Stand With Dave…

August 19th, 2014

… and get arrested.

#Ferguson… where standing still is a crime.

http://seen.co/event/national-guard-deployed-in-ferguson-ferguson-mi-2014-5642/highlight/38659

I woke up this morning and there was a black swan staring at me.  You know, a Nicholas Nassim Taleb black swan of the Antifragile variety was standing right next to Dave in Procruste’s Bed.  This black swan was born on a piece of cardboard and then began to multiply itself on twitter and it began to spread across America like an ignited molotov cocktail escaped from its glass container.

Why does Dave expect this to spread?  There are plenty of reasons for that and many of them are justified reasons if you ask Dave.  If I had to guess, the main one would be the broken promises of “Hope” and “Change” followed by the reality of Dodd-Frank, the London Whale and one too many rounds of golf.  There was one story in the local paper this past week, that in my opinion, sort of sums up #negrospring from Dave’s point of view and why Dave would say America’s fascination with race just crossed the Rubicon.

From USA Today:

But now a Northbeach patron says the bar went to extremes in controlling who enters by blocking all black men at the door for part of last Tuesday night’s event.

The man, Michael Brown, 32, of Dover, claims he and several others were turned away from Northbeach because of their race.

“It happened with almost all the black guys who came up, unless they were with a group of white people,” Brown said Wednesday.

 

http://www.usatoday.com/story/news/nation/2014/08/07/patron-claims-del-bar-denied-access-because-of-race/13757213/

http://www.reddit.com/r/Delaware/comments/2cswvs/northbeach_dewey_accused_of_excluding_blacks/

http://www.delmarvanow.com/story/news/local/delaware/2014/08/06/dewey-bar-race/13706413/

 

Alex Pires @farmerslawyer

 

Who is Alex Pires and how did he come to own so many bars in Dewey Beach?  Well, winning one of the largest civil rights cases in history with a payout of over $1 billion didn’t hurt.

 

from Wikipedia:

Pigford v. Glickman

In 1997, Pires and attorney Phil Fraas agreed to take on the case of 11 Black farmers who had been discriminated against by the USDA for years. These farmers had been traveling the country trying to find lawyers to listen to their story. As described by John Boyd, President of the National Black Farmers’ Association: “We visited with 14 lawyers, including Johnnie Cochran—all of them turned down the case. Pires and Fraas were the only ones willing to do it.” Pires told the farmers he believed their claims could only succeed if they could get several hundred other farmers with similar claims to join them in a class action. The claims involved were years, and often decades, old and the statute of limitations had long since expired. Pires theorized that if they could show USDA’s discriminatory practices regarding Black farmers was pervasive and longstanding the case would have wide appeal and the statute of limitations problem could be solved somehow. Pires, Fraas, and the farmers began touring the South, holding meetings to discuss and explain the case. Within a year they had far exceeded the goal of finding several hundred farmers who had been discriminated against by USDA. In September 1997 Pires filed Pigford v. Glickman in the United States District Court for the District of Columbia, naming hundreds of plaintiffs with claims of discrimination and asking the court to certify a class.[2] Within a few months, noted civil rights leader and attorney J.L. Chestnut of Selma, Alabama joined Pires and Fraas. Battling heavy opposition from the Government, Pires succeeded in getting class certification and in 1999 Pires, Fraas, Chestnut and their colleagues settled the case. Ultimately, over 22,000 people filed claims—a figure ten times higher than projected. By the end of the claims process, over 15,000 claimants would be compensated (an average $50,000 plus $12,500 to pay taxes on the award) for a total payout of over $1 billion —making it one of the largest civil rights cases in history.[3]

And “Allen B West for President 16″ attempts to play the left/right paradigm false dichotomy politico card for all its worth and Dave does not think this is going to get you the top job Allen.  The assumption is that the enemy must be clearly defined.  Like they say at the poker game, if you can’t spot the “jobs” sucker, then you should probably get up from the table.

When it comes to tracking economic and political black swans, it may pay to know the difference between your modus ponens and your modus tolens.

http://tradewithdave.com/?p=9716

http://tradewithdave.com/?p=10535

Bitcoin Encounters The Dreaded Albino Rhino

August 17th, 2014

Is Bitcoin going bottoms up or is it “Bits Up” for BTC?  You be the judge.

 

First it was the Washington Redskins, then Earl’s Restaurant & Brewing Company drops their Albino Rhino brand of beer under pressure from human rights activists, then there was the Rino half of the McCain/Palin team dismantled from a porch within view of Russia, followed by Governor Rick Perry’s “politicial” indictment in name only (aka The PINO)  and now Tim Swanson goes and invokes the dreaded BINO designation and applies it to Bitcoin.  What’s a crypto currency to do?  Sounds like the Winklevoss twins could use a Kit Kat moment of their own and cats don’t even like being called kat… just look at ‘em… they’re angry.

