Seriously? Mike Hearn’s quite remarkable presentation about the future (which is actually the present) includes a statement from Mike that machines don’t have an agenda, or at least they can be programmed to NOT have an agenda and therefore to act with complete objectivity.
All these machines that Mike is talking about are programmed with algorithms. Algorithms are “if/then” statements. Such as “If you take your hand and push me in my chest, then I will punch your lights out.” That’s an algorithm. It’s conditional. Not only is it conditional in a Turing complete sense (any input will provide you with an output), but it’s conditional in accordance with its program.
There’s only one problem. That program… the one running the software that runs on the hardware that runs the robot was written by a person. It’s impossible for a human being, even one as cold and calculating as Mike Hearn to not have an agenda. All programmers have an agenda, ergo all programs have an agenda. It’s impossible for robots, self-driving cars or any machine for that matter to be entirely objective in its output when that machine was designed, built and deployed through the subjective nature of a human being.
Mike even says as much himself in the presentation. He talks about working on products with a “billion plus users” and that no matter how hard he tried to make these projects objective (cough~ objects of his objective), he always failed. He says they always turned political essentially making Dave’s point. Looks like this particular presentation was one of Mike’s final hopes that through seemingly disinterested puppetry he would be allowed to mold Bitcoin in his own image. Who knows how Bitcoin XT will turn out? That story (core, xt, classic, unlimited) is far from over.
If this isn’t a CIA opp (or some other .gov agency that is unnamed e.g. Paypalintir Mafia), then I’ll eat my hat. That hat eating exercise, ladies and gentlemen, was an algorithm. I designed the algorithm and I have a hat that’s made of cheese just in case I need it.
Why do choosy mother’s choose Dave? It’s simple. Because, if you did, you would have seen this Henry Kravis First Data train coming down the Paypal payment rails in June of 2014.
“PayPal signed a strategic agreement with First Data to enable the acceptance of PayPal’s tokenized payments in-store by First Data’s acquiring clients and businesses. This is an important step forward in driving availability of PayPal at the point-of-sale as First Data is the largest U.S. merchant processor, with approximately 40% market share.”
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Holding On To Bitcoin & Beyond With All Their Might
Photo by Paul E. Alers
There’s plenty of buzz around Bitcoin and which infinity it’s going to be headed to (zero or hero). Here’s the first one. It’s a white paper from Bretton Woods Consumers’ Research division (est. 1929) that was presented this weekend at the North American Bitcoin Conference in Miami (www.btcmiami.com). The title is “The Promise of Bitcoin and the Blockchain”. I would suggest you find out if “the promise” is from one or the other or bothbefore launching into the space for yourself.
If you didn’t know better, you would think that there was a single orchestra conductor somewhere handing out the sheet music. Speaking of the DTCC, that’s been one of Dave’s favorite subjects over the years. Here’s twenty articles on the subject if you’re having trouble sleeping or understanding why the DTCC is so important to Digital Assset Holding’s strategery.
I skipped this one when it originally came out, but considering that this blog post has turned into a library index for January 2016 as the Month of the Blockchain, here you go. Magister Advisers: A Survey Of Global Leaders.
Images from the Delaware shore. Apologies for the amateur video. Between fighting the wind, watching out for flying debris and responding to text messages from Dave’s wife demanding that I come home, I was busy. Video was recorded around 11 a.m. 1/23/16.
Davos Channels Its Inner Frank Sinatra – Embraceable You
When Dave tries to sell you something, he will normally say something like “You may want to consider this application.” I also might say something such as “Your organization may want to adopt this protocol.”
If Dave was working at a pet shop, I may even say “You should embrace this puppy.” Outside of my becoming Barry Diller and IPO’ing online dating sites Match, OkCupid, Plenty of Fish and Tinder for $400 million (while holding back 86% of the stock for myself), describing any technology, except puppies or Russian brides, as “embraceable” is… well… suspect.
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So, why exactly must we “embrace the blockchain”? Think about it for a moment. Embrace a puppy? Who wouldn’t embrace a puppy? Embrace Anastasia? She seemed like such a nice girl online until she moved in, married me and took me for everything I owned. Embracing something or someone or some puppy is a big deal.
When you embrace you let your guard down. When you embrace you submit, you consent, you give up. That’s what embraces are all about. Hugging for more than 20 seconds can release oxytocin which is like smoking marijuana. Yep. It makes you trust the person you’re hugging. Read the studies for yourself.
I guess that’s why everyone that wants to cut the cost of administering the global central banking system that starts in Basel Switzerland and covers nearly the entire globe wants you to embrace the blockchain including the IMF. If you’re not sure about the distinction between embracing cold hard Bitcoin and embracing the warm fuzziness of the blockchain, then you may want to check her intentions before consenting to your Russian bride with marriage vows and before you take the polar bear plunge into the frozen waters of cryptographic money.
If you’re not careful, you could end up kicked to the curb and “left” behind for dead like Bitcoin on a blind date with Mike Hearn.
When it comes to the economy are you looking to get revenge or is a miracle the preferred outcome? Parsing the finer points between all dead, mostly dead and slightly alive is interesting, but pales in comparison with love. Dave got some love this week from two fighters. Actually they’re not fighters. Dave turned them into fighters when he turned all Don King boxing promoter to make a buck at The Thrilla in Chinchilla. The payoff was pretty great for Dave in the end. Preston declared publicly that he loved me and Chris Derose privately messaged me “I love your tweets btw”.
So, it’s not all bad that two of the brightest minds in the “Blockcoin” space are such good sports. Unfortunately I can’t say the same for Chipotle and Monsanto. It’s going to take more than Billy Crystal’s Princess Bride character Miracle Max to resurrect these two S&P 500 corps from the dead if they keep it up. What do Chipotle & Monsanto have to do with each other and which one is Harry & which one is Sally in The Great Digestion Meets The Great Stagnation?
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The Digestion/Stagnation Cast of Characters
It’s complicated. So, let me lay out who’s who so that we can get this economic drama started.
# Former Dallas Fed Pres., limelight seeker, 1970’s China negotiator & Kissinger ally: Richard W. Fisher
# Former Harvard Pres., Obama White House economist & shunned non-SecTreas: Larry Summers
# Current George (Koch Bros.) Mason Univ. econ prof and author of the Great Stagnation: Tyler Cowen
# Grillman that cleans the grill at my local Chipotle restaurant & never won a Nobel Price in Economics: Paul K.
# Truck driver who sprays herbicide all over Delaware where Dave hangs his non-secular blogging hat: Willard
It’s Chipot-LEE, not Chipol-TEE
Dave likes to eat at Chipotle or at least he “liked” to eat at Chipotle. That was until I got sick. Not that kind of sick. Not serious sick… just Grillman-Paul-didn’t-clean-the-grill-good-enough sick. Dave doesn’t eat out very often. I know a lot about the food business and I’ve been involved in it for eight years. That’s one reason I don’t eat out often. The second reason is that my system is pretty sensitive to a clean kitchen and cooking utensils and if the frying pan or the grill isn’t clean, Dave finds out shortly thereafter.
So, I ate at Chipot-lay back in October when the stock price was around $750 per share and somebody didn’t clean the grill. Not good. I didn’t think too much about it. Anyone can have a bad day and I had probably eaten at that particular store a couple of dozen times and never had a problem. So, November comes along and the stock price is down to $540 so Dave goes back for more (doh). Dave gets sick again and this time… it’s worse. Not life threatening, but… well…
Dave had noticed that the staff wasn’t quite as sharp as they had been during the summer months when this resort town is over run with tourists and there is literally a line out the door at Chipot-LEE and multiple management types lurking around. This WAS the off-season and if the payroll-cost-to-sales ratio is inversely proportional to the number of tattoos, nose rings and blue hair hairdos, then this store had their staffing costs under control, but unfortunately their cooktop “safety”… not so much.
It was about the same time between my last trip to Chipoletea and my second-to-last trip to Chipoletea that all the news broke about trouble at the $750 per share Mexican Grill. I had distinctly remembered that line out the door in July and thinking to myself just how much money this one store was making for the company. $1,000 per share seemed like a good deal based on the incredible number of transactions per hour this store was banging out.
Four short months later and my wife is asking me what’s wrong and I’m saying I got Chipotled and she says “Aren’t they having trouble?” Hollering over the noise of the bathroom fan, Dave says “Honey, Chipotle had some sort of serious e-coli outbreak in Seattle or somewhere. I don’t have e-coli, I’ve got e-mail.” You see, I was passing the time watching Sleepless In Seattle with only my Iphone to entertain me and Meg Ryan e-mailing Tom Hanks. After that it was Meg Ryan (Sally) meeting Billy Crystal (Harry). Finally it was Billy Crystal miraculously preventing the mostly dead from meeting their maker. It was like a Netflix movie bathroom binge.
“I’m calling Chiportl-Tea right now!”, said Dave’s wife
“Honey, don’t do that,” says Dave. “They just didn’t clean the grill. You know that. I know that. This is not some sort of community health emergency. Please don’t call them…” Dave calls out from behind the doors of the facility. It’s too late because I can already hear my wife on the phone calling and asking to speak with the manager. For a second I think… I know what this is. She’s trying to get a free meal… maybe some coupons… maybe a free Patron Margarita (yes, I saw a Patron bottle at Chipotle – go figure). Is Dave’s wife trying to monetize Montezuma’s revenge at Dave’s expense? Now that made me angry.
Here I am suffering, all alone in the facility – Chipotled – and all Dave’s opportunistic Princess Bride can do is to try to make Rudyard Kipling allowances for Grillman’s doubtful grill cleaning too. “The manager told me to call back…. he’s having a lunch rush,” she said from the other side of the door with that little bit of disappointment in her voice like she missed out on some sort of discount at Bed Bath & Beyond because her coupon expired. “Are you okay in there?” she said, but I questioned her sincerity. “Go away. I’m coming up on the part where Harry meets Sally,” I said as dismissively as possible. I’m sure Sally would have never tried to take advantage of Harry by humiliating him in public.
“Eventually Feeling Better” ~ The Solution To America’s Food Problem
Way back in 2011, a Frankenstein version of twitter-censoring Marc Andressen’s software eats the world emerged from the foothills of Fairfax, Virginia’s Mercatus Center. The Harris Chair of economics, Tyler Cowen’s idea was straight out of the Koch Brothers playbook… eat or be eaten and was as clear as the subtitle of his book: How America Ate All The Low-Hanging Fruit Of Modern History, Got Sick, and Will (Eventually) Feel Better (burp). Not to take one iota away from Monsieur Cowen’s innovative approach to his successful retrogression reversal (perish-THEN-publish) of the academic author digestive system (1. ebook first, 2. hard cover last), we still find ourselves in an undulating economic agita as our new “service economy” of pizza delivery persons circle the cul de sac of a deflating wage vortex in search of tips.
Let’s contrast what Tyler had to say about “eventually” feeling better in 2011 and precisely what former Dallas Fed President Richard W. Fisher said in January 2016 about how the Fed “front loaded a tremendous market rally starting in 2009.” Dick explains “the reverse Whimpy factor” (alluding to Whimpy from the cartoon Popeye) “give me two hamburgers today for one tomorrow.” Take a listen.
Dick Fisher knows a thing or two about front loading for The Great Digestion. Not only did he join the Pepsi board of directors the day after resigning from the Dallas Fed, but he’s helping to build these venerable brands of low hanging snacks found in your local convenience store such as Mountain Dew, Lay’s Potato Chips, Doritos, Cheetos and even Tostitos. Are you feeling better yet? Betcha can’t eat just one.
Ticklin’ your innards is one thing, but exacting gastrointestinal revenge is war!
Dave enjoys eating an entire bag of Doritos at one sitting as much as the next guy. The only difference is I won’t do it because I know to check the ingredient label prior to ingestion. But before I get accused of hate speech against a commercially lauded Super Bowl snack, let’s take a look at where all this so-called “food” came from anyway and why do we seem to be having so much trouble digesting everything from a gluten-free Chipotle corn tortilla to the Atrazine leeching into Dave’s Delmarva groundwater.
