Getting into Bitcoin? 2 subtle points…

Andreas Antonopoulos releases a new talk on his YouTube feed several times each week. If you are still a Bitcoin doubter, watch his latest video with an open mind. It highlights two subtleties of utility and adoption that can overcome the gap between early adopters and doubters.

Early Adopter: I do not refer to an investor, but one who embraces Bitcoin as both a payment instrument and a currency. Someone who realizes that is very likely to become a stateless currency some day.

Doubters: These are individuals who see Bitcoin as either risky, unnecessary, susceptible to hacking & scams, or fueled by libertarian anarchists. In general, they do not perceive a fundamental or compelling benefit to a stateless currency—or they believe that Bitcoin is not backed by something real, tangible or enforceable. They question a currency without some form of central authority, clear backing or point of redemption.

In particular, Antonopoulos helps his audience reconcile the relationship of a decentralized currency with a community or government that does not fully embrace the benefits or fears the downside (crime, tax dodging, deflation, loss of control over the monetary supply).

Below, I have added notes related to two key points below. These are the very same points that I focus on in my conference presentations. Andreas is very articulate and we are certainly on the same page about these subtle but critical issues:

1. Resist the urge to regulate or control
Timestamp 10:34

— Governments or trusted, established banks (e.g. Merrill Lynch) may try to persuade you that blockchain-backed currencies have potential, but that certain ‘safeties’ must be added to the to make them compliant and commercially viable. They will say that this is needed to encourage compliance & reporting—or to thwart criminal activity.

For example, the treasury, IRS or other fiscal bureaucracy might ask the community to respect a list of assets that are tainted by criminals and to seamlessly substitute new coins for the tainted coins. This seems like a small change. In fact, it seeks only to overlay a law-and-order framework on top of Bitcoin. But, don’t be misled by good intentions.

This is exactly what you don’t want to do! Fiddling with the legitimacy of outstanding wealth undermines the entire purpose and benefit of migrating to a decentralized, stateless currency. The architecture must remain open, permissionless, resistant to censorship, and resistant to manipulation by any authority, whether good or bad. There is already a mechanism for distributed consensus—one that does not vest any central authority with the power to annul a user’s wealth by edict.

Ironically, even the US treasury recognizes the critical importance of unit fungibility. It guarantees the exchangability of every issued dollar for any other—no matter what its history.

2. Don’t just save—Use it in your business
Timestamp 12:12

— How do I get started with Bitcoin (or some other cryptocurrency). Help me get started with an exchange so that I can buy my first crypto coin…

No, no, NO! Don’t start with an exchange account. Learn how to set up a wallet in your home or online. One that you control. Rather than hoard Bitcoin, accept and spend it. This is critical if we hope to see eventual adoption of a transformative economic mechanism in our lifetimes.

— Buying cryptocurrency should not be your first step into the game. Don’t think of crypto as an investment asset. Think of it as a currency that you accept and spend.

Bitcoin will not be relevant in your lifetime, until the fraction of trades fueled by purchase & sale, salaries, fees and loan payments dwarfs the number of transactions fueled by speculators, investors, HODL and even sector funds or ETFs. All of these trades retard the day that Bitcoin will be stable, fluid, fungible and useful. Currently that first set of transactions represents 98% of all activity. To spur adoption, we must change push the fraction of investor transactions and currency exchange below 30%. It’s a tall order, but it is gradually beginning to happen.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He advises The Disruption Experience in Singapore, sits on the New Money Systems board of Lifeboat Foundation and is a top Bitcoin writer at Quora. Book a presentation or consulting engagement.

Ric Edelman: Bitcoin will become asset class

Kudos to WallStreet analyst and advisor, Ric Edelman. He drank the Kool-Aid, he understands a profound sea change, and he sees the ducks starting to line up.

Check out the clearly articulated interview, below, with Bob Pisani at the New York Stock Exchange and legendary Wall Street advisor, Ric Edelman, (Not my term…That’s what CNBC anchor, Melissa Lee, calls him). Read between the lines, especially the last words in the video, below.

Ric Edleman has just joined Bitwise as both investor and advisor. This lends credibility and gravitas to the organization that created the world’s first cryptocurrency index fund. Bitwise benefits from Edelman’s affiliation, because the US has been slow (some would say “cautious”) in recognizing the facts on the ground: Cryptocurrency is already an asset class.

Edelman fully embraces a strong future for Bitcoin—not just as a currency or payment instrument, but as a legal and recognized asset class; one that is at the starting line of a wide open racetrack. He explains that the SEC sets a high bar for offering a Bitcoin ETF, but that this will be  achieved. It will pave the way for large institutions, pension funds, etc to allocate a portion of money under management for blockchain products.

At timestamp 3:39, Melissa asks Edelman “Why wait for an ETF?” and “If you believe this strongly, why not advise clients to invest a portion of assets into Bitcoin right now?

Edelman’s response is stunning. He explains that he is frustrated, because this is what he wants to advise. But, his firm is bound by the Investment Act of 1940—and so, they cannot tell a client “Go to Coinbase” or “Invest in a private fund such as Bitwise—that I am such a big fan of. We don’t have that ability in our practice.” [i.e. until the SEC recognizes Bitcoin as an asset].

In my opinion (and in the opinion of Edleman), SEC recognition of Bitcoin as an asset can’t be far off…

  • It’s already happening in other countries. Reputable exchanges and index funds exist today.
  • Unlike a traveler’s check or Amazon gift card, it is inherently a store of value, whether or not you believe that its value is intrinsic;
  • The IRS already considers it an asset for tax purposes (What an odd schism in definition & treatment!)