Here’s Tim Swanson @ofnumbers article:

http://letstalkbitcoin.com/blog/post/bino

 

Earl’s Restaurant dropped the Albino Rhino brand after a human rights fight:

http://www.cbc.ca/news/canada/british-columbia/earls-drops-albino-rhino-after-human-rights-fight-1.1353822

Maid In The Shade

August 13th, 2014

Dave has made at least four mentions of the Maidsafe network in the past couple of months. Although I have been aware of it from the outset, it was Chris Foster who really focused my attention on the potential of Maidsafe. Suffice it to say David Irvine is brilliant even if he did say “Technology has the answer” which is essentially the Peter Thiel thesis with the exception that Mr. Thiel is awaiting Hollywood to tell that story.

Recently at the Maidsafe forum one of the participants encouraged the sci-fi thinkers in the crowd to put on their tin foil hat, stare into the corner and come up with a scenario of just what the world might look like if we are successful in shifting our monetary system and the society it represents from one based on “In God We Trust” to one based on “In Tech We Trust.” Here’s Chris Fosters’ take on just what such a world might look like from the checkout line at Wal-mart… the SAFEland Wal-mart.

 

The safe machines that betrayed the people

Governments around the world had been following ProjectSAFE from the start. Once the code was made public, they commenced fashioning it to run ‘whole of government’ systems.

Polling told governments, that the only thing holding back a National/International ID system and full metal surveillance, was the publics concern over data security.

The public, definitely wanted the bad guys caught.

These were valid concerns, data security indeed was a big problem worldwide.

The solution was in, the Maidsafe system was fully tested for government, but the will of the people would still be required…how to get this public consensus.

There had to be a strong reaction in order to implement the solution and thus, complete the hegelian Dialectic

The solution would be arrived at over the course of 5-10 years, a steady series of ‘leaks’ ever more shocking, would be planned. These leaks would totally demoralize the public into believing they had no privacy and all data was unsafe, whether public or private….everything was hackable by big brother or worse..terrorists and rogue governments.

Slowly, slowly is the Fabian way..step by dialectical step.

The unorganised masses, now being completely demoralised begged for a solution and what do you know, we now have it. The public agree, there can longer be reason for concern of data security and so it follows mass collection of surveillance data is acceptable.

But wait, there’s more…international travel so much of a hassle now, long waits, scanners…wouldn’t a world ID system be relevant now we have zero data leakage?

I know, lets use a blockchain, we’ll store it as a file on the governments SAFEplatform and give everyone a satoshi address as an identifier…brilliant!

You know, global warming is now a real problem, we are in peril…carbon must be reduced. The only way to reduce carbon in any meaningful way is for everyone to reduce their ‘footprint’. Luckily Google has been working to create a global inventory of all natural things we have that database, sweet!

We’ll start measuring all inputs along the supply chains and calculate the real cost to the system and price accordingly, nice little earner. Next we’ll need to measure what each individual consumes daily and come up some kind of average that we can sustain.

Ok, we have the average carbon allowance for every human in the system..how we going to police it……? Blockchain again..brilliant! We’ll introduce mandatory crypto currency across the planet, cash will be outlawed. We can now track all inputs and outputs, spends and saves, we know what everyone’s preferences are and we can track their movements..this is good for the world community.

We still need to track peoples energy consumption…oh yes we have the ‘smart meter’ network for that, we track their movements via energy usage around the house and even shut down the supply if they go over their carbon limit.

The people were Free, Secure and trusted their Privacy to .Gov

All was good in SAFEland, the politicians layed around reading their copies of Machiavelli’s ‘The Prince’……until, one day……… ‘cue dark music’

 

Here’s a link to the entire page:  https://maidsafe.org/t/a-world-with-privacy-security-and-freedom/985/7

Below is an interview conducted by Max Keiser of David Irvine and Nick Lambert of Maidsafe. The interview is in the second half of the show, but you can always learn something from Max & Stacy by watching the entire episode.

 

Dave on Thiel and the need for Hollywood to make movies that will “save us”: http://tradewithdave.com/?p=17984

Thiel and Andreesen “In Tech We Trust”:

 

Elon Musk & Ray Kurzweil on that SAFE feeling we get from being so intelligent:  http://mashable.com/2014/08/03/elon-musk-artificial-intelligence/

DAVEsafe on MAIDsafe:  http://tradewithdave.com/?s=maidsafe

Davergy via Daversity

August 11th, 2014

… it’s solutions based.  Weird Al explains:

Trade Weapons With Dave

August 9th, 2014

Abu Bakr al-Baghdadi has a $10 million bounty on his head and more than his fair share of the $150 million in U.S. military equipment in his hands?