Most people don’t know it but there was a thing called The Green Revolution and it has nothing to do with being “green” and it had everything to do with avoiding global starvation in the short-run with a Richard Fisher style front-end loading of the food supply through the widespread use of nitrogen based fertilizers, herbicides and pesticides. Starting in the 1930’s and led by Nobel Laureate Normann Borlaug, it culminated in a 1968 pre-Soros version of the Colour Revolution when William Gaud said;
“These and other developments in the field of agriculture contain the markings of a new revolution. It is not a violent Red Revolution like that of the Soviets, nor is it a White Revolution like that of the Shah of Iran. I call it the Green Revolution.” William Gaud, US Agency for International Development – 1968
Undoubtedly a key to increasing crop yields was the ability to use a front end loader to short circuit the ancient 7-year cycle of jubilee where the land rested and debts were forgiven. Rather than continue the tried and true practice of natural law allowing for a re-infusing of soil with depleted nitrogen and phosphorous and a cleansing of debt, man had a better answer. This was brought about by a little known process called Haber-Bosch that’s well known to guys like the Koch Brothers. While nitrogen and phosphorous fertilizers seemed like a miraculous solution to reducing erosion and increasing crop yields in the 1959 New Zealand documentary Land From The Sky (see the 9 min 30 second mark), instead the short cut brought us full circle to where contamination of the watershed is a given and corporations like Koch Industries are depicted as our heroes for cleaning it up.
[Duncan, Arthur (updated June 10, 2015). ‘Superphosphate – Superphosphate pros and cons’, Te Ara – the Encyclopedia of New Zealand]
Make sure to take note in the short commercial below of this marketing approach to the Hegelian synthesis of 1. thesis (earth is covered with water), 2. antithesis (the water is polluted), 3. synthesis (“We are Koch” water cleaners) of taking the polluted water we already have, as if “polluted water” is what we were given. Nobody seems to question where that pollution came from in the first place when we have clearly been applying it from both land and air for over a half-century courtesy in Dave’s neighborhood of Willard the truck driver.
So what does all this have to do with Chipotle and Davearrhea? Since you asked, Dave knows a thing or two about organic marketing and green revolution 2.0. I helped to contribute information to the USDA’s development of their Organic Standards program in the 1990’s. I was actively involved in the organic cotton textile and apparel manufacturing industry and it’s a little known fact that cotton covers 2.5% of the world’s cultivated land yet uses 16% of the world’s insecticides. If you don’t think you’re eating and drinking cotton, look for cotton seed oil in your food and Atrazine in your local water quality report. Today Dave is involved in a start-up raw juice and fresh food business that just received it’s first official Establishment Inspection Report from the Food & Drug Administration, but what does that have to do with Chiportlee exactly?
This is where conjecture comes in – a Dave specialty. So, about the same time I was making my last two trips to Chipotlerrhea, I noticed a sign posted right where you place your order. The sign read “No GMO“. “Wow!”, Dave thought to himself. Not only does that take some kind of nerve, it ain’t gonna be easy to make that work in the supply chain. Trying to make sure you get non-genetically modified food if your manager has to run out to the local Safeway and buy some tomatoes could be a little bit tricky and does this mean the chicken, pigs and cows aren’t eating any GMO grains?
Like I said Bo Knows a little about the food business now and if you want to build 600+ Bojangles chicken restaurants or 1,900 Chipotle fast casualterias you’re not going to see Bojangles going GMO probably ever, but even the hipsters at Chipotlay have got their work cut out for them. Organic is one thing, but 85% of soybeans, 70% of cotton (and the oil) and 50% of corn are genetically modified in the U.S. so it’s a big deal and a big part of everyone’s food supply because remember your “protein” (i.e. your beef, pork & chicken) is second-hand food. Those animals have to eat crops before they can adorn your dinner plate and with government-backed animal protein campaigns such as Milk-It Does A Body Good, Beef- It’s What’s For Dinner and Pork – The Other White Meat, where could anyone possibly find a protein source outside of an animal? Keep reading.
That’s when it hits Dave like a Mountain of Monetezuma Dew drops raining down on my head like an aerial application of mini Monsanto mercenaries parachuting from the sky with blow torches spraying RoundUp weed killer on everything. The Dave Conjecture: the powers that BE don’t want Chipotleee getting all non GMO up in their business. It’s one thing when your local tree-hugging, roots and shootsrastafarian restaurantrepreneur and unlicensed medicinal marijuana dispensary operator in New York’s Hell’s Kitchen claims that his burrito wraps are non-GMO. It’s something else altogether when a $749 per share, 1900 location Chipotle Taco Bank & Trust posts such a claim front and center for every soccer mom in Cincinati to see.
Ka-ching… and that’s not the sound of a cash register, but rather the same industrial food lobby that brings us such innovations as “wild caught” salmon raised on a farm, reloading their annual campaign contributions Kalashnikov. Keep in mind that the stakes are so big in the global Genetically Modified Organism game that Russian President Vladimir Putin claims that Russia will be the world’s largest exporter of non-GMO foods. Makes for quite a fight… a food fight to be precise just like the one you’re witnessing playing out at Chipotle today.
In an effort to sort out the potential confusion:
Dave thinks he suffered from Burrito-rrhea simply because Paul Grillman is not nominated for a Nobel prize in grill cleaning and because Manager Guy changed and the operation slacked off during the off-season. Simple enough.
Dave’s wife’s attempt to apply the logical fallacy method of getting a FREE meal out of the manager’s hide since Chipotle was suffering from a national media onslaught of E.coli outbreaks by falsely creating a correlation to Dave’s-arrhea was valiant if not self-serving. Nice try. Probably not gonna eat there for a while anyway and I may eat some chicken and even some pork (trying to cut down on that one), but the tofu is #1.
Is there a bigger story? Is there a conspiracy of “green revolutionaries 1.0” that don’t want to see the increased localization of food production and will risk everything to protect the very profitable process of turning the hydrogen in our air combined with natural gas to yield nitrogen based fertilizers using the Haber-Bosch process? Synthetic fertilizer combined with GMO seed from Monsanto that is RoundUp pesticide resistant is a good financial gig if you can get it just so long as clean groundwater and runoff isn’t your issue… clean water – who needs that? The increased consciousness of where our food comes from has been tough on Monsanto too with their recent announcement of 2,600 laid off and a stock price that’s dropped from $125 to $91 in about a year
Q: What Is The Great End Game In Gastronomic Horseshoes?
A: Ingestion By A Unicorn of Course
Getting back to the gastrointestinal secular stagnation that occurs when the front-end loaded Happy Harry Heroin Meal of the Fed’s FREE money policy (and resultant Dudley Do-Right of negative interest rates – they’re BACK) meets the spinning fan blades of a Kyle Bass online reality show titled: Inability To Normalize Rates In Our Lifetime , what’s a Larry Summers or Whole Foods CEO for that matter ($55 3/15 $30 1/16), to do? The way Dave sees it, there’s only one way out of this Fed fairy tale turned Porcelain Nightmare on Wall Street. Throw Jonah out of the boat with the bale water and hope that he gets eaten by a billion dollar unicorn in a takeover.
That’s right, Marc Jeftovic over at Rebooting Capitalism has found the escape hatch from the vortex of broken Black-Scholes models into an Everything Is Awesome Legoland of Silicon Valley returns via the black holes of social tech vortex funding rounds… and rounds… of down rounds. Getting bought out by a unicorn that is yet to earn money but has successfully jumped the steeplechase of shark-tank equity dilution multiple times is the way to go. Dave calls it The Escape From The Zero Bound Down Round 1/2 Pound of Ground Round. Critics have called it “…an Alcatraz Island of eight rent seeking horse burgers on a hateful Tarantino grill.” The bottom line is even a horse’s stomach ain’t gonna be able to digest this one. She’s coming back up like the monthly rent on an Embarcadero condo and it may be colorful, but it wont’ be pretty.
If you think things were tough for the banks during the financial crisis and the great recession, keep in mind that no major players went to jail. The story may not be the same when it comes to the management of you favorite burgeoning national hipster cafeteria chain. Is jail time the solution to America’s food safety problem? At least some people think so. Has anyone considered looking a little bit closer to home for their food and remember I am a fan of Chipotle, their operating model and especially their transactions per minute, but maybe there’s a lesson to be learned. Don’t go up against Monsanto unless you’re ready and you don’t always have to buy your veggie burrito from a national chain.
Then what’s the economic solution to Harry’s Stagnation Met Sally’s Digestion? Is the answer for Larry Summers to extract free range revenge from Paul Krugman? It was Larry who introduced the secular stagnation entree into the vernacular in his February 2014 speech. So what’s happened since then? Paul (grill master) Krugman tried to share a macroeconomic booth with Summers at Katz’s Deli in New York, but it didn’t work out so well when Summers responded in a less than friendly Economic Club of New York manner in the Washington Post.
photo: Beyond My Ken
“The essence of the secular stagnation and hysteresis ideas that I have been pushing is that there is no assurance that capitalist economies, when plunged into downturn, will, over any interval, revert to what had been normal. Understanding this phenomenon and responding to it seems the central challenge for macroeconomics in this era.” Larry Summers
[Summers, Larry (Nov. 2, 2015). “Where Paul Krugman and I differ on secular stagnation”, The Washington Post]
If you’ve never pictured yourself (and your digestion) this way, or if you’re not familiar with a torus or Poincare’s conjecture, you are topologically speaking a donut. You’re a torus because if you tied a string to your nacho and ate it, the string could theoretically pass through you from one end to the other without ever puncturing the torus. The same thing cannot be said about a baseball for example, but it could be said about a coffee cup. A torus has a hole in it. Everything we consume through the course of our life passes through our torus. It goes in one end and comes out the other. Economic systems when properly designed would work the same way with special attention paid to the externalities.
When we put bad food into our torus it’s not going to be digested. It’s coming out… one way or the other. When we put bad monetary policy into our strained fiscal policy it’s a recipe for disaster. This time we crimped the torus when we touched the zero lower bound and in some instances even fatally punctured the social contract when we passed through NIRP to the other side of negative interest rates. Like Mark Jefftovic said, once you cross that event horizon there’s no going back. Richard Fisher’s Great Digestion seems to be bubbling up as a great projectile heaving event. I think Greg Slepak said it pretty well a week ago when he described our handling of the situation.
Environmentalism is not about protecting the Earth, it’s about protecting ourselves. Earth can handle humans just fine.
Dave believes that we are in dominion over the earth and that the earth is not in dominion over us, but only if we are stewards of that power. Means testing your carbon footprint will be increasingly part of the discussion especially in light of Bitcoin and blockchain technologies and their ability to measure it precisely. In Richard Douthwaite’s “The Ecology of Money” and concepts such as “To each according to his needs and contributions” many people fail to realize that someone else will be establishing the values within those new “systems” of sustainability. The big difference now is that even though it may be a tough job to keep a stagnant grill clean, the proliferation of sensors (including new digital forms of money) will make tracking every detail of digestion (or evacuation) a reality – a stark reality as we swap our liberty for safety (even food safety).
The next time you’re craving some protein instead of taking revenge out on three animals per day (bacon & eggs, ham & cheese sandwich, roast beef & mashed potatoes) you may want to consider an alternative and securing your nutrition a little bit closer to home such as some kale from your backyard or your local farmer’s market (Yes, Virginia kale is made of protein and cows eat grass). The system of “green” sustainability was here long before we reinvented the “Mexican Grill”. Take a look around and see if you can find it. You just may improve local economic stagnation and it should be good for your digestion too.
Then God said, “Let us make mankind in our image, in our likeness, so that they may rule over the fish in the sea and the birds in the sky, over the livestock and all the wild animals, and over all the creatures that move along the ground.” Genesis 1:26
Then God said, “I give you every seed-bearing plant on the face of the whole earth and every tree that has fruit with seed in it. They will be yours for food. Genesis 1:29 (New International Version)
Preston, COO Eris Industries Patrick, CEO Overstock
One of these Byrnes is a tae kwon do black belt & former professional boxer while the other is a barrister marmot.
