest of the day, but a little annoyed that no one had told her how long it would take.

She found out from Becky that she had “stellar capacity” for a crypto mine. Sasha tried to ask again how much they would pay, but Becky said she’d have to find out from her case manager. “That’s your next stop!” she told Sasha brightly. “Then installation!”

The case manager’s office was like Jake’s, and he even looked a bit like Jake. The nose and chin were different, but much the same smile. “Sasha, right?” he asked, half-rising from his desk.

“Hi,” she answered. Sasha could hear that she was tired.

“Would you like a drink of water?”

“Yes, thanks.” He handed it to her, and Sasha sat down.

“I really want to know how much this will pay. No one will tell me so far.”

“Of course, of course! You get a percentage of the yield from the mine. It can vary depending on your physical state, since all the energy is sourced from your body.”

Sasha didn’t say anything, just kept looking at him.

The case manager paused, waiting for her to acknowledge what he said. When she stayed silent, he continued. “It’s usually 5%, but that fluctuates based on the price of the cryptocurrency at hand, the daily processing efficiency, and so on.”

“Please estimate, in real money, how much I can earn from this.”

“Well, Sasha, I can’t promise anything. I can’t make a guarantee. But I can tell you that you’ll be able to pay half of the monthly fees for a nice PodNiche.”

She sighed. “Okay. I hoped it would be more. But okay, what the fuck. Let’s do the installation.”


Header image by Liz West.

Neural Fintech

“See, it’s a simple program.” The recruiter had very white teeth, Sasha noticed. He was wearing a navy blue suit and smiling big. The identity module said his name was Jake.

“A very simple program,” he repeated. “You know that old expression — humans only use 10% of our brain power? That other 90% is an opportunity, and we at Centripath have the software to take advantage of that opportunity.”

Sasha nodded. “Yeah.” She knew all of this from the promos she had watched. The exact figures weren’t true and Sasha knew that also, but it didn’t matter as long as they paid enough.

“Ae you familiar with cryptocurrencies?” Jake asked. “The one you’ve probably heard of is called bitcoin.”

“Uh-huh, I know bitcoin,” Sasha told him. “That’s why I’m here.”

“Wonderful!” Jake exclaimed. “Well, what this program does is harness your brain’s under-utilized processing power. The technical details aren’t important, but basically all that extra energy runs a cryptocurrency mine. Not always bitcoin, but that’s certainly one of the assets we harvest.”

Sasha was sitting forward on her armchair, leaning toward the recruiter with her elbows on her knees. “So you pay me rent for that. For using my brain. It doesn’t say on your website, so I wanted to ask how much you pay.”

“Ahhh, yes,” Jake answered, still smiling. “We have to analyze the capacity you have available, of course, and then we’ll give you a quote.”

“And this crypto mine won’t interfere with my daily life? I’ll still be able to think, like, normally? I watched the testimonials, but…”

“Then you know that you won’t feel a thing! It’ll be like nothing happened. Everything about the Centripath program is perfectly safe. All of this equipment has gone through rigorous testing. Really, you’re signing up for free money.”

Sasha bit her lip, thinking for a moment. “Okay, I want to take the scan. Or however you test people’s brains.”

Jake clapped his hands together. “Sasha, I am so glad to hear that! First let’s go over this paperwork — it should show up momentarily…”

Sasha felt the ping. “Got it.”

“Alright. I need to you read this and add your bioprint here… Here also…”

They sped through the details, then Jake led Sasha into the examination room.


Let me know if you want me to continue this. Otherwise I’ll leave it as microfiction. I owe the idea to my boyfriend, Alex Irwin. Header photo by Pantelis Roussakis.

—> READ THE SECOND SEGMENT

Cryptocurrencies Aren’t Fake, They’re Just Libertarian

Bitcoin-themed coaster. Photo by pinguino k.

Bitcoin-themed coaster. Photo by pinguino k.

A headline from the Miami Herald: “Bitcoin not money, Miami judge rules in dismissing laundering charges” — c’mon! Bitcoin is clearly money. I have mixed feelings about how cryptocurrencies should be regulated, but they are obviously currencies. The judge’s rubric for this question was weird and ahistorical:

“Miami-Dade Circuit Judge Teresa Mary Pooler ruled that Bitcoin was not backed by any government or bank, and was not ‘tangible wealth’ and ‘cannot be hidden under a mattress like cash and gold bars.’

‘The court is not an expert in economics; however, it is very clear, even to someone with limited knowledge in the area, the Bitcoin has a long way to go before it the equivalent of money,’ Pooler wrote in an eight-page order.”

Most mainstream currencies are backed by governments, but that’s not an inherent feature of money, just a modern quirk. How do people think money got started? It grew out of bartering, and for a very long time it wasn’t regulated or centrally controlled at all. [Edited to add: David Graeber’s Debt asserts that money actually emerged before bartering. Does not change my larger point. See the note at the end.] Just as an example, per the Federal Reserve Bank of San Francisco:

“Between 1837 and 1866, a period known as the ‘Free Banking Era,’ lax federal and state banking laws permitted virtually anyone to open a bank and issue currency. Paper money was issued by states, cities, counties, private banks, railroads, stores, churches, and individuals.”

And that’s relatively recent! John Lanchester wrote a truly excellent overview of what money actually is and how it functions for the London Review of Books, and I wish I could make this judge read it.