 

Let’s just say hypothetically that Dave wanted to give over a bunch of U. S. military grade weaponry to the Islamic State in Syria and Iraq.  Let’s say Dave was Muslim and Dave thought that the Muslims should be running things in a Muslim country like Iraq.  97% of the people are Islamic, so it seems reasonable to refer to Iraq as an Islamic State.  Now, Dave’s not taking a political position as this exercise is purely hypothetical and I am most certainly not diminishing the bravery exhibited by the U.S. military who served in Iraq.  This is strictly business… complex military industrial business.

So, let’s say Dave has this idea for shipping, let’s say… $150 million worth of military equipment to the Islamic State.  That would be tough to do because Dave isn’t in the military.  So, I guess if you want to do the first part such as accessing the gear you would have to be in the military.  Okay, so let’s say Dave IS the military, or the Commander In Chief, I would just ship my $150 million worth of gear right over there or leave the brand new gear that was already there for that matter, but there’s just one problem.

Dave can’t just hand the equipment over to the Islamic State because the Islamists aren’t our “official allies.”  They are “the enemy.”  Hmmm?  What to do?  I’ve got it.  I’ll ship the stuff over there and hand it over to the weak Iraqi Republic military (our sort of allies because we destroyed their country and then put them back in power… that should work well) and then they’ll give it over the the Islamic State.  Got it.

So, let’s recap.  If Dave was into supporting Islam and Dave wanted to give them a bunch of military gear Dave would first give it to the allied government that I put in place and then when that government runs scared they can hand the gear over to the Islamic State.  Bad-a-bing… bad-a-boom.  Easy-peasy Lebanesey.

 

And when you’re looking for high-level military intelligence or you’re heading to an auction and want to know the “fair market value” of military weaponry, remember to always “cut out the middleman” and for prices check The Huffington Post:

According to Lt. Col Melinda F. Morgan, a Pentagon spokeswoman, some 12,490 excess defense items worth $70.5 million have been turned over to the Iraqis, with 7,000 more, worth about $40 million, to go. That category includes such things as older versions of weapons, vehicles, and body armor.

Finally, U.S. forces have also given the Iraqis 1,251 non-excess military items worth $47.7 million, Morgan said. That category includes such items as up-armored Humvees and 50-caliber machine guns, Richardson said.

All of the dollar figures are for what the military calls “fair market value”; the purchase price of those items could, of course, have been much higher.

http://www.huffingtonpost.com/2011/09/26/iraq-withdrawal-us-bases-equipment_n_975463.html

Oh, and one other thing.  Once you deliver your $150 million to the opposition, make sure to ship in a new $1 billion to replace it.

https://medium.com/war-is-boring/heres-the-billion-dollars-worth-of-gear-the-u-s-is-selling-to-iraq-9345e1454c7d

 

VICE NEWS documents their views:

… and in other news from Israel and Gaza, Sean Hannity reporting on the insanity which is defined as doing the same thing and expecting a different result:

… and Save The Children… at least the ones who are not carrying their own Kalashnikov:

 

Wondering about the religious history on all this.  Well the names were changed to protect the innocent.

http://tradewithdave.com/?p=21573

Murmurate With Dave

August 8th, 2014

Chaos theory applied to an initial public offering… dig this…

 

August 8, 2014THE SWARM HAS NO PLAN

Swarm has been criticized several times for not sticking to a plan. Some people, including those writing about Swarm from an external perspective, simply assumed that what we were doing fit into some established framework, like legal equity.

 

This couldn’t be farther from the truth. Although this is a bit silly, the sad truth is that human beings often work via established mental frameworks. Rather than taking the time to reason from the bottom up, as advocated for by folks like Elon Musk, people simply fit a new concept into an old box.

 

As has been made clear over time to those watching the evolution of the Swarm, Swarm is more like an evolving network with a broadly stated goal of providing the most value possible to the participants inside of that network, rather than a corporate entity trying to convince people to buy its’ stocks after announcing the quarterly earnings report (or worse, some scamcoin trying to engineer some new pump and dump).

 

It’s not surprising that there has been confusion about what we are doing, sinceother people are effectively trying to create an duplicate stock market via crypto technology. But the Swarm is something vastly greater than this. Allowing everyone to participate in the upside of a project is something far greater and more interesting than duplicating the stock market.