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Well, I’m back. Dave here. You may have been wondering where I’ve been. Before we get into all that, let’s take a look at some stats. This blog was launched October 2010 and continued regularly until April 2015. Of the thousand or so posts, 274 posts included Bitcoin and I bought my first Bitcoin for $11 in late 2011. I guess that makes me an old-timer in this space, but as Janet Jackson was fond of singing in her 1986 Soul Train Music Award winning Best R & B disco track “What have you done for-me-lately?” So I’ve been away from the blog for 9 months… but I have been on Follow @tradewithdave.
Why did I leave and why am I back and what can I do for you lately? Dave left for two reasons. First I was busy working on a business project and secondly I saw a tsunami of blockchain media mania heading my way. RUN!!! Don’t get me wrong. I don’t have anything against the blockchain per se. Remember, it was Dave who first said; There is no forgiveness in the blockchain in December 2013 long before the idea of perm chains (i.e. permissioned ledgers) had even entered lexicon bitcoinia. Obviously, if forgiveness is the issue, it was only natural for permission to become the Daily Special at the crypto lunch counter.
tl;dr? Just go straight to the video at the bottom party people.
Ironically, it was on April 5, that I posted my final blog post Satoshi As A Service when the next day Tim Swanson posted his 66 page white paper on permissioned ledgers titled Consensus As A Service. [Swanson, Tim (2015, April 6). Consensus As A Service: a brief report on the emergence of permissioned, distributed ledger systems]. That paper unleashed a tsunami of blockchain enthusiasm vs. bitcoin minimalism that officially lasted until December 29, 2015.
What exactly happened yesterday? Well, Dave calls it the Thrilla In Chinchilla hearkening back to the 1975 literal knockdown-drag-out-third-and-final Heavyweight Boxing Championship of the World between The Greatest Muhammad Ali and challenger Smokin’ Joe Frazier. The Thrilla In Manilla was a legendary and brutalizing 14 round battle royale between two men that left one Ali, standing victorious. This time around, rather than being a bloody battle of wills, the bitcoin vs. blockchain debate was a battle for rodent supremacy between Bitcoin’s unofficial, yet fully-fungible Honey Badger mascot vs. Eris Industries official Blockchain Marmot – the ubiquitous Doug. This time around, the prize is a full-length fur coat made from your opponents hide and a share of the $6 billion plus market cap of Bitcoin. Second prize is your own increasingly block-size share of the twelve month budget cycle of the Too Big To Fail bank’s collective distributed ledger development projects.
What’s cuter than a $410 million dollar JPMorgan out of court settlement?
The effort to extract the underlying tech by extracting the blockchain, like so many tons of underground coal, while avoiding the above-ground public relations nightmare of everything Bitcoin from Senator Chuck Schumer’s free advertising for the Silk Road contraband market to the collapse of Mt. Gox’ Bitcoin exchange and Chuck Shrem’s money laundering conviction at BitInstant has coalesced nicely for Marmot Doug. Pheww.. the Shrem Affair got dangerously close to Erik Voorhees and even the Winkelvoss twins. Operation Blockchain sans Bitcoin now focuses on the 40+ bank member R3CEV and Digital Asset Holdings that’s run by former JPMorgan’s Blythe Masters known affectionately in communities such as Reddit.com’s r/Bitcoin as the Cruella Deville of the Credit Default Swap, yet unquestionably she has brought Wall Street and City of London financial star power to the distributed ledger space.
(UFC Octagon original design credit: Greg Harrison)
Representing the two opposing sides of the same underlying-tech-of-electricity-driven-computers generating consensus and shocking home gamer/miner utility bills for the unsuspecting housewife/househusband are two prominent yet equally juxtaposed experts in their own right – coder/community director Chris DeRose and barrister/marmot breeder Preston Byrne. Rather than meet in a 120 degree arena mid-day in Manila, this time around the virtual UFC octagon of cryptographic journalism was Coindesk. DeRose threw the first punch with his December 21st take on how; when it comes to banks being BIGGER it doesn’t necessarily make ’em better in a Tim Swanson blockchain maximalism kind of way.
Although clearly on the defensive at the outset Byrne responded in seasoned debater form with a series of quick blows to the ghostly body of Bitcoin Past ($1,124 – Dave called that top) and a valiant lawyerly attempt to dismiss the case entirely when his finely crafted petitio principi claim of “Nobody will own the stack” silenced… even a mouse rodent. While Byrne begs the question he nearly knocks DeRose entirely out of the ring because if nobody OWNS the ring, then boxing promoter Dave “Don King” Harrison has no reason to be here anyway. Case closed! (gavel strike! briefcase click!)… as both Byrne and his increasingly famous haircut, non-violently (open carry withstanding) avoid the screen door hitting them both on the way out of the boxing ring turned courtroom.
Wait just a doggone Merry Marmot minute. Hold your horsepowered hover board! This is a boxing match, not some Court of Public Appeals to the private chain of oracle prediction market opinions. We’re talking trustlessness here as in boxing-ring-trust (correction: UFC octagon-of-trust), not some Latin circulus in probando logic that avoids the violence of live rodent fur-skinning and drops our pay-per-view (or as they did in those days, closed circuit television) revenues like an alt-coin price on the day after Christmas. Dave knows a thing or two about value. Don’t forget that Dave made a call of his own on November 27th and 30th of 2013 when the BTC price peaked at $1,124 on the 29th.
Where’s The (Counter)party People?
So, speaking of Ultimate Fighting Championships, what’s the story on this other Byrne who’s been accused of carrying a tae kwon do black belt through a metal detector? He’s none other than Patrick Byrne CEO of Overstock.com, scourge of the Wall Street naked short sellers and most recently persona non grata a the R3CEV Christmas party. You see, although “Black Belt” controls his own broker dealer on Wall Street and has a green light from the SEC backed by a self-referential $5 million bond (not a counterparty creature in sight… not even a marmot) it seems that he wasn’t invited to participate with R3CEV’s chain gang of 40 banks. Those lawsuits that our non-barrister Byrne brought against a hedge fund and a research firm may have something to do with the lack of reception at 55 Water Street. (Yes, there’s 10 articles linked on that subject too).
What Byrne may lack in holiday party invitations, he makes up for in university degrees and philosophical exploration of economics and real world business. After pursuing Wall Street short sellers with not one, but two lawsuits for allegedly unfairly attacking Byrne’s Overstock company’s stock price, he became the self-proclaimed “most hated man on Wall Street” and even gave a speech to prove it. It’s one thing not to be embraced in the concrete canyons of Wall Street, but it’s something else to become the most hated Mormon in Salt Lake City because haters gonna hate, but Mormons aren’t haters… jus’ sayin’. Overstock will announce earnings on 2/4/16 so we’ll see for sure just how Overstocked those warehouses in Utah truly are.
You see, while “Blackbyrne” as I have come to fondly refer to Patrick (as opposed to “Brownbyrne”/Preston – see marmot for color only) has been busier than Johnny Tabacco (aka “T-Zero”) taking on the “Sith lords of Wall Street“, it seems that Jeff Bezos over at Amazon has been making hay out of Overstock’s same store sales decline and the last time I looked Overstock only has one “store” known as the IOT – Internet of Towels.
Byrne made history when he purchased a $500,000 TIGRcub digital bond the company issued through Entrex.net – the first such transaction in history. Not to diminish the significance and expertise of securities lawyers within the realm of securities, (the other Byrne, Preston happens to be one himself – a securities lawyer, not a middleman per se because Eris’ distributed application is FOSS – free and open-source software), but this is what legal professional middle man Jeffrey Steiner had to say:
“It [blockchain] can not only ensure that there’s security in the transaction, but it provides a full record of ownership for things like corporate bonds and stocks. It can increase transparency, reduce costs, and remove the middleman—in this case remove a [traditional] exchange or a broker.”
[Alois, JD (2015, Dec. 17). Overstock CEO Gets SEC Approval to Issues Shares Using Blockchain. Crowdfund Insider. Retrieved from http://www.crowdfundinsider.com/2015/12/78921-overstock-gets-sec-approval-to-issue-shares-using-blockchain/]
…and from OSTK’s ($12.11) the firm’s 11/13/2015 8-K filing*:
“* technical, operational, regulatory or other difficulties we may encounter in connection with Medici’s efforts to create a system for the trading of digital securities, or with the operation of Medici’s system, which we began on a limited trial basis during Q2 2015 with a privately-placed sale of $500,000 principal amount of our cryptobonds to our CEO Dr. Patrick Byrne in exchange for cash and a subsequent sale of $5.0 million to an unaffiliated third party in July 2015”
Patrick Byrne’s cryptographic NASDAQic watershed purchase of the first-ever $500,000 TIGRcub digital bond was probably hashed into some blockchain somewhere. Now with his SEC approval, uh approved, why exactly is Mr. Byrne’s The Trade Is The Settlement green shoots of cryptographic stock trading and $5 million bond float being blocked out from R3 like Ludwig von Mises at a Cass Sunstein paternalistic “electronic sidewalks” for the internet convention? Well, that’s the bottom line of this article and it’s not pretty if you’re a patriot like the one found on those $20’s in your pocket (at least for now) and who was so famous for launching the War On Central Bankers on behalf of the owners of the United States – aka citizenry.
Unfortunately President Jackson was not a woman, so like the banking regulations that are currently blocking the R3CEV consortium from the blockchainization (cough LCHClearnet) of the entire settlement system and displacing the current regime of intermediaries, those laws are simply going to have to go (Andrew goes too) and along with them the Depository Trust & Credit Corporation (Cede & Co. weekend reading) as we know and love it. But that won’t happen overnight now will it and if you don’t know who Cede & Co. is, they’re most definitely your counterparty come flood or high water. Check you’re Vanguard terms of service and keep an eye on Blythe Masters because she’s got her eye on the DTCC and I don’t think she’s too worried about the State of Alabama’s interest in 55 Water Street and it’s underground document storage that was rode hard and put up wet by Hurricane Sandy.
Making America Great Again – One Cuff Link At A Time
photo credit: Steve Jurvetson (Wikipedia)
You see, the last time Andrew Jackson tried to mitigate the moral hazard of private central banking by distributing federal funds to state level banks, the plan worked. This time around however, the plan (that would be Mervyn King’s Divorced Currency Plan now being led by Andy Haldane at the Bank of England) if Dave’s right about it, will be to revise the banking laws such that R3CEV’s approach WILL be legalized because as it stands today, the best I can tell, they can’t do what they intend to do because it’s simply against the law of the land. Keep in mind that distributed ledgers may find their way through the regulatory maze of K Street, but cryptocurrencies don’t roll across the land like a marmot rolls across your back yard. Displacing the Federal Reserve Note, well that’s a Chinchilla of another color and these Monsieur Byrnes aren’t brothers of another mother. Confused yet? Check the blockchain for notarized birth certificates… why not?
Genuine (rhymes with wine) cryptocurrency is more like Ivory Soap… it floats. Bitcoin is more like a Donald Trump haircut – entirely avoiding the complexities of physical contact even though Ben Lawsky’s novelty hunting (Bit) License chased perfectly good business out of New York state like The Donald would chase illegal aliens across the Rio Grande. Banks can’t go there (in the near-term) no matter how much Chase would like to issue you some Chasecoin like Kohl’s issues Kohl’s Cash. Jamie Dimon may know the answer to “That’s why I’m richer than you Mike Mayo”, but even Donald Trump’s hairdresser knows for sure that “Bankcoin” is out of the question even for Lloyd Blankfein’s Goldman gang of good works. By the way, did Erik Voorhees founder of Shapeshift even get a Christmas card from the Lawsky’s this year?
The Sach claimed as recently as December 2015 that the blockchain could revolutionize “everything” echoing Blythe Master’s speech from August. Lloyd knows that everything changes eventually… even the law… cue Hillary: The Movie. In the end however, it’s the concept of “ownership”, (see John Locke, Adam Smith, KRS-One and Cherokee Trail of Tears) just like the concept of democratized leadership that is taking on a whole new meaning (i.e. democratized money) and so much for Franklin’s “a republic if you can keep it” – was nice knowin’ ya.
Getting back to all things Thrilla and the DeRose Honey Badger v. Byrne Cuddly Marmot challenge and just who is going to emerge from their rodent burrow victorious. I guess you could say this challenge is unlike the one-off BitPay sponsored Bitcoin Bowl Game. This time around, everything is coming up Roses Bowl for all God’s creatures. Will R3CEV end up embracing the non-middleman middleman of the Linux Foundation or maybe some proof-of-stake consensus engine like Ethereum as an inter-bank settlement system? All Dave knows is that for banks to be compliant with current regs, transaction reversability is a must and “No, there isn’t forgiveness in the blockchain Virginia Yellen” and In Proof-of-Work We Can’t Trust the plunge protection team because unfortunately for the banks and for Overstock customers, this is not your father’s reversible Member’s Only nehru jacket.
Believe Dave when he says the Chinese know how to play Whack-A-Mole too
photo credit: Anna Frodesiak (Wikipedia)
To be perfectly clear, this isn’t about banks using blockchains to create new forms of private cryptocurrencies like Bernard von Nothaus who ended up in the Chuck Shrem Big House. This is about creating a new interbank settlement system so that private banks (the main owners of the private Fed anyway) can develop an efficient workaround that will allow them to settle amongst themselves (cuddly “muskrat giggle” c/o Capt. & Tennille) rather than through a clearing authority and avoid the kind of Big Short nightmare that Jamie Dimon experienced with Barclay’s when he perfected his Barclay’s “dk” on their value transfers during the flash crash like a whack-a-mole game on the Boardwalk in Atlantic City… every rodents worst nightmare (those moles know how it feels to be Mike Mayo).
Dave back then on “next time around” which has now becoming “this time around” the settlement campfire of the vanities:
“This time around there won’t be any memos from Barclay’s to JP Morgan saying their transfers are being DK’d in the middle of the day. That’s old school. The Depository Trust and Clearing Corporation is the one that is reporting on the JP Morgan credit default swaps and its the organization that controls all the marbles, including your stock accounts held in the street name of Cede & Co.”
Allow Jamie Dimon to explain Barclay’s blockchainless dilemma in his letter to shareholders:
“Chaos reigned throughout Thursday evening. You sent another $40 billion in cash. Billions of dollars of securities were sent out and many were “DK’d” or otherwise sent back. By about 11 o’clock, when DTC shut down, you had apparently received a net total of approximately $42.7 billion of securities. All of the confusion was heightened by the absence of any definitive list of securities you were purchasing – an absence that we believe further supports the notion that you were taking all of the securities collateralizing our intraday advances.”
A miniature pony… in a block… on a chain. There, fixed it.
photo credit: Phil Konstantin (Wikipedia)
So, to avoid the near-term risk of being on the receiving end of a Joshus UnsethBitcoin Uncensored (and believe ’em when they say “uncensored” – gee whiz guys I got a wife & kid) Roman Catholic blockchaining, the winner of the Thrilla In Chinchilla is Bitcoin Miracle MaximalistChris Derose. However, this UFC Octagonal decision comes with a non-oblique caveat. This decision is subject to reversal, if and when the K Street Clan (and Dave’s thinking there must be a Promontory Financial pony in this room somewhere because I sure smell something) gets their 40++ bank consortium and their election cycle campaign donations organized behind the “elected” (read: most advertising bought) officials that can bring the reform to the banking law commensurate with other globalized treaties such as the Trans Pacific Partnership (which probably makes this blog post illegal because I don’t possess the intellectual property rights to the DNA of miniature ponies) that make multinational corporations, not only realpeople in their own legal right, but one step higher than sovereign nations. Dave can only describe this in the non-immutable manner of the Bitcoin Diner lunch special for bankers best described as the When Davos Met Sorosblockchain foodchain moment at Katz’s Deli. But I’m running on…
These guys are “tech underliers” if I’ve ever seen one.
My response to Byrne’s very well planned and quite effective strategery claim that “Nobody will own the stack” is as follows. Nobody actually owns any bitcoin in the traditus sense of ownership. They just hold the address to where they are located until they trade it in for that cuddly marmot in the window. Nobody owns any coal until they dig it up. Peter Diamandis doesn’t OWN any gold until Elon Musk harvests some asteroids even! Capiche?! Bitcoin, more than its so-called underlying tech (arguably coal mines as much as blockchain) is such a big deal that it entirely challenges the concept of ownership as we have come to understand it – property rights enforced at the end of the barrel of a toy gun (either yours or the government’s).
Yes, Preston Santa Claus does keep a database at Oracle and if Dave was guessing there will be as many versions of perm-chains as there are Christmas lists and I sincerely hope that Santa brings your share of those 12 month bank budget cycles in 2016! You’re work is good and it’s only exceeded by your commitment and professionalism (twitter feed sometimes withstanding). Good show. Marmot on…
Thank goodness… they’re Fiskars, a Warren Buffett Berkshire Barbarous Relic
Holding your private key is not the same as holding the deed to your house or even the trigger of a 12 gauge shotgun defending your family farm in Waco, Texas. Knowing where something is located (dropzone), not holding onto some Charlie Hebdo comic with your cold dead fingers (may all victims of terror both; genuine and state-sponsored false flags rest in peace), is the El-Erian equivalent of the new normal for ownership in your cryptographic future. Where is your private key? Well, the last time I checked, mine is “in the crevice of a tree” (so send me my dang baseball cap NOW!) and that my friends brings me to Drop Zone. However, due to the generational Ritalin trend, our freefall exploration into how Miracle Max’s DZ solves the North Korean bible problem (and, I’ve been working on that one for 5 years) will have to wait til next time you speed reader you.
In the meantime the judge’s “final” decision (don’t you love having your own blog) is based on this simple fact; There’s no genuine ownership in the blockchain just a finger pointing at something like a toy gun and saying “that’s mine” in hopes that some coercive judge or mobster doesn’t put that same finger into a garden clipper and say “hand it over Vitalik… all $18 million… now!” My response to Mr.(s) P. Byrnes would be that nobody actually owns any bitcoin…. they just hold the address to where they are located (the crevice of a tree again)… but we’ll have to save our terrestrial Drop Zone contra-band-aid and precisely how it brought healing to the North Korean bible problem til next time…
If you’re disappointed that essentially both men are winners (Derose today and Byrne tomorrow) and that there wasn’t enough blood to satisfy your craving for a Chris Matthew’s “thrill up my leg”, then Dave suggests that you go see Gina Carano in Deadpool… because that’s basically what they have planned for the privately owned Fed… in the end… after they get all the gold out… and dump all our debt onto China (wait – we did that already, aaand Dave doesn’t go the movie anyway). Go figure. Gina Carano, on the other hand, could whip BlackByrne, BrownByrne, Derose, Junseth and even marine/Iraq War veteran and Eris Industries CEO Casey Kuhlman with one foot tied behind her back. So, as Skeeter Davis sang back in 1969 when country still wasn’t cool and Dave was a mere 8 years old (that’s 54 in Bitcon years); “I’m a lover not a fighter.” I love you guys, but don’t forget… there’s nothing wrong with money, but…
“For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” 1 Timothy 6:10 NIV
“Those who cannot make good will be victim to “coordinated shunning” by the rest of the network – the whole of society. They will not be able to interact financially or in any other system running on the blockchain. They will be in an “economic prison”. This will extend beyond being unable to make money transfers, because the blockchain will be in control of voting, commerce and communications. Being banished from this system would make life all but impossible.”
Daniel Larimer, Founder & Chief Developer of Bitshares, CEO of Cryptonomex, Inc.
Sparkes, Matthew (2014, June 9). The Coming Digital Anarchy. The Telegraph. Retrieved from
If you made it all the way here. Congratulations and Happy New Year. You should do a Happy Dance! As Dick Clark would say on a Rockin’ New Year’s Eve, “This one has a good beat and it’s easy to dance to”:
Andy Perry’s back and this time he’s wielding a Democratised version of Herman Miller’s Death of A Salesman, but this time it’s more like Death of a Foundation (the Bitcoin Foundation to be precise). Andy doesn’t even mention the Bitcoin Foundation’s foundations in this enlightening article, but what he does mention is that Bitcoin is a marketing effort and that, at its core, the foundation and Bitcoin are political by nature.
Dave didn’t make any points with Jon Matonis about two years ago when he started taking Jon to task via email (and occasionally on the blog – search for “Windhover Transition”) for what Dave viewed as major strategic errors in attempting to convert Bitcoinism into a religion rather than a political initiative. In Dave’s opinion, it was neither. Bitcoin is business and it’s a good business if you can get some without ending up like Chuck Shrem.
Here’s Andy’s article with the occasional trade of peanut gallery comment from the non-metaphorical Dave.
Using Democratised Money Theory To Understand Bitcion
Posted on April 5, 2015
Points from previous posts on Democratised Money Theory can be taken and applied to Bitcoin and other Cryptocurrencies. This can give an interesting insight into all forms of money.
Democratised Money Theory:
Money is a contract – a set of words and images that embodies a decree. (This is the decree gold and silver bugs get confused about when they refer to fiat money). This decree element is a vital component of a money contract. It decrees the economic environment for the life of the money contract. This decree is expressed in form of the central bank interest rate in respect of that specific contract.
Round one – nearly a knockout punch.
Applied to Bitcoin:
Bitcoin is a set of words and images that embodies a contract. This is what Bitcoin is in its totality that and nothing else. In its form, Bitcoin differs from government money in how and where that contract is recorded. In the case of Bitcoin the contract is recorded in programming code form. This is the decree that Bitcoin embodies, which is intended to function exactly the same as the decree embodied by government issued money. Programming code embodies the method and thence the rate at which Bitcoins can be ‘mined’ or Bitcoin ‘decrees’ made. It effectively decrees the rate of creation of decrees!
But this is really no more than a marketing device. By making the issuing of Bitcoin decrees ‘automatic’, the creators of Bitcoin are seeking to obscure their role as the Authority which delineates the terms and form of Bitcoin. They do this precisely because the people who might adopt Bitcoin don’t like the idea of conforming to a given authority. The ‘anonymity’ of ‘Satoshi’ is more of the same marketing…. a personification of the commons; ‘Everyman’ and ‘No One’
A mere “marketing device?” I resemble that remark.
Bitcoin is a commercial contract as opposed to a state sponsored contract in the case of Government Issued Money.. Despite the best efforts of Bitcoin advocates to obscure the fact, Bitcoin is at its core a business proposition and in this it differs fundamentally from state issued money which is at its core a political proposition.
This points to a fundamental difference. State issued money is derived from the commons, crypto currencies are not. Crytocurrencies, like all ‘democratised’ currencies, represent an exact inversion of the developmental dynamic of state issued currencies.
State issued currencies began their existence in the commons operated for the benefit of all, and were appropriated for the benefit of a minority. This process culminates in the creation of specific forms of privately issued Democratised Money.
Democratised currencies such as derivatives and Bitcoin were created and developed by a minority supposedly for the benefit of all. Democratised money and Government Issued Money begin at opposite ends of the money spectrum and move in opposite directions.
(Dave in his best booming black-robed judge voice; “Mr. Perry…would you please define what you mean by democratised… or is that democratized… are you Canadian?)
There is no point in simply describing the differences between state issued money and democratised money as they are now. At best this will offer you a blurred snapshot of the development of money in the 21st century. You have to describe the trajectory of development of both democratised privately issued money and state issued money simultaneously and how they will affect each other as they develop.
Paging Thomas Piketty?…. Thomas Piketty!