Granted, legal definitions exist in a parallel reality, so maybe there’s some legislative reason why the US government can’t bestow official currency status on non-state-sponsored currencies. They’d certainly have to step up their game when it comes to regulating them, which would be a lot of work since so far their game has been practically nonexistent.

Just to top off the ridiculousness, Tim Maly drew my attention to this bit from the Miami Herald article: “‘Basically, it’s poker chips that people are willing to buy from you,’ said Evans, a virtual-currency expert who was paid $3,000 in Bitcoins for his defense testimony.”

As Maly quipped on Twitter, “Bitcoin isn’t money laundering because bitcoin isn’t money says bitcoin expert paid in bitcoin.”

Is this merely a question of semantics? Yes. But I’ve always come down on the side that language is important — it’s both my first love and my livelihood, after all — and it bothers me to see foundational economic concepts misapplied. Let’s at least describe our brave new world accurately.


Note on the origins of money: Facebook commenter Greg Shuflin mentioned David Graeber’s book Debt: The First 5,000 Years and its assertion that bartering came after money. It doesn’t change my larger point, but here’s the relevant Wikipedia passage:

“The author claims that debt and credit historically appeared before money, which itself appeared before barter. This is the opposite of the narrative given in standard economics texts dating back to Adam Smith. To support this, he cites numerous historical, ethnographic and archaeological studies. He also claims that the standard economics texts cite no evidence for suggesting that barter came before money, credit and debt, and he has seen no credible reports suggesting such. […] He argues that credit systems originally developed as means of account long before the advent of coinage, which appeared around 600 BC. Credit can still be seen operating in non-monetary economies. Barter, on the other hand, seems primarily to have been used for limited exchanges between different societies that had infrequent contact and often were in a context of ritualized warfare.”

Sounds like an interesting book!

Something Something Blockchain

Yay, We Don’t Need Politics Anymore!

The DAO's logo, grabbed from their website.

The DAO’s logo, grabbed from their website.

I wanted to resist writing about The DAO — that stands for “decentralized autonomous organization” — but after going through my notes from this past week’s reading, I realized that I can’t avoid it.

The reason I wanted to steer clear is that everyone else has already said it better, but maybe you don’t subscribe to their newsletters. Besides, who else will address the cyberpunk angle?

Bloomberg columnist Matt Levine covered The DAO with delightful snark:

“One of the great joys of our modern age, with its rapid advances in financial technology, is examining the latest innovation to try to figure out what centuries-old idea has been dressed up in cryptographical mystification.”

To summarize aggressively, The DAO wants to crowdsource an entire company, which will sort of act as a venture capital partnership, dispensing ETH, a bitcoin-like cryptocurrency. You can read plenty more about their structure and setup on their website. The DAO’s main differentiators are “smart contracts” and, as the name suggests, decentralized governance:

“The ETH held by The DAO will never be centrally managed. DAO Token Holders are able to vote on important decisions relating to the management of The DAO, including the power to redistribute its ETH amongst themselves.”

Cryptocurrency Art Gallery by Namecoin.

Cryptocurrency Art Gallery by Namecoin.

The cryptocurrency crowd fascinates me because many of them seem to think they can opt out of normal human power structures, or somehow use code to avoid disputes. And I think that’s… well, impossible. (Maybe I am strawmanning egregiously, in which case I hope a cryptocurrency enthusiast or garden-variety libertarian will email me to point it out.) As I’ve written before:

“There is a reason why centralization happens over and over again in human history. We didn’t invent the Code of Hammurabi out of the blue. Monarchy did not develop randomly, and republics require executive branches.”

Direct democracy is a terrible system; I would go so far as to say it’s unworkable. Does anyone endorse mob rule? And centralized power is an oft-repeated pattern because it’s efficient. Furthermore, we have courts and the like because they’re useful — because the need for arbitration arises frequently despite the existence of contracts. Going back to Matt Levine’s article:

“The reason that ‘law and jurisdiction’ come into play is that sometimes stuff happens that is not addressed with perfect clarity in the contract. Sometimes the parties need to renegotiate to address something not specifically anticipated in the contract. Sometimes they can’t agree, and need an outside adjudicator to decide what should happen. And sometimes the project affects people who never signed the contract in the first place, but who have a claim nevertheless.”

And as business analyst Ben Thompson wrote in his “Bitcoin and Diversity” essay:

“I can certainly see the allure of a system that seeks to take all decision-making authority out of the hands of individuals: it’s math! […] If humans made the rules, then appealing to the rules can never be non-political. Indeed, it’s arguably worse, because an appeal to ‘rules’ forecloses debate on the real world effects of said rules.”

Lots of people don’t want to do the hard things. They don’t want to admit that decisions always carry tradeoffs, and they don’t want to negotiate messy human disagreements. But a world without those hard things is fairyland — nothing more than a nice dream.

As we continue to integrate computing into our daily lives, our legal system, and our financial system, we will have to keep grappling with human fallibility — especially when we delude ourselves into thinking we can escape it.


Update circa June 19: I was tempted to write about The DAO again, since it’s been “hacked” (sort of) and a “thief” (sort of) absconded with $50 million (USD value). However, a lot of other people have already published variations of what I wanted to say. The drama is still unfolding — /r/ethereum is a decent place to keep track — so I can’t point you to a canonical writeup, but Matt Levine’s new analysis is both cogent and funny. Also this Hacker News comment is smart.