 

Although in early stage startups some degree of flexibility is needed because of the necessity of a “pivot,” this is even more the case for something like Swarm. We won’t simply do a pivot, we will fork our own fork until there is a dazzling fractal structure of emergent complexity.

 

Because of this, the Swarm doesn’t release plans. It murmurates. There are so many people trapped into thinking in old categories. There are a great number dedicated to make sure new paradigms don’t emerge and that old power structures don’t change.

 

But the Swarm is not simply a project. It is a network of people dedicated to innovation and change, working around the chinks and cracks to make this change happen.

 

So I’ll say it again, the Swarm has no plan.  It will go on regardless of what happens from a technological aspect. It will go on regardless of what happens from a regulatory aspect. It will go on regardless of our legal structure and related constraints.

 

Swarm will drive innovation because it is dynamically creating the rule set that leads to the most innovation. Everyone else will be behind because they are thinking of how to maintain something they already have rather than how to create.

 

We will succeed by whatever means necessary. Many projects will be swarmed, including many projects that would have been too risky or too ambitious to get funding in the past.

 

Some of these may flame out on the launch pad, some may burn up as they enter the atmosphere, but eventually some will go to the moon.

 

We will burn through a lot of bad ideas, but the end result will be brilliance.


That’s what it means to join the swarm.

 

Okay, okay… I got to give you credit for this one.  If you can pull this off… it’s genius.  If you can’t… well, I can’t blame you for trying and for at least being forthcoming about it… even if it is after taking a lot of people’s money.  I don’t think Elon Musk does it this way… jus’ sayin’.  This could work… if everyone stays out of jail and in the absence of a legal form, the lawyers don’t get a hold of the money… indeed… it could work.  Let me restate that.  If you have a legal form and you pay the lawyers a bunch of money, that’s okay.  If you don’t have a legal form an you pay the lawyers a bunch of money then that’s simply a ripoff.  If you can stay out of Ben Lawsky’s way in the meantime, more power to ya.

http://blog.swarmcorp.com/2014/08/08/the-swarm-has-no-plan/

Shallow Hal & The Blind Date With Bitcoin

August 8th, 2014

If Bitcoin were a girl… and your friend told you he was setting you up on a blind date…

 

If your date was described as “We believe Bitcoin is still technically attractive,” how would it make you feel?  Would you jump for joy or be propelled by the gravity of the situation?

If your friend doesn’t know “Jack” about attractiveness, it may help to think of attractiveness as a “moving average” as in  if you’re expecting Gwyneth Paltrow, you may want to get moving.

If your friend doesn’t know “Jack” about being in the black, then you can ask him why Bitcoin is down 20% year-to-date.  If you have money in Pantera (Black Panther) Capital, Ron Glantz explains the technnical nature of attractiveness:

http://cdn.panteracapital.com/wp-content/uploads/July-2014-Bitcoin-Letter.pdf

For those of you who were around on November 27, you may recall that Trade With Dave:  http://tradewithdave.com/?p=19264

Trade With Dave’s Mom

August 8th, 2014

@Stellar.org is playing the trust game… is your trust in range? 

Dave’s beloved mom always said “Trust is like a bank account… you have to work hard to make the balance go up and it’s easy to make a huge withdrawal, but not so easy to rebuild the balance once the trust is lost.”  Around our house there is an action which is described as “a grandma Harrison.”  For example, you might say something like, “I checked into a hotel on vacation and pulled a Grandma Harrison” meaning that you booked the hotel reservation online to get the maximum discount and then while you were checking into the hotel and waiting in line you overheard that there was an even better offer being made at the desk, so you called the 800# while you were standing in line, cancelled your online reservation (after you had confirmed with the desk clerk that your room was reserved), and rebooked your reservation while simultaneously speaking with both the phone reservation agent and the desk reservation agent and securing yet an additional $25 discount… plus a room upgrade.

I know it can be humiliating and more than a little bit disturbing to those people standing in line behind you, but if you adhere to the Grandma Harrison theory of economics, a few million saved over a lifetime is a few million earned over a lifetime.  Although, technically speaking, my wife is not genetically related to my mother, somehow she inherited the same trait and is equally willing to cause Dave great embarrassment while saving Dave great cash and thankfully Dave’s children also inherited the same trait.  Keep in mind Dave doesn’t mind saving money too, but Dave would prefer to sit in the car rather than to witness the carnage at the counter because remember Dave grew up watching retail clerks say… “I’m going to have to get my manager Mrs. Harrison before I can give you that deal”  and Dave’s wife was doing the same thing last week at Verizon over some $100 rebate thing-a-majig on some tablet she was purchasing.

Back when my mom was trading, she didn’t have an app for trust.  She had to decide how much rope she was going to give someone based on a combination of inputs.  To say that many of her trades were “heads she wins, tails you lose” is somewhat accurate but she wasn’t unfair… just ruthless. Usually there was some component of failed marketing (i.e. two coupons for the same offer that don’t explicitly say you can’t use both coupons) or some failure to perform (i.e. “my son’s french fries weren’t hot… he ate them because he was hungry, but I still want my money back because we ordered hot french fries and by the way if you want to give us some hot french fries after you give me my refund as recompense we will accept them and continue to trade with your establishment in the future.”).

Stellar.org via their relationship with Swipe is effectively monetizing trust using a tool similar to the Price Is Right Over/Under Game. Before you can fully appreciate the reversal of the trust relationship where you decide how much you are going to trust the bank rather than how much the bank is going to trust you, you need to realize that all of the currency in this model has been prepaid (i.e. the prebit).  If you don’t understand the difference between a credit based system, a debit based system and a prebit based system, then you have some catching up to do (http://tradewithdave.com/?s=prebit).  To simplify that concept for you, a credit based system is where you borrow debt-based money (Federal Reserve Notes) based on how much the bank trusts you like when you use a credit card at Wal-mart.  A debit based system is where you pay with debt-based money (Federal Reserver Notes) on a pay-as-you go basis like when you use a debit card at Wal-mart.  A prebit based system is where you pay with say Bitcoin or Stellar where the total number of monetary units is constrained… unlike the U.S. dollar which is quantitatively unconstrained (aka QE).

Greg Brockman does an outstanding job of explaining just how the Stellar trust system is effectuated in his August 2, 2014 article titled The Stellar Object Model:

The Stellar Object Model
Stellar attempts to encode a relatively direct model of real-world finance. Here’s an overview of the main concepts you need to know to start building using Stellar’s API.

Credits

Think of the credit system as a graph. Each account is represented as a node, and the credits are represented as per-currency weights on the edges. For example, if Joyce owes me 10 GBP, then from my perspective the balance between us is set to +10 GBP. If she later gives me 15 GBP in person, then our balance should adjust down to -5 GBP.

From her perspective, everything is the same except the signs are reverse.

Note that it’s possible to issue credits in arbitrary (even user-defined)currencies. The implications here are pretty interesting, and I’ll likely address them in a subsequent post.

Trust

Trust lines are effectively permission for an edge’s nodes to move the balance in one direction. By default, trust is set to 0. If I set my trust for Joyce to 100 GBP, I’ve given her permission to unilaterally increase our edge’s GBP weight up to a maximum of 100 GBP — that is, I’m willing for her to claim to owe me up to 100 GBP. If she sets her trust for me to 50 GBP, she’s given me permission to decrease our edge’s GBP weight down to a minimum of -50 GBP — she’s fine with me claiming to owe her up to 50 GBP.

Think of the balance kind like a slider, which I’m only allowed to adjust down, and which she’s only allowed to adjust up. Translated to real-world terms, this means I’m allowed to say I owe her more, and she’s allowed to say she owes me more. Trust acts as a clamp, preventing either one of us from moving the slider too far (meaning we can’t claim to owe each other outrageous amounts).

So why do you need the clamp at all? Naively, it would seem that I should be perfectly fine with Joyce claiming to owe me a million dollars.

The main issue is that when I trust multiple issuers for the same currency, I am effectively (modulo some fiddly options) saying that I consider those issuers’ credits equivalent and I’m fine with either. If I trust Goliath National Bank and the Iron Bank each for 1000 SEK, and each has issued me a credit for 100 SEK, I could wake up tomorrow and find that the Iron Bank owes me 200 SEK and Goliath National Bank owes me nothing. The network reserves the right to move around balances like that in order to make other people’s transactions happen.

Stellar (the currency)

Your stellar balance is distinct from your credit balance, and much simpler. Think of it as existing in an entirely different database table: there’s some stellar balance associated with your account, which is stored as a non-negative integer number of microstellars. (So stellars are divisible no further than the microstellar.)

So why is the stellar necessary at all? It’s the one part of the system that isn’t just a digital representation of something in the real world. One intuitive way to think about it is that all real-world representations come with baggage — for example, credits require this complicated notion of trust to trade them around. In contrast, it’s possible to define your own, much more convenient rules for something that exists only in the digital world. The stellar is powerful in that it can be traded between parties who don’t trust each other, and thus forms a bridge where there isn’t already a trust path.

Ledger

Think of the distributed ledger as a database snapshot. If you run your own stellard, it will grab the latest ledger almost instantly, at which point you can start submitting new transactions. It will then automatically download history, which is mostly useful for API calls that report on previous transactions.

The ledger’s state is updated by transactions, which are saved and recorded forever.

Exchange

The distributed exchange is a way of moving around both stellars and credits. It acts without regard to trust.

The exchange itself is effectively a pool of submitted offers, stored within the ledger. The creator of a pending offer can also cancel it.

Each offer has a TakerGets field and a TakerPays field, which indicate what you have and what you want in return, respectively. You can trade some credit you hold (such as my 200 SEK from the Iron Bank) or new credit you’re willing to issue (such as 30 GDB issued by me). Offers can be partially fulfilled.

A taker can accept an offer without regard to their trust settings; this means that after the trade completes they may have more Iron Bank SEK than their trust line would allow. However, the taker explicitly accepted the offer, so they knew what they were getting themselves into. (As an aside, you can thus think about trust as a signed policy allowing the network to take action on your behalf while you’re offline; it doesn’t restrict you from taking actions on your own.)

Note there’s no concept of me “creating” a GDB credit before offering it. Since credits are just weights on the edges, there isn’t even room in the data model for me to hold my own credits.

Spam prevention

Each ledger-updating action (such as setting trust, sending a payment) on the Stellar network burns a minuscule amount of stellar (10 microstellars). The hosted web client does its best to isolate you from the resulting fractional balance. This amount is chosen to be negligible to legitimate users, but prohibitively expensive to spammers.

Each active account is required to hold a minimum balance (currently 50 STR). This prevents a spammer from spinning up many accounts (which otherwise would bloat the size of the ledger).


There are a number of corner cases and configuration options not covered here. However, this post should be enough to help you reason about what any given API call will do.

Note that Stellar’s tech is forked from Ripple’s, and this post should largely apply to Ripple as well. Over time, I expect the technologies will diverge — for example, Stellar already has inflation addresses and a few other diverging features.

Now, what is particularly interesting to Dave about this system is fairly obvious.  It functions “almost” solely as a means of exchange rather than attempting to function as a store of wealth which has IMHO been much of the cause for the low velocity of Bitcoin.  Gold, for example, isn’t a great money system primarily NOT because it’s NOT a good store of wealth, but precisely because it’s not an efficient means of exchange.  It’s just tough to buy that latte’ with gold – you get the picture.  But that’s not even the main thing about Stellar.  The main thing is that you get to set that trust range just like you would get to set the price range if you were on The Price Is Right.  This is a form of price discovery and this mechanism (price discovery) is the mechanism that has effectively been destroyed by our current joke of an economy (see TradeWithDave.com for more insight on that).

In the absence of a genuine marketplace and price discovery everything becomes distorted and that’s what we have done with our current systems for business, government and the like.  It’s more like the Koch Brothers trying to negotiate with Dave’s mom over the price of nitrogen based fertilizers while my mom is shoveling manure from the horse stall for her garden.  The system we have now just doesn’t work and it’s failing at the edges and it is these edges that Stellar.org is building its entire system on.  Now, don’t take for granted that Stellar may be a price discovery system, but it’s based on another system known as the internet which is just as co-opted as everything else, so don’t think for one minute that Dave thinks Stellar is some sort of return to a libertarian paradise (i.e. seasteading nightmare with Peter Thiel) of free market-ism.  Hardly, but it (Stellar via Swipe via whoever they work with first- see yesterday’s posts) will be efficient and effective enough to wipe out much of the small and medium enterprise commercial and lending mechanisms in the marketplace if you ask me and that’s not necessarily a good thing, but it’s a thing nonetheless.

The challenging aspect of all this, if you ask Dave, is helping regular folks grasp the power that has been created in the reversal of the mechanism which Dave refers to as the coincinet which for lack of a better example means that you walk into a store carrying the credit card swiper thing-a-majig and the retailer is the one with the credit card that they swipe through your swiper.  Jed McCaleb realizes that this is about honoring those cards, creating an acceptance network but most importantly inflating the network through a rising velocity of trust.  In these new models the approval and honoring process functions in reverse… Brockman again:

Think of the balance kind like a slider, which I’m only allowed to adjust down, and which she’s only allowed to adjust up. Translated to real-world terms, this means I’m allowed to say I owe her more, and she’s allowed to say she owes me more. Trust acts as a clamp, preventing either one of us from moving the slider too far (meaning we can’t claim to owe each other outrageous amounts).

Why is it so important to say that some other entity can only owe you so much?  Why is it important to limit how much could be owed to you?  It’s crucial because in the absence of a form (think Janet Yellin’s Fed) or boundary you cannot capture energy and the system leaks eventually losing access to the credit markets.  When “Satoshi” established 21 million bitcoins he created a form that allowed everything to work against that form just like the fire inside an internal combustion engine works against the displacement of that cylinder driving the piston downward and powering the forward movement.  Stellar has done the same thing, but what they are not trying to do is to establish a long-term store of wealth and that’s why there’s a decent chance that they will unlock the velocity that has been so difficult for Bitcoin to achieve no matter how many neru jacketed speeches Patrick Byrne from Overstock.com makes.

Stellar isn’t anywhere close to being based on “the promise” of a genuinely independent and peer-to-peer system that Bitcoin could have been in the United States and may still be in the Isle of Man.  Then again, Stellar is light years ahead when it comes to shedding the difficult store of value mechanism of genuine money while rocketing upward when it comes to functioning as a means of exchange… again Brockman:

“…credits are represented as per-currency weights on the edges.”

and

“It’s the one part of the system that isn’t just a digital representation of something in the real world. One intuitive way to think about it is that all real-world representations come with baggage — for example, credits require this complicated notion of trust to trade them around. In contrast, it’s possible to define your own, much more convenient rules for something that exists only in the digital world. The stellar is powerful in that it can be traded between parties who don’t trust each other, and thus forms a bridge where there isn’t already a trust path.”

Dave would argue that it’s not a bridge… it’s a gate, and if you want to take your bags through that gate, you’re going to have to pay.  Thanks to the efficiency of triple-entry accounting (think Schmidt’s creepy line becomes creepy circle) and blockchain technologies, that fee relative to the service level is going to appear to be greatly diminished on the surface.  In other words, the merchant fee is going to look like a great deal.  The bad news is that “baggage” that Brockman’s real-world representations come with are going to need to be scanned with every transaction.  Yes, the genius of Stellar is that it lets the user effectively create an expansion joint between them and their chosen gateways which allows the user to in essence become the banker establishing the policy for credit creation… kind of like millions of little Janet Yellen’s doing their own exclusive quantitative trust easing helping to lubricate the system, but don’t be deceived.  The system in its entirety has a cap on it and once everyone is in, that flexibility that was such an attractive feature of the system will come to benefit the systems owners… not the systems users and the last time Dave looked you don’t own the internet.

If you ask Dave, Stellar is eating Facebook and Bitcoin’s lunch using precisely the same method Dave would use to eat those sandwiches his dear mom made for him… starting at the edges.

 

Greg Bockman:  http://gdb.svbtle.com/the-stellar-domain-model

Facebook… We Have A Problem (Stellar.org)

August 7th, 2014

Apollo 13 does its best Stellar.org imitation

Back on May 9th, Dave wrote the following article (Faceproof:  Will The Blockchain Destroy Facebook’s Key Value?) and at the time Dave had no idea what Uncle Jed was up to…

“So, what’s the point?  It’s pretty simple actually.  When it comes to identity verification on the internet, the blockchain protocols 100% accuracy is going to win out over even Facebook, Google, LinkedIn, Twitter or even your local bank’s 99% accuracy (“Hey, honey where’s my ATM card… have you been in my wallet again?”) when it comes to saying just who exactly is who.  Triple entry accounting is as close to bullet proof accounting is it comes because it doesn’t simply require Assets = Liabilities + Capital, but it starts off with a global measurement of the entire money supply so it knows that if everyone’s Assets don’t total up to equal the predetermined balance (Say 21 million Bitcoins for example) then somebody is hiding something under Mt. Gox and those missing Assets can be tracked down easy as… uh… easy as Pi.”

and

“Facebook is good at what they do, if you can call it that, and with Deep Face they’re extra good at turning your identity into a monetizable asset, but Dave has a sneaking suspicion that Facebook met its match when a match rate of 97.25 percent is no longer a social OR business norm…”

Here’s a link to the entire article:  http://tradewithdave.com/?p=20993

So what does Dave think will most likely happen with Stellar?  Here’s a couple of uneducated guesses.  First of all, I think it will appear to fail as it comes out of the gate.  It’s just not that understandable beyond geek-dom (think space camp attendees) and in the absence of a tangible deal with a bank or a shadow bank (think Kabbage… Dwolla) having utility via Stripe just makes it look and feel like another altcoin or Iphone app like say… FourSquare or SquareWallet with out the wallet… but don’t judge a book by the rocket on the cover.  So, I see a scramble for the coins, likely confusion/waffling at the management level regarding issuance of Stellar (i.e. the greed factor ♪ barely kept his family fed ♪ ) and conventional hoarding ala Bitcoin and then boredom as lots of folks think it’s an altcoin equivalent of Brock Pierce’s dollar-linked Realcoin… not hardly.

This will likely be followed by a deal with an institution or a bunch of institutions… say the National Association of Bailey Building and Loans or something along those lines.  Maybe 10,000 credit unions that don’t know any better get convinced to allow the trojan horse spaceship into their space.  It could be Green Dot cards or Amex Bluebird or Dwolla or maybe DiscoverCard’s acceptance network… who knows what, but they will do a deal with either a corporation or a group of corporations and lookout when they do because the energy that is pent up within the velocity of “Facebook Money” (which doesn’t exist) will propel a horizontal wildfire of epic proportions and one that Bitcoin could have only dreamed about.  This will be more like when the U.S. Government issued those $800 stimulus checks… the Stellars (read money) will burn a hole in fellars pockets.

At this point, I would imagine there will be some sort of parabolic rocket ship curve that rises and comes crashing back down in less than a month’s time as the numerator of the velocity which is incredibly fast is only exceeded by the denominator of global currencies (think Hawala meets Lady Gaga) which is incredibly widespread.  Someone will be selling a commodity in Stellars such as gift cards for CVS at a 50% discount that will absorb massive amounts of the liquidity.  If it happens it will be epic… like Bitcoins $1,000 rise was epic… only thing is Stellar will fall even harder and even faster than Bitcoin did.. that is until it finds its equilibrium based on convenience yield.

Remember:  This foundation is about adoption and honoring, not developer egos, politics, hoarding and electricity costs which have  bogged down Bitcoin

At that point, Stellar may fail again entirely… but if it doesn’t it may become genuine Facebook Dollars or Apple Dollars or Google Dollars or it may actually be capable of bypassing both Facebook, Apple and Google entirely as it carves out its own space in the landscape.  All this could happen in very short order…say a couple of months leaving Bitcoin in the dust as a wholesale platform for cryptocurrency while Stellar takes the retail stage front and center.  My guess is a bidding war breaks out due to the connectivity that Stellar.org will likely have achieved with the banking system.  Who knows, a bank may even join the bidding war.  The folks at Stellar seem smart enough to have bypassed the Ben Lawsky law-skis entirely and Dave would pay more than a couple of Stellars to be a fly on the wall in Barry Silberts office about now.  Oh yeah… he gave up that office didn’t he.  Hmm?

If you think Facebook has paid a lot for its acquisitions in the past… you ain’t seen nothing yet if they make a bid for Stellar.  How do you make a bid for a non profit foundation exactly (think salaries)?  Now, Stellar is facing a reasonably high hurdle in asking people to sell their Facebook friends down the river.  Then again, I think most people would do that for about $10… okay $20.  So, maybe that’s not such a big deal after all.  My gut instinct is that there is some sort of technological poison pill embedded in the whole “hand over your Facebook friends to a non profit Foundation” functionality embedded in Stellar but Dave doesn’t know enough about Facebook (yet) or the flexibility of laws governing Foundations (think Donk Fraud and Title 3 of the Jobs Act administered by Bart Chilton’s replacement… cue drummer sting followed by rim shot) to figure that one out.  No doubt Jed understands that.  At least Dave hopes so.

Mr. McCaleb has once again managed to ply the internet space and this time it feels like he’s mining the space between Europe’s Right To Be Forgotten law (http://america.aljazeera.com/articles/2014/8/6/wikipedia-googleforgotten.html) and the value of your identity and personal dataflow as expressed in Facebook’s stock price.  Dave has little doubt that there’s a pony in here somewhere and in the absence of gravity things could get a bit messy while we search for it.  If someone like Groupon gets their peanut butter in Stellar’s chocolate, things could get quite interesting.

Dave on Stellar:

Bring your decoder ring: http://tradewithdave.com/?p=21621

Kabbage:… It’s what’s for dinner Grandpa: http://tradewithdave.com/?p=21611

Dave on the regulatory nature of Disney Dollars or why Mark Pincus got stuck trying to compete with Sheldon Adelson:

http://tradewithdave.com/?s=%22disney+dollars%22+

Securities & Exchange ~ Blockchain Version

August 6th, 2014

Passing the Howey test…

Maybe I missed this when it first came out.  Maybe I just happened to read it again today.  Whatever… it’s awesome… Lego Awesome.  Tim Swanson on cryptoequity.

http://cointelegraph.com/news/112034/mitigating-the-legal-risks-of-issuing-securities-on-a-cryptoledger