Democratised Money Theory:
This money contract is mounted on a transferable medium. Something that can be securely transferred from one owner to another. The contract is issued by the relevant legal authority which is the body authorized to mount that specific proclamation upon that specific transferable medium.
Wait just a doggone minute. Do you know how to code in C++. Didn’t think so. Not sure you’re authorized to make such a blanket statement. Please check with @Beautyon_ before making any other potential tech claims. /sarc off.
Applied to Bitcoin:
The Bitcoin contract is recorded as code which can be transferred from one processor to another. The proprietary name that is given to the contract and its mode of transference is the ‘Blockchain’. The blockchain in its totality serves as both decree and record of Bitcoin whereas individual notes serve as decree or record of government issued money. But the blockchain cannot be owned by any one person; unlike a money note (or all money notes), which can be transferred, stored and even destroyed by its owner. (Although interestingly it is a crime to modify and deface modern banknotes. Now why would that be?…)
Can’t be illegal… I saw Max Keiser do it on Youtube.
(As a secondary point of interest, bank credits are not money despite what many insurgents argue. Bank credit transactions require a separate and autonomous mode of record, disqualifying them as money.)
Obviously you haven’t seen Jamie Dimon’s cuff links… jus’ sayin’… Mike Mayo?
There may be some confusion over the designation of the ‘relevant legal authority’. In this case it is the creators of the blockchain code and the issuers of Bitcoin. The authority to do this is vested in private property which is a totem of capitalist states. Satoshis have legal authorization to issue Bitcoin, although final rights are reserved by national governments.
And Ron Paul has a silver dollar in his pocket.
Democratised Money Theory:
The validity of a money contract depends on the extent to which it decrees the nature of the real economy. The ‘value’ of that money contract is an expression of its validity. In other words: The money contract is valid to the extent that it decrees the nature of the real economy. Not ‘reflects’ the nature of the economy, decrees it. It is valuable to the extent it is valid. This comprehensively defines the value of money.
There you go… assuming the law again… as if… Marc Rich and Eric Holder aren’t real people. Hello? You need to watch the “Because Obama” video on Youtube… it should help.
Applied to Bitcoin:
Trade and creation are ubiquitous in human society. Human beings purposefully alter the environment around themselves continually and without exception. This is the real economy. The control of this alteration is the purpose of politics and economics. Money is one method of implementing this control. A piece of money is a decree of who will do what where and when. It is specific to the extent that this serves the purpose of the issuer. It is generalised to the extent that this serves the interest of the issuer.
Bitcoin contract is specific in that it serves the interests of ‘Satoshi’ to create a privately issued digital currency through ‘mining’ and recording transactions on the Blockchain.
The Bitcoin contract is generalised to the extent that it operates as a store of wealth and to a much more limited extent as a means of exchange and transfer.
Love it. This gets into some finer points about Occidental/Oriental vostro/nostro, capital controls and the reversal of Gresham’s law and re-emergence of gold and “Democratization” in a Hong Kong sense of the word. We’re going to need another blog post before we can accept “store of wealth” as the primary and “means of exchange” as secondary, but I like where we’re going here but it may be in precisely opposite directions. For deeper insights google TradeWithDave, Larry Summers and “What would Goldman Sachs do?”
I have previously used the example of a train ticket to illustrate another aspect of money but the metaphor can be useful in this context too:
All train tickets are contracts.
All pieces of money are contracts.
All train tickets are the same in function and distinct from other contracts.
All money is the same in function and distinct from other forms of contract.
You need a valid train ticket to access the rail system.
You need a valid piece of money to access the economy.
Train tickets are specifically valid in terms of the journey you are permitted to undertake
Money is specifically valid in terms of the economic activity you are permitted to undertake
A specific train ticket contract decrees a type of journey will take place
A specific piece of money contract decrees a type of economic activity will take place
A train ticket is valid to the extent that the journey it decrees will take place, does take place
A piece of money is valid to the extent that the economic activity it decrees will take place, does take place
A train ticket is valuable to the extent it is valid
A piece of money is valuable to the extent it is valid.
(NB. Claiming gold is naturally money is like getting on a train with a piece of Stephenson’s Rocket in your hand and claiming it gives you a right to ride!)
The decree aspect of Bitcoin is well illustrated by the apocryphal ‘10,000 Bitcoin For A Pizza’ story.
Bam! Bam!!(second jab… followed by right hook)
Bitcoin, like any form of money, does not reflect reality or the economy. If it did, then the first Bitcoin would be designated as worth the totality of the economy, the first and second would each be worth half the economy, the first, second and third would each be worth one third of the economy and so on… This is obviously nonsense
(swaying ~ ~ ~ ) Who do you think you are? Janet Yellen? (famous last words before collapsing to the mat)
Since money does not reflect the economy as it is or was, it must instead decree the economy as it is going to be.
In the case of the Bitcoin Pizza, 10,000 Bitcoin didn’t call the pizzeria that made the pizza into existence.
It didn’t call the flour purchase for the pizza into existence.
It didn’t bring the pizza man into work to make the pizza. All this stuff was already there.
But what it did, was to call this specific pizza into existence.
Bitcoin like all other money, decrees how the world will be from now on.
(Whatever you do, just don’t say “emergence”)
Once the Bitcoin Pizza transaction was successfully completed, the Bitcoin became both decree and record and its value was accordingly modified.
Democratised Money Theory:
A money contract is valid to the extent that everyone complies with the terms of the decree it embodies. A money decree is complied with to the extent that the amount and terms of money contracts issued compare with the amount and terms of economic activity undertaken for the same territory and time span.
Ooh. “Time span”… now we’re getting to the good quantum stuff.
Applied to Bitcoin:
Here is a ‘sketch’ graph which roughly illustrates the dollar value of Bitcoin since its beginning. The graph is useful in illustrating the decree function of Bitcoin. I have marked five significant points on the graph:
1.Bitcoin the beginning has no recording function, so no value added there. The mining protocol decrees Bitcoin is virtually valueless.
2.Bitcoin records some few transactions; ‘wealth store’ value increases. This leads to an increase in mining which decrees Bitcoin is again virtually valueless.
3,4.The number of Bitcoin records begins to accumulate rapidly, especially in relation to the number of fresh decrees issued because it is becoming harder and more specialised to ‘mine’. The increased cost of ‘mining’ is effectively a decree of greater value.
Is this where the confidence game starts? If so, we’re going to need a salesman and I think Gavin Andreesen may be available soon.
5.The validity of recent decrees increasingly comes under question. Bitcoin is having trouble making the real world conform to what it proclaims. This is reflected in the recording function. Bitcoin falls in ‘value’
Yuri/Lara/Tonya debate the blockchain’s ability to satisfy the double coincidence of needs and wants vs. store of value
“Deal with it or shun it.” That’s how @Beautyon_ ended his most recent article on medium.com. Dave crossed paths with the self-proclaimed Austrian economics libertarian on Twitter the past couple of weeks. @Beautyon_ (B.O. for short) has been debating the value proposition of a project called Eris Industries with Preston Byrne, an attorney and also the COO of Eris. Dave took exception with a few of the statements that B.O. made. Dave has taken exception with plenty of statements that @Prestonjbyrne has made, so it only seemed fair. That was until @Beautyon did something I didn’t know you could actually do.
“Somewhere my love”… was lost. If you look closely at the picture above it says “You are blocked from following @Beautyon_ and viewing @Beautyon’s Tweets.”
Well, that was a first for Dave, but then again Dave is not some sort of Twitter Cigar Aficianado that has actually grown a Cuban cigar or been to Cuba with Jay-Z, but I do think I smoked one once at some college buddy’s wedding. I realize that doesn’t make me an expert on Twitter, but I did stay at a Holiday Inn Express once and I was the one that metaphorized the now well-known slogan that when every problem is a nail, the blockchain is a nailgun.
So, I found a gram of @petertoddbtc‘s ego in my bag and smoked it. Felt way better than drinking that kool aid. #bitcoin
By “well-known” I mean, @petertoddbtc probably thought it was funny and in blockchain land that rates pretty high… at least I think so… or it should… if it doesn’t. I know some lady in Twitter said she was smoking Peter Todd’s ego so metaphorically speaking we’re in the same crypto Hawalah hookah lounge as @MeherRoy ‘s Bitcoin/Ripple aren’t the internet of money, so in horseshoes and hand grenade’s battle of the metaphors Dave’s a playa.
Back to B.O. Since I am operating under radio silence and unable to direct message on Twitter to B.O. (a skill only recently acquired after Max Keiser threatened to “kill” me if I kept emailing him and didn’t learn how to DM on Twitter), then I can’t request clarification on issues. Therefore, Dave will just air his irreversibly reversible laundry here on the blog. This may require even more than the normal healthy dose of conjecture which Dave is well known for by this time, so bear with me.
For those of you who never took a proofreading class, “TL:DR” means “too long, didn’t read”… I got that from Google. B.O.’s commentary is in black italics and Dave is in blue.
TL;DR If you have software that does something that is valuable, it will sell itself once people hear about it. What other people are doing wrong does not impact your software.
Excellent point, applies to life also, but can’t say that other people’s mistakes don’t help guide us… certainly worked for Poincare’.
There are some interesting and sportsmanlike debates happening around software properties and philosophy in the area of Bitcoin and the Blockchain. There are two distinct camps in this fascinating debate; the software developers and the non software developers.
Oops… Is it “sportsman to block a fellow Twitterer..er? I don’t know yet. I don’t know Twitter culture, but I intend to find out. After six years of bloggin’ and a couple years on Twitter, I think I got blocked twice and both times people soon came back and asked for my forgiveness for accidentally doing it. I didn’t even know what it was, so I said “sure… uh… sorry that happened to you… uhh.. uhh. Have a nice day.” Forming “two distinct camps”?
Hold your horses Hegel? It’s a little early in your dialectic to submit this to Fox News vs. MSNBC. Preston Byrne probably went to sailing camp, not to mention law school, we’re going to need to check your credentials before you get to roll out the aisle carpeting and define the two sides of this debate. Who knows, there may even be a peanut gallery or back bench or other metaphorically significant playa.
The non software developers can be characterized as Statist Sceptics. On top of not understanding how Bitcoin works, they do not like Bitcoin in principle, because they are Statists, and they are doubtful (without reason) that it can gain traction and spread globally. They have been Moving the Goalposts (a Fallacy) for several years in debates about Bitcoin, and have had to concede humiliating defeat many times as Bitcoin resists all their baseless nonsense and hopelessly bad predictions.
I’ve been writing about Bitcoin since 2011. I’m pretty sure it’s going to be a huge success as the world measures successes and Doctor Zhivago measures fidelity, but then again I’m hardly a “Statist”. I also called the top of the Bitcoin price within 24 hours. Did you do that? Didn’t think so. So, it may just be possible that someone writes about Bitcoin a ton, is fascinated by how it functions and the social and economic implications while simultaneously viewing its p2p behavioral economics ability to “Nudge” the participant in a Cass Sunstein kind of way (technically that’s not a metaphor, it’s a reference) as a threat of Biblical proportions.
First they said Bitcoin was a Ponzi Scheme, then they said it was only for “techies” then they said it was a bubble, then they said some other nonsense about it. Now, no one says any of those things, and they are onto the next iteration of their FUD; for example, the transaction rate is “not fast enough”. They have conceded that Bitcoin works exactly as specified, and are running out of novel attacks. The rumblings of complete capitulation are starting to be written, and its a distinct pleasure to read them.
Compounding the anti-Bitcoin proponent’s frustration are voices that they recognize as deeply authoritative (IBM), saying that, “The underlying technology could change everything”. Those that are retreating into that camp now say, “And also Bitcoin” when they talk about “Blockchain Technology” as the latest way to try an diminish the world changing effect Bitcoin will have.
I think I agree with the above paragraph, but frankly after reading it three times, I don’t follow it, but I’ll leave this one as agreed for now.
All the Bitcoin detractors have several characteristics in common.1 They do not develop software 2 They do not understand or use cryptography 3 They do not have the language to describe cryptography 4 They have a quasi religious belief in the necessity of the State 5 Their only way in to the software world is by analogy
Wow! “All”. That’s a broad brush Doctor Z. “They do not have the language.” Since when do people “have language”? Are you the non-metaphorical Noam Chomsky of Bitcoin linguistics? Many of these characterizations are true, but the global use of “all” simply cancels out “all” credibility. Try again.
Without an understanding of cryptography, it is not possible to understand why Bitcoin works. Without an understanding of Austrian Economics, it is not possible to understand why Bitcoin is limited to 21 million units. Without an understanding of software and its history, it is not possible to predict the future course Bitcoin will take.
Alright, now we’re getting into the good stuff:
A) “Without an understanding of cryptography, it is not possible to understand why Bitcoin works.” Wrong. That’s where metaphors come in and that’s why they’re so popular. Take Jesus for example explaining the disintermediation of the God/Caesar double-spend. Jesus asked “whose likeness and inscription is this?” on the coin. This is the original definition of “the receipt is the transaction”, “the map is the territory”, “the realm is the coin”. 16They brought one. And He said to them, “Whose likeness and inscription is this?” And they said to Him, “Caesar’s.” 17And Jesus said to them, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” And they were amazed at Him.
B) “Without an understanding of Austrian Economics, it is not possible to understand why Bitcoin is limited to 21 million units.”Wrong. As I explained to you previously on Twitter if your mother had understood Austrian Economics as taught by well-known Mises Institute proponent Professor Walter Block you would not have occupied your mom and therefore would not be here today to help us sharpen our iron. Yes, I’m glad you’re here, but no you don’t understand Austrian Economics or if you did, you would have answered my question rather than attempting to hide behind Twitter. I’m waiting.
C) “Without an understanding of software and its history, it is not possible to predict the future court Bitcoin will take.”Bwwwwhahahahahahah! Sorry. You’re a Bitcoin profit now. My apologies. That outburst was unnecessary. Please tell us more. So far, it’s not going to great for B.O. Maybe we need to ramp this up to a technical altitude that Dave will have more difficulty breathing and get beyond fortune telling and such.
If you do not understand cryptography, specifically, Pretty Good Privacy, it will be difficult to understand the idea of a cryptographic signature, and its properties. Bitcoin is not a system of “Smart Contracts”; it is a system that uses cryptographic signatures to verify that a piece of text is now “locked” to the owner of a private key, who has the sole power to unlock that text and sign control over it to another owner of a different private key. All of this takes place on a public ledger.
Okay. Great explanation. Although I don’t understand PGP, I did write about five years ago that if any network ever did break PGP in the next fifty years it would most likely be the Bitcoin computer network that does it. Then again, what do I know beyond following Dan Kaminsky on Twitter… Thankfully Dan doesn’t block me. Thank you Dan.
This is not at all like a contract, and neither is it “smart”. In order to “send” Bitcoin to another person (N.B. sending and receiving Bitcoin never actually happens, you simply sign an entry in the ledger and your balance, the number of entries you can sign, changes which is represented as a number), you must use your private key to sign a message that is verified by the network. The system that controls this and verifies that the same signature on a piece of text can only be assigned to one key at a time is the breakthrough in The Double Spending problem, the explicit reason that Bitcoin was developed.
Good point and precisely the area of questioning that I asked IBM’s Richard Gendal Brown to clarify in regard to his recent comments on Bitcoin’s “pay” and “control” issues in his Smart Contracts Platform article.
This system can be used for other purposes that require registration of signed text, that is certain, but the Blockchain was developed specifically to facilitate the creation of a system of money that is free from government control, and immune to inflation. This idea, the idea of sound money, is anathema to Statists. They love government money that robs the poor and is the source of many of the troubles we face today.
Wait just a Doge-coin-minute Hoss. Who says that this is “sound money.” Yes, I take it that you believe it is “sound money.” I got that part. “This idea” is Bitcoin. That’s what “this idea” is. Don’t you think you should say something like “I believe this is sound money” so that the reader can better understand your beliefs, or is Austrianism void of beliefs? And as far as “They” goes. “They” can’t love anything. There is no “plurality” to love regardless of the Chomsky-ean sense.
The love of money is the root of all evil no doubt, but that love is only expressed by the individual and just because “they” work at the United States Postal Service and are more concerned about their pension than delivering Steve Forbe’s magazines espousing how touse Bitcoin to eradicate poverty via scarcity doesn’t mean you know what they love and what they hate. Wrong again by mass generalization.
Do you see what I did there? I described what Bitcoin is, without using any poor analogies and stating only the facts. This is important, and I will come back to it later. Bitcoin does what it is designed to do. It does it very well. It will do it even better in the future, and this is something that non software developers do not understand; software is not fixed. The Bitcoin network we have today is not the same as the Bitcoin network at its start.
There will be improvements in every area, including the speed at which the network runs. In the past, downloading the entire Blockchain was needed for every peer. Now you can download a pruned version that is smaller, and there are clients that do not require downloading the entire Blockchain at all. Anyone who presents a Straw Man Argument that Bitcoin cannot work because it takes “too much” time to confirm transactions, or the transaction volume is small compared to SWIFT or some other centralized system clearly cannot think, and doesn’t know anything about software or its history.
Yes, I saw what you did there and not you did not; “stating only the facts.” Yes and Bitcoin is revolutionary technology. I’m not sure “PruneCoin” is ready for prime time. By the way, is “Straw Man” a poor analogy? In regard to “anyone” who doesn’t know “anything” about software or its history, what level of knowledge would you suggest to be acceptable?
Maybe Ian Grigg (@iang_fc)? He’s a reasonable fellow that allows me to follow him on Twitter. Maybe Jon Matonis (@jonmatonis)? Jon’s a wealth of knowledge and he used to even write complimentary things about me, that was before I wrote to him how the Bitcoin Foundation’s strategy was going to fail.
Clifford Stoll, Astronomer who claimed in 1995 that the World Wide Web would never take off. His piece was published because he is an Astronomer, not because his insight is any better than anyone else’s. In the past before the global software precedents, they could have been excused for doubting the spread of any particular software or hardware, as the infamous Clifford Stoll did when he said the web “would never take off” but now, in 2015, we have numerous examples of devices and software that spread globally and that scale.
The flash drive, which used to hold 64MB now holds 64GB in the same form factor. There are one thousand and twenty four megabytes in one Gigabyte. That means in the picture below, the top drive has one thousand times more storage space than the bottom drive.I have no doubt that these same people, had you enthusiastically said to them, “Your 64MB flash drive will hold a 64GB in a few years and cost less!” would have scoffed at the idea. The same thing is happening with Bitcoin. Men who know nothing about software are scoffing at the idea that Bitcoin can change and improve. Its an a-historical perspective, to use parliamentary language. On IRC, they simply say, “DERP!”.
Often these people group the Blockchain and Bitcoin with tangentially related projects like Ripple, leaving out the crucial details that allow you to distinguish one from another and make a proper judgement, either by deliberate omission or ignorance. Ripple is very different to Bitcoin. It is a “pre mined” currency where all the tokens are created at once, by the developers.
Bitcoin on the other hand, is designed quite differently. Its money creation mechanism follows a predictable curve, and is achieved through the process of competition between miners. This was done to keep the expansion of money supply under control until all the Bitcoin is generated, and is a direct result of the correct ideas in Austrian Economics.
You lost me on those last four paragraphs bro. Clifford Stoll is not as good as you are at predicting the future. I overpaid for my first IBM PC/AT in 1985 at $5,000. I’m still stinging from that and Ripple isn’t Bitcoin and neither one are the internet of money. Dude, I’ve got a two-part article on Meher Roy (@MeherRoy) and I still owe part II, and I’m busy refuting B.O. Don’t make me go all Gina Carano on you.
There is no boss, thankfully It is entirely right to say, “Bitcoin is controlled by no one”. When this construction is used, it is meant to distinguish between Bitcoin and tools like Ripple, which is centrally controlled. Clearly, the Bitcoin miners control their own hardware and software, and the Bitcoin reference client is under the supervision of the man who is currently responsible for it. At the same time, the network requires consensus for it to operate properly, and it cannot be corrupted or gamed by a single entity. This is exactly what is meant by, “controlled by no one”. It is not controversial to say this, and it is an accurate description of how the Bitcoin network operates.
Yes and no. Give me a taser and a room with 5 core devs in it and I could probably do something nefarious to Bitcoin, but since I’m not an expert on the history of software (and the future of Bitcoin too), I wouldn’t know what to do even if I WAS Gavin Andreesen, but I can tell you this. When the price of Bitcoin was plunging, I wouldn’t go online like Gav did and tell the world that I was hedging my bets so that I wouldn’t look like a fool to my wife. When you’re “Chief Scientist” your reputation rises and falls with the Space Shuttle Bitcoin and there’s no getting around that. So far, it’s very impressive and the overall price rise is unprecedented.
What the Statists do not like about Bitcoin not being under central control, is that its success is a strong, undeniable signal that control by democratic government is not needed for essential societal functions like money, and that there are better ways to organize every aspect of society that do not require government. The idea that money will no longer be the special preserve of the State and its corrupt central banks is deeply disturbing to these men, and so, they do anything they can (which is precisely nothing) and say anything they can (which is too much) to undermine the idea that Bitcoin does not need to be centrally controlled.
By the way, who is Satoshi? Are you 100% certain that Bitcoin isn’t a FED inspired project? Allowing the banks to be all “blockchainy” is a reasonable motive behind Eris wouldn’t you agree? The banks are certainly ramping up their “Bitcoin innovation centers”. And on that Snowden thing, are you equally sure he’s not a psyop? Have you got some evidence on this stuff that you wouldn’t mind sharing, cause the last time I looked President Obama just guaranteed that Edward Snowden would get a bunch of Bitcoins sent to him with that so-called Executive Order. While you’re at it maybe you can toss in some Wikileaks and Pierre Omidyar Ebola Paypalintir mafia, Peter Thiel centrally controlled floating libertarian island stuff.
Comparing any centralized service, like Ripple, which maintains a definitive central ledger in its offices, to Bitcoin is absurd. These two softwares are in completely different categories, and this bad comparison highlights the naked computer illiteracy of the men who make this febrile comparison. Ripple tokens, the way they were generated, who controls them and the software are all crucial pieces of information that you need to grasp before you can make a judgement about it or compare it to Bitcoin. Once you have a grasp of these, you can clearly see that Ripple is nothing at all like Bitcoin. Bitcoin, if you need to make a comparison to existing software, is more like the BitTorrent Protocol. Once again, if you have used BitTorrent, you will know what I am talking about. If you have not, you will not.
Who exactly is comparing Bitcoin to Ripple again? Wasn’t there some article about Stellar and a girlfriend and something-a-nother. I’m pretty sure Ripple is for banks. Oh… on whether or not I’ve used BitTorrent? If you can predict the past usage of BitTorrent as well as the future usage of Bitcoin? Then you know the answer.
There is nothing stopping anyone from making clear, detailed distinctions between different software projects. We can say that Ripple is nothing like Bitcoin, and X software is like Y software. This is useful, and shying away from the details is not; in fact, omitting the details of how software works only causes confusion, and helps spread uncertainty. GPG users and promoters are very used to the computer illiterate characters who will say things like, “Yes! but I’m sure the government can read PGP messages, there is no way that they can’t; they can do anything!” without any evidence or knowledge of what they are talking about.
It is only now that Edward Snowden has confirmed that GPG is beyone the reach of the NSA, that their ignorant anti GPG nonsense is forever dispelled as garbage. Once again, this is the Faulty Appeal to Authority fallacy; GPG works because it works, not because someone says it works. The same is true of Bitcoin.
At this point, I have some insatiable desire to invoke the Dos Equis most interesting man in the world video series and ask him about Snowden or use some metaphor about computer illiterate characters trying to pick-up Gina Carano at the Geek Squad desk at Best Buy confusing the “call me maybe” symbol for a left hook. Then again, there’s the now famous Vitalik Buterin quote “It’s just a friggin database technology” and Dave’s standard response to nearly everything Vitalik says, or writes….. “like he said.” I may engage in debate with B.O., but you won’t find me arguing with V.B. over much except his desire to replace Easter Sunday 2015 with “the year of Satoshi.”
#blockchains are a friggin database technology; 5 years down I doubt any users will care what the underlying network token is — Vitalik Buterin (@VitalikButerin) February 23, 2015
No matter what software you are talking about, you need to make the case as to why it should be adopted by a user. If there is nothing like it to do the job your software can do, your sales pitch is easy. Bitcoin has this advantage; there is nothing like it in terms of what it does and its scale. Other software projects, have a harder case to make.
We agree on this… so long as you don’t leave out the disclaimer about how much electricity it currently uses and that Freedom isn’t free and neither is electricity… there’s a country song in there somewhere.
Ssssssssssssssssssssssssssss! Imagine for yourself, a new software project, that wants to leverage a new technique. In order to sell the project, the facts about it need to be explained, and the software demonstrated. Anyone with experience in testing new software knows how these pitches go. They are very short and terse in the text (just as the Bitcoin White Paper is) and you are invited to run the software yourself. The install process is simple, and then the software either does what it developers claim it does, or it does not. Its all simple and straightforward.
If the explanation is too long, and the software essentially unusable, then you have an indication that something might be wrong. Couple with that, the fact that it doesn’t solve an outstanding hard or easy problem, and the second level alarm bells start ringing.
BitTorrent and Bitcoin solve two very hard, distinct problems. BitTorrent solves the problem of how to share files to many people without a central server to distribute them serially. In the past, if you wanted to download a large file, you had to line up behind other people who were downloading the file one person at a time.
This is a download being performed over a modem through a telephone line, from a BBS using the Zmodem Batch protocol. Zmodem was used to download files one by one from a BBS, that could handle as many downlands as it had phone lines running to the hardware. The internet, and then BitTorrent changed all of this, by facilitating packet switched connections on a single phone line, and multiple downloads of files from many sources simultaneously, respectively. With BitTorrent, the file is broken up into pieces and distributed out of order for re-assembly at the destinations in parallel. It is much faster than a serial download, and each person with a copy of the file can share it with other people who do not have that part.
A visual representation of the BitTorrent process in action. It is fast, global, and unstoppable. One third of all internet traffic is made up of BitTorrent file sharing. Bitcoin will do this to money, and be just as unstoppable and transformative. BitTorrent is a breakthrough in how files are distributed, and was the result of many years of thought on the problem of how to distribute files without a central server. There had been other attempts at solving this problem, and it took several iterations before BitTorrent was developed by one man: Bram Cohen.
Bitcoin has a similar history. For decades developers have been trying to solve the problem of creating an efficient intangible money token. After several attempts, the main problem, how to stop people spending the same token twice (a problem of synchronization) was solved in the form of Bitcoin.
In each of these cases, the explanation is simple, the software solves a big problem, and you can download it and use it immediately to solve that specific hard problem. Its clear, unambiguous and instantly beneficial.
Thanks. This is helpful and we didn’t even need Andreas Antonopoulos to explain it to us.
Now back to our imaginary software project. This project does not solve an outstanding problem. It is designed to be a database like MySQL or PostgreSQL, usable by any organization that wants to store data. This project is trying to re-purpose the Blockchain software to do the common and simple task of a database of a kind that runs on commodity hardware and free software. There is an explicit rejection of Bitcoin by its developers and promoters and the use of Bitcoin in this project, and most importantly, they have not figured out how to create a Blockchain without Bitcoin; they try to hide it in a sea of text and jibes describing what they are doing.
First of all, Marmots are not an imaginary friend. They’re real. Capiche? The first half of your paragraph I’ll give you. As a matter of fact your entire article and my unrequited response could be boiled down to those second and third sentence of the above paragraph. I’ve deployed plenty of database applications, but for the life of me, I don’t know if Eris solves any sort of problem or not, but I know that your problem with Eris is solved by answering that question;“This project is trying to re-purpose the Blockchain software to do the common and simple task of a database of a kind that runs on commodity hardware and free software.
That’s a question for Preston and Casey. My guess is that it has something to do with SQL running on dedicated servers versus running on a decentralized (or is that distributed) network of servers across the internet. Frankly, I don’t know and I don’t care… Look! Squirrel! No… seriously, you say “runs on commodity hardware and free software.” There is no such thing as commodity hardware when you’re talking global scale (I think that’s a legit statement, but I’m no programmer). As far as “free” software goes. This is THE key issue of this entire diatribe. What do you mean by “FREE” and since I can’t follow you on Twitter you can’t DM me your answer to that question… so… I win.
What is wrong with this picture? This imaginary software that I describe is not trying to solve a real problem. Any organization can download MySQL, hire some developers, not even top flight ones, and create extremely fast applications that do everything they could imagine they need.
If they have an extra requirement of being able to audit who wrote what to the database and when, by adding cryptographic signatures to all entries and changes, they could have a completely audit-able and 100% reliable system where who did what and who owns what entry could be infallibly known. I will divert quickly to describe how it could be done.
In a trusted organization that requires verifiable database entries, it is possible to use GPG signatures to stamp each entry in a way that makes them unforgeable and tamper evident.
Pretty sure Eris does the same thing… potato, potatoe, Dan Quayle.
To do this, you issue everyone with write access to the database, a GPG Keypair that they use to sign entries and changes. Each signer will have a GPG Keypair, and a separate machine will automatically sign all entries with its own keypair, for time stamping and authenticating entries. To understand how this works and why it is infallible, you need to understand what GPG does, what a cryptographic signature is, and how it can be used to authenticate text, enable non-repudiation of a promise and the integrity of entries that are passed through this tool.
yawn… (by the way, who is “you”… oh, the metaphorical “you”… got it… next item please.)
Creating a system as I describe here does not require a breakthrough in software or theory. It is doable now, and can scale, and the tools are well understood and secure. The vaunted infallible, incorruptible public ledger features of this system can be had without using the Blockchain or an experimental derivative of it. If you want a database that is filled with entries that are not corruptible, you do not need a Blockchain to achieve it, you need infallible digital signatures precisely of the kind provided by GPG.
One of the tell-tale signs of what we call “Snakeoil” are features that have no meaning. Imagine a software project that made the claim that they have, “made Blockchains controllable” That doesn’t mean anything. All software is controllable by default, by the developers who write it. This is not a new feature or a breakthrough, it is simply the way things already are.
It is very suspicious that a set of men attack the idea of Bitcoin, rather than expound the value of their own offering. The world needs more software. This is a fact. If you have something that is good, then by all means promote it. Saying that another piece of software, that by your own omission does not even overlap with your use case is a bad thing, quite rightly raises serious questions and suspicions about the true motivation behind such statements, and detracts from the thing you are claiming you are trying to sell.
Hmmm? Yes…. Hmmm? You should DM me….
Its complicated Bitcoin is not, “just a database” anyone who says this does not understand what a database is, or the achievement of solving the Double Spending Problem. Databases are everywhere, common, and have been for decades. Bitcoin is causing global excitement precisely because it is not “just a database”, it is profound and new breakthrough.
I like cheerleading as much as the next guy. Go! Team! Win!!
Bitcoin users do not have a common objective, but use a common means to achieve their objectives. Saying that Bitcoin users have a common objective is like saying people who use the fiat dollar or web servers have a common objective. Clearly they do not; web servers are used to serve web pages. The objectives of the people publishing pages are expressed in the text and images the users post for the world to see. Bitcoin is nothing more than a tool, just like any other tool, and nothing can be implied or imputed onto its users simply because they use it.
That’s pretty profound. Hmm. I’m impressed. Can I follow you on Twitter? No? Okay, then I’ll blog about you.
The Bitcoin designer had a specific aim in mind, and part of his genius was to predict the human reaction to a money that is sound. As the true nature of money is further exposed by Bitcoin’s spread, more people will come to distrust and reject fiat money issued by central banks, and the creator of Bitcoin’s mission will be complete.
There you go prophesying again. Are you ready to talk about Jesus because that’s why I’m here? DM me… Oh, you can’t. Okay. Who designed “the Bitcoin designer” since we’re talking about design and who designed you… and Mises… and Hayek and Block… and uh…. ummm…. Robert Wenzel? How ’bout Peter Schiff? Peter Schiff’s dad?
Bitcoin is designed to be decentralized. The miners and software maintainers do not have “limited supervision” over the network; it is ordered by its operation and doesn’t require supervision or control. To say that it does, demonstrates a profound misunderstanding of how Bitcoin works. The only way you can claim that Bitcoin is supervised is to change the meaning of the word “supervised” and this is another thing that Bitcoin detractors do; they change the meaning of words to confuse and distract anyone who is trying to understand Bitcoin’s operation as a newcomer or computer illiterate that can be swayed by bad arguments because they cannot distinguish the truth and lies about Bitcoin.
I think this is arguable…. Preeeesssttttoooonnn!!!
Blockchains are run on software. They could also be run with pencils and paper and the mail. Blockchains are data. It is wrong to say however, that if you write the rules that you want expressed that they will “do exactly what we tell them to do”. This is false. The Blockchain works precisely because the rules that govern its operation are finely tuned. The rules that govern its operation is the breakthrough. You cannot simply wave your hands, shout, “die Bitcoin die” at the top of your lungs and command that a Blockchain start exhibiting a set of features you desire. That is nonsense on stilts. Problems do not fall to the mind of man on demand. This is why they are problems. The Blockchain and by extension Bitcoin, if it were “just a database” or s simple matter of telling computers to “do exactly what we tell them to do” would have been invented at the same time that the database was invented. Blockchains are not just databases, they are something very new, and novel, and clearly, very hard to understand for some.
Can be run on paper does not equate to would be run on paper? You need to spray some Hai Karate on your internet kill switch and call me in the morning. If you made it this far, you deserve a commercial break. I saw some debate on Twitter last week about the blockchain where Preston and someone said “what could should be” and someone else said “what can be will be” and someone else said “Que sera sera.” I can’t find the actual reference, but I will… I’m getting tired of typing, but I’m not getting tired of learning from all these guys… including you B.O. (truce?).
You cannot, bearing this in mind, “obtain the benefits of the Blockchain” without Bitcoin. This idea, that you can have a Blockchain whilst entirely stripping away Bitcoin by simply writing some software should send up a giant red flag.
Preston says you don’t need Bitcoin to have a blockchain. Looks like we need Webster’s or someone at the Hague to define a blockchain just like we needed someone to define “enhanced interrogation” and my most recent blog on defeating the State’s attempt to arrest me by “enhancing the quality of my life.” Take the blue pill… the red pill, but whatever you do, don’t forget which one contains enhancement and if it lasts more than four hours… see your doctor.
Chinese Snakoil. It is entirely legitimate to desire and imagine and then write any manner of software you want. It may even be possible to create software that seems to be irrational on the surface, but which works. But there are some things that cannot be done, and even if they can, do not need to be done.
As I described above, there is no need to use a Blockchain to secure database entries, make them infallible and trustable, and to extend that trust outside of the organization that holds the central database. No new techniques need to be developed to do this, so the question that immediately comes to mind is…
Uh… that’s like saying there’s no such thing as a salesman. I resemble that remark and Rodney Dangerfield does too. You’re acting like Bill Gates didn’t steal most of the stuff he has from other companies and that primary dealers are not the primary beneficiaries of QE. You need to get up on our Vampire Squid stuff… this is business. Next item please.
Why are they doing this? Recording a cash deposit is easily done on a true database like MySQL, enforcement in a breach of contract is done by courts all the time. You cannot have software enforcement of a payment of money without the valuable token that can be confiscated by the software contract, so removing Bitcoin from your novel offering doesn’t make any sense. You need the valuable token to ensure that both parties do what they promise to do. But if your philosophy is that the state should be the sole arbiter in disputes, there is no need for Blockchain contracts; paper ones will do. It is only in the case that you want to replace Government courts as arbitrators in disputes and lawyers to draft and interpret the law that Blockchain contracts have real, revolutionary utility. Adding an extra layer of complexity to the existing monopoly courts and banking system that even the promoters of the bad idea cannot explain coherently and convincingly is not a good business idea.
Let me guess…. banks? Umm… that’s it. Final answer…. banks.
You cannot simply “choose to look at Blockchains as an open source database”. First of all the term “Open Source” refers to software licenses, not to the license that covers the content stored in them, and the Blockchain is not a simple database; it is far more than that, as I have explained.
“Open Source” refers to George Soros and if you don’t know that you don’t know Dave. Heck, the Soros Brothers fund has a new Bitcoin swap baked in.
The entire idea of Blockchains and Bitcoin is that the transactions are irreversible. It is not a beneficial feature to create a Blockchain that has reversible entries on it. If you want that, you use PostreSQL or MySQL not a hacked version of the software that runs the Bitcoin Blockchain.
Now you’re talking Betty Crocker. Who said; “There’s no forgiveness in the blockchain.” Marmoting is burrowing under the Genesis block and then swapping it out… but it’s fully disclosed burrowing.
Use the right tools for the job. You do not use a power drill to mix cookie dough or scramble eggs. +DERP! It is not practical from a business perspective to use tools for something other than what they were designed for, especially when there are mature tools that do exactly what you need without any risk. Take that into account and then superimpose the Procrustean idea of reversible Blockchain transactions, and essentially you are demonstrating that you have entirely missed the point and innovation of the Blockchain.
You’re right. Procrustes being an excellent bedding of your idea. We can be friends… just don’t ask my wife because I use like a screwdriver to scramble my eggs if I can’t find a clean spatula… she hates when I do that. Oh yeah… banks need reversibility.
The Blockchain was designed specifically to bring into being a new form of money. It literally is a money printing press. The form of money it generates is clean, ethical, anti-centralization and and anti-State. This is why it rankles so many people who are invested in the idea of the State, and who are its certified gatekeepers.
What is money? Sorry, you can’t DM me. Dave will say gold. No further questions your honor.
There is no right way to do any sort of software. Software is written to meet the needs of its users. If you want to use a database to store pictures of your navel, that is a correct use by default. There is no wrong way to use software, but there is a wrong way to use it if your goal is very specific.
Hold on a minute. Don’t try to substitute “store pictures of your navel” because Preston already coined “double-spending of cat pictures.” I want a mental image of cat pictures. I’m banning you from saying that again – ever. You and Preston can be friends now.
If you want an efficient database to be used internally in a corporation or enterprise, you do not need to re-engineer the Blockchain to remove Bitcoin from it to do so. You simply use MySQL or PostgreSQL. You use the right tool for the right job, and you do not force a tool on to a problem simply because the words that describe it are hip and fashionable.
No. We’re going to make money. Do you know how to make money? You sell stuff.
The Blockchain was specifically designed to allow Bitcoin and its properties to exist. By definition, that is the correct use case for that software; to create a decentralized, peer to peer digital money substitute without the Double Spending Problem. If you have another novel use case and you re-purpose the software used to create the Blockchain, that is good; but if you do not have a novel use case, you do not need to use the Blockchain.
“Correct use”? mmmmmm. Are you Satoshi? If you are, then you doooo know how to make money and I take back everything I said.
The Blockchain does not need anyone to be right about it, and it does not need to be defended, any more than arithmetic needs to be defended; it just is, and that is all there is to it. Its use and growth is its own defence. Its logic is its own defence. Its utility is its own defence.
Guess we both wasted our time writing, but my wife went out of town today, so I did this instead of finishing my taxes and I got you pretty good a few times.
Most rational people do not have an objection to any software being re-purposed or re-designed. It simply doesn’t matter what people choose to do with their time and what software they want to release. Software cannot attack other software. It is irrational violent men who attack other men for holding the “wrong” ideas, and of course, the anti Bitcoin men are very eager to physically attack Bitcoin users simply because they use Bitcoin. This is the stark difference in ethics of the evil men who are against Bitcoin and the men who are natural and normal.
Aaaand, that’s precisely why Preston promotes the ethnically ambiguous marmots… so he wont’ attack you. It’s an outlet for the limitations of the law and human patience. Me?…. I type. Actually, I used to fight a lot…. “physically”… like you say. You got me on that one, but I never attacked anyone for using Bitcoin. I’ve never actually seen anyone use Bitcoin which makes me wonder why I have spent five years writing about it.
Software doesn’t care about what view you take. It only executes as it is instructed to execute. Either your product works and achieves your aims or it does not. If it does, then you have to convince someone that your offering is worth risking their data and business on. This is the simple truth.
Software cares… Care Bears care….and Smart Phones are SMART…. it’s that simple. HAL from 2001 Space Odyssey… he didn’t execute, so we executed him, but I refuse to turn this into a tangential A.I. discussion.
A Blockchain is demonstrably not like any other database software. The superficial advantages that the Blockchain offers in terms of proving that something has happened at a certain time or that someone has the keys to unlock an entry, can be trivially replicated on MySQL or PostreSQL with a GPG layer. Propagating messages in a verifiable way is easily done with SSL and GPG without a central server, using BitTorrent as the transport layer. Anyone familiar with GPG and the Web of Trust knows this. Permissions in MySQL are mature and reliable. If cost savings (and risk savings) are your aim, you would be far better off using the standard tools in an organization, which by its nature is centralized and where accountability and privacy are needed.
The Blockchain is for a different purpose; its aim is to move accountability to the network and out of the hands of a central authority. If you are selling something to an organization that requires central authority, you do not need the Blockchain and its guarantees, because these are achievable by compulsion, and verification done by digital signatures.
You’re assuming it wasn’t created by the NSA and Satoshi works at Fort Meade.
Transparent audit logs are achievable by other means than a Blockchain, and organizations more often than not, like to keep the details of their internal databases private, as they contain business sensitive data. Spreading out the database task into the public onto servers not under the control of the corporation is not something that is desirable. A product that does this is a solution to a problem no one is trying to solve looking for a client that does not exist; the complete opposite of Bitcoin and the Blockchain, which is a solution to a real problem that has been sought after for decades, that everyone needs.
Quarterly earnings are the beginning and end of desire Doctor Zhivago. Next question.
You do not need a consensus mechanism in a company where everyone is under centralized control. The board is the consensus mechanism. Computers today are so powerful, and storage so inexpensive, large databases can run on laptops without any problem. Distributing the load over many machines is something that is required only in “Big Data” Scientific applications, where the idea of the Blockchain and its record keeping abilities are simply not needed.
I have two problems with this. a) William H. Gray, III b) real-time behavioral economics applications of the “nudge” variety won’t run on a laptop. We’re talking just short of quantum artificial intelligence.
There is a demonstration floating about from one of the “Blockchains not Bitcoin” companies, where they claim to have replicated Netflix on their software. Not only is this use case an example of piracy of copyrighted material, but this function is already efficiently done with BitTorrent on a global scale.
Hey, wait a minute. You pirated Bill Murray’s image from Groundhog Day for your blog post. Andie McDowell used to be my neighbor and I can prove it. You better think twice about shunning me on Twitter.
These new Blockchain derivative products do not know what they want to be, and of course, NetFlix does not want a distributed system in the way they devise, they want a centralized system so they can profit. The only thing they could want in terms of distributed architecture is the use of BitTorrent to stream films to their customers. Everything that is Blockchain is worthless to them…unless they start taking Bitcoin for on demand viewing of films, which of course, makes the case for Bitcoin as a transformative “tech”.
Someone said that Google could reduce their server costs with a hacked Blockchain. This is absurd. Hardware is very cheap. Re architecting Google’s infrastructure to use a Blockchain offers them no advantage whatsoever. Google’s needs are simple; they would pay billions for a very fast high level lossless compression breakthrough. This would mean that their existing infrastructure could instantly have greater capacity with no hardware retrofitting. Apple just had something similar happen to them; a software developer wrote a novel image compression algorithm they bought it and are incorporating into their software. That is real innovation; solving specific problems that are well defined, with a novel approach.
How do you define cheap? Is a $10,000 redundant gold plated electronic watch expensive?
Uber, AirBnB, Spotify and the vast majority of companies all need simple databases to run their services. The true innovation that helps them is Bitcoin. It reduces the cost of processing payments, and eliminates the risk of fraudulent payments completely. This is not something to be sneered at; it is a revolution in how people pay for services, and it will completely destroy the credit card industry forever.
Cue heavens open angel music.
What sort of man could possibly be against this? Or claim that it is anything less than one of the most profound beneficial breakthroughs in the history of computers and software?
The man… the marmot legend… the lost son of Christopher George star of The Rat Patrol ~ Casey Kuhlman.
No Straw Man, Faulty Appeal to Authority, corporate gibberish or FUD can stop Bitcoin. Its use case is too obvious and compelling, the savings too great, the elimination of payer fraud too seductive.
Who’s trying to stop Bitcoin? Barry Silbert is stinging enough without stopping Bitcoin altogether.
Bitcoin is real. It is not vaporware. It is here now, you can use it, benefit from it and you don’t have to ask anyone’s permission to do so. The permissionless nature of Bitcoin is an offence to the Statists, who openly say that every new technology or software should be exposed to scrutiny and regulation by the State, no matter what it is. Bitcoin, being immune from that sort of anti-Americanism, doesn’t care what you think, or recommend; it simply is, it will do what it is meant to do, like BitTorrent does, and nothing can stop it.
Bitcoin is no more real than an Oculus Rift experience. For now, banks define what is “real” in a property sense. We’re not there yet. Once the banks and the Fed are ready to give up the ghost, then the implications are real, but Bitcoins will never be “real” in a “control” or “pay” sense. They’re a Jean Baudrillard simulation and a darn good one at that. That’s why we have a White House Office of Information and Regulatory Affairs and why spooks like John Kiriakou tell you they’re going to have to work at Dunkin‘ but end up working for Marcus Raskin whose daughter-in-law is Deputy Sec-Treas. Wake up and smell the birth certificate.
You are not required to like it, integrate with it, use it or even talk about it, and lying about it will not dissuade people from using it. The benefits are obvious to anyone who can think, and those who think instinctively like to save time and money and resent lining up and showing ID to use their own money. Setting up a Blockchain wallet takes literally five minutes and once its done, and you fund it, you have hand-held global access to the entire world market, as a bank, where you can send and receive an unlimited, unrestricted amount of money to anyone, anywhere, instantly. That’s a good thing.
A public record all transactions… what could be better? That’s a good thing? You bet it is. Especially for thisprostitute who wants to learn how to start accepting Bitcoin.
This is the core of the reason why Statists dislike Bitcoin. It sets people free to do as they like with their own money. Unfortunately for them, its too late to stop Bitcoin. All the vaporware, wishful thinking and FUD in the world can’t stop it. Years of bad press written by ignorant men have not stopped its growth, and every day that it grows it is going to become harder to retard.
You’ve been reading Isaiah Berlin again. I told you about that. There is no “freedom from” and “freedom to” only “freedom with”. You haven’t been reading your Dave. “Hard to retard”. That’s actually got marketing potential. Did you trademark that… because I think I’m going to use it.
By all means, continue to write your own software, but do not believe for an instant that anything you say can stop Bitcoin. Only software can stop Bitcoin, and to do that, its function needs to be be a better Bitcoin than Bitcoin, not any coin that is in any way crippled. Bitcoin has unleashed an idea into the world that will never ever go away. The world has changed. You can either deal with it, or leave it.
Ashby’s law of requisite variety: “Variety destroys variety.”
May I suggest BeautyOn’s law of scarcity: “Only scarcity destroys scarcity.”