Category Archives: Technology

Cryptocurrencies – Questioning The Value Proposition, by Stephen Englander

When the tech bubble popped in 2000, many companies went to zero, but many had value and are still with us today. Their values were lower than the euphoric values assigned to them at the height of the tech bubble, but they were or became profitable going concerns. A similar weeding out process will probably hit cryptocurrencies. From Stephen Englander at Rafiki Capital Management via zerohedge.com:

Bitcoin is deciding whether this is the moment to crash and burn.

My conjecture is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.

The dilemma is that once you stop pricing Bitcoin and its derivatives as new assets that will head to the moon, the pricing model is more conventional and much less breathtaking.

We discuss these issues below.

Below we go through some of the questions on why Bitcoin and cryptocurrencies have certain characteristics, and whether these characteristics are needed or even desirable.

  1. Is Bitcoin Netscape?
  2. How limited is the supply of cryptocurrencies?
  3. If Bitcoin crashes what happens to other alt-currencies?
  4. What asset market lacunae do cryptocurrencies fill?
  5. Why mine?
  6. Why distribute the ledger?
  7. Do cryptocurrency transactions need coins or tokens?
  8. Can you make cryptocurrencies KYC and AML compliant?​

1) Is Bitcoin Netscape?

Bitcoin emerged in the shadow of the financial crisis, when the reputations of the financial and economic policy community was at a post-1930s low. It is designed for a world in which there is no confidence in major fiat currencies. Bitcoin gives you pseudonymity (albeit imperfect), the distributed ledger means that transaction records are unlikely to disappear, the mining can take place anywhere and there are built-in incentives for miners to keep mining.

The question is whether there is a problem that the original Bitcoin solves in developed economies. Some Bitcoin characteristics superficially suit a ‘Mad Max/Hunger Games’ world, but add little now. My suspicion is that even in the Mad Max world, the value of Bitcoin will be de minimis since hard assets will be the currency, not an abstract string of code.

 

To continue reading: Cryptocurrencies – Questioning The Value Proposition

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My Joke Cryptocurrency Hit $2 Billion and Something Is Very Wrong, by Jackson Palmer

A cryptocurrency whose coin features the Japanese dog the Shiba Inu and was started as a gag is now worth $2 billion. From Jackson Palmer at motherboard.vice.com, h/t Stucky at theburningplatform.com:

Dogecoin’s inventor looks to the past for insight into the future.

Jackson Palmer is an Australian entrepreneur and technologist best known for creating the infamously successful “joke” cryptocurrency Dogecoin. Currently based out of San Francisco, Jackson works as a product manager but is still active in the cryptocurrency space. Jackson has holdings in various cryptocurrencies, including less than $50 worth of Dogecoin. You can follow him on Twitter and YouTube.

When I jokingly tweeted about “investing in Dogecoin” in late 2013, I never imagined that the tongue-in-cheek cryptocurrency I had just brought into the world would still be around in the year 2018, let alone hit a $2 billion market cap like it just did over the weekend.

Last year saw an explosion of interest and investment in cryptocurrencies across the board, so it’s tempting to see 2017 as the best year to date for the industry. But I feel it is shortsighted to mistake this explosive growth as being sustainable—in fact, I feel 2017 was arguably the worst year for cryptocurrencies yet. To understand why, let’s revisit what I learned from the currency I created as a joke.

Dogecoin started as a parody of the multitude of alternative cryptocurrencies, or “altcoins,” flooding the market at the time. As interest in Dogecoin grew through social media and an active Reddit community, it went on to become an educational gateway for many people dipping their toes into the world of cryptocurrencies for the first time, thanks to its low price and welcoming community.

In 2013, the vision for the future of cryptocurrencies seemed relatively clear: To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt. Bitcoin, which ignited the cryptocurrency movement in 2009, brought real technical innovation to the table in achieving this vision. Back then, I hoped that through the power of community, a project such as Dogecoin may help drive further awareness of and innovation in that technology.

To continue reading: My Joke Cryptocurrency Hit $2 Billion and Something Is Very Wrong

The Fukushima nuclear meltdown continues unabated, by Helen Caldicott

It looks like Fukushima’s radiation will be leaking into the surrounding Japanese countryside and the Pacific ocean until the end of time. From Helen Caldicott at independentaustralia.net:

Satellite image shows damage at Fukushima Nuclear Power Plant (via ecowatch.com).

Dr Helen Caldicott, explains recent robot photos taken of Fukushima’s Daiichi nuclear reactors: radiation levels have not peaked, but have continued to spill toxic waste into the Pacific Ocean — but it’s only now the damage has been photographed.

RECENT reporting of a huge radiation measurement at Unit 2 in the Fukushima Daichi reactor complex does not signify that there is a peak in radiation in the reactor building.

All that it indicates is that, for the first time, the Japanese have been able to measure the intense radiation given off by the molten fuel, as each previous attempt has led to failure because the radiation is so intense the robotic parts were functionally destroyed.

The radiation measurement was 530 sieverts, or 53,000 rems (Roentgen Equivalent for Man). The dose at which half an exposed population would die is 250 to 500 rems, so this is a massive measurement. It is quite likely had the robot been able to penetrate deeper into the inner cavern containing the molten corium, the measurement would have been much greater.

These facts illustrate why it will be almost impossible to “decommission” units 1, 2 and 3 as no human could ever be exposed to such extreme radiation. This fact means that Fukushima Daichi will remain a diabolical blot upon Japan and the world for the rest of time, sitting as it does on active earthquake zones.

Robot image of Fukushima Daiichi Unit 2 reactor (Source: tepco.co.jp)

What the photos taken by the robot did reveal was that some of the structural supports of Unit 2 have been damaged. It is also true that all four buildings were structurally damaged by the original earthquake some five years ago and by the subsequent hydrogen explosions so, should there be an earthquake greater than seven on the Richter scale, it is very possible that one or more of these structures could collapse, leading to a massive release of radiation as the building fell on the molten core beneath. But units 1, 2 and 3 also contain cooling pools with very radioactive fuel rods — numbering 392 in Unit 1, 615 in Unit 2, and 566 in Unit 3; if an earthquake were to breach a pool, the gamma rays would be so intense that the site would have to be permanently evacuated. The fuel from Unit 4 and its cooling pool has been removed.

But there is more to fear.

The reactor complex was built adjacent to a mountain range and millions of gallons of water emanate from the mountains daily beneath the reactor complex, causing some of the earth below the reactor buildings to partially liquefy. As the water flows beneath the damaged reactors, it immerses the three molten cores and becomes extremely radioactive as it continues its journey into the adjacent Pacific Ocean.

To continue reading: The Fukushima nuclear meltdown continues unabated

Big Brother = You, by Raúl Ilargi Meijer

Social media users are creating their own Orwellian nightmare. It bothers very few. From Raúl Ilargi Meijer at automaticearth.com:

Happy belated new year. Belatedly. Thought I’d sit out a few days, since there wasn’t much news to be expected. And it did pan out that way, other than Trump bogarting the limelight; but then, that isn’t really news either. Anything he says or does triggers the expansive anti-Donald echo chamber into a daily frenzy. And frankly, guys, it’s not just boring, but you’re also continuously providing him with free publicity. At least make him work for some of it.

Then, however, the big microprocessor (chip) security ‘flaw’ was exposed. And that’s sort of interesting, because it concerns the basic architecture of basically every microchip produced in the past 20 years, even well before smartphones. Now, the first thing you have to realize is that we’re not actually talking about a flaw here, but about a feature. We use that line a lot in a half-jokingly version, but in this case it’s very much true. As Bloomberg succinctly put it:

All modern microprocessors, including those that run smartphones, are built to essentially guess what functions they’re likely to be asked to run next. By queuing up possible executions in advance, they’re able to crunch data and run software much faster. The problem in this case is that this predictive loading of instructions allows access to data that’s normally cordoned off securely..

And:

Spectre fools the processor into running speculative operations – ones it wouldn’t normally perform – and then uses information about how long the hardware takes to retrieve the data to infer the details of that information. Meltdown exposes data directly by undermining the way information in different applications is kept separate by what’s known as a kernel, the key software at the core of every computer.

As I said: feature, not flaw (or two really, Spectre and Meltdown). And that makes one wonder: fixing a flaw is one thing, but how do you fix a feature? Several quotes claim that software patches would mean the performance speed of affected chips (that would be all of them) would go down by 25-30% or so. Which is bad enough, but the problem is not -limited to- software. And patching up hardware/firmware issues with software can’t be easy, if even viable.

That would make one suspect that even if a software patch can suppress this feature, as long as the architecture doesn’t change, it can still function as a backdoor. Apple may say there are no known exploits of it, but would they tell if for instance intelligence services used it? Or other parties that cannot be labeled ‘hackers’?

To continue reading: Big Brother = You

“Everyone Is Affected”: Why The Implications Of The Intel “Bug” Are Staggering, by Tyler Durden

This could be huge. From Tyler Durden at zerohedge.com:

Earlier today, we reported that according to a press reports, Intel’s computer chips were affected by a bug that makes them vulnerable to hacking. Specifically, The Register said the bug lets some software gain access to parts of a computer’s memory that are set aside to protect things like passwords, and making matters worse, all computers with Intel chips from the past 10 years appear to be affected. The news, which sent Intel’s stock tumbling, was later confirmed by the company.

In a statement issued on Monday afternoon, Intel said it was working with chipmakers including Advanced Micro Devices Inc. and ARM Holdings, and operating system makers to develop an industrywide approach to resolving the issue that may affect a wide variety of products, adding that it has begun providing software to help mitigate the potential exploits. Computer slowdowns depend on the task being performed and for the average user “should not be significant and will be mitigated over time” the company promised despite much skepticism to the contrary.

As Bloomberg helpfully puts it, Intel’s microprocessors “are the fundamental building block of the internet, corporate networks and PCs” and while Intel has added to its designs over the years trying to make computers less vulnerable to attack, arguing that hardware security is typically tougher to crack than software, there now appears to be a fundamental flaw in the design.

In a vain attempt to mitigate the damage, Intel claimed that the “flaw” was not unique to its products.

“Intel and other technology companies have been made aware of new security research describing software analysis methods that, when used for malicious purposes, have the potential to improperly gather sensitive data from computing devices that are operating as designed,” the Santa Clara, California-based company said. “Intel believes these exploits do not have the potential to corrupt, modify or delete data.”

To continue reading: “Everyone Is Affected”: Why The Implications Of The Intel “Bug” Are Staggering

Dangers of Government Control, by Walter E. Williams

Why does the Federal Reserve have so much control over the monetary system and the FCC over the internet? From Walter E. Williams at lewrockwell.com:

We are a nation of 325 million people. We have a bit of control over the behavior of our 535 elected representatives in Congress, the president and the vice president. But there are seven unelected people who have life-and-death control over our economy and hence our lives — the seven governors of the Federal Reserve Board. The Federal Reserve Board controls our money supply. Its governors are appointed by the president and confirmed by the Senate and serve 14-year staggered terms. They have the power to cripple an economy, as they did during the late 1920s and early 1930s. Their inept monetary policy threw the economy into the Great Depression, during which real output in the United States fell nearly 30 percent and the unemployment rate soared as high as nearly 25 percent.

The most often stated cause of the Great Depression is the October 1929 stock market crash. Little is further from the truth. The Great Depression was caused by a massive government failure led by the Federal Reserve’s rapid 25 percent contraction of the money supply. The next government failure was the Smoot-Hawley Tariff Act, which increased U.S. tariffs by more than 50 percent. Those failures were compounded by President Franklin D. Roosevelt’s New Deal legislation. Leftists love to praise New Deal interventionist legislation. But FDR’s very own treasury secretary, Henry Morgenthau, saw the folly of the New Deal, writing: “We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!” The bottom line is that the Federal Reserve Board, the Smoot-Hawley tariffs and Roosevelt’s New Deal policies turned what would have been a two, three- or four-year sharp downturn into a 16-year affair.

Here’s my question never asked about the Federal Reserve Act of 1913: How much sense does it make for us to give seven unelected people life-and-death control over our economy and hence our lives?

To continue reading: Dangers of Government Control

While Blockchain Exploded in 2017, Has it Grown Up? by Tom Luongo

Tom Luongo reviews the promise and pitfalls of blockchain technology. From Luongo at zerohedge.com:

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2017 will likely be remembered as the Year of the Blockchain. There’s no doubt in my mind that blockchain technology is here to stay and will alter the way we organize and distribute capital within the global society.

But, at the same time, as I look around (admittedly within my own myopia) I see the explosion of blockchain projects and wonder about their usefulness. While everyone is looking for new ways to utilize the blockchain I don’t see a lot of people asking whether we should be.

Aren’t there use-cases where a simple encrypted database would be better, faster and cheaper than creating a blockchain to handle that function? I’m not sure I have an answer to that question but I think it’s one we should be asking whenever we are looking at new projects.

Because, it’s easy to say, “But it’s Blockchain!” as if that is the sole reason for a project’s existence. Case in point, any publicly listed company that adds blockchain to their name or announces some blockchain-based product to their offerings has been immediately rewarded with scads of speculative money.

How many crypto-boiler rooms are out there now trying to convince people this is coin is ‘the next big thing?” I question the motives (and nee the sanity) of John McAfee’s “Coin of the Day” gig he’s been doing on Twitter.

When you have the kind of power within the space that McAfee has, using that power responsibly is paramount. I mean, really, isn’t Jim Cramer bad enough? At least you don’t see Cramer out there boiler-rooming a bunch of thinly-traded penny stocks on CNBC.

It’s behavior like this that will invite SEC attention, if not to McAfee himself then the space in general.

Moreover, the plethora of needless hard forks of Bitcoin itself, the obvious scam-coins and the pure mania inherent in certain projects has me worried that a lot of this activity will ultimately do much more harm than good.

To continue reading: While Blockchain Exploded in 2017, Has it Grown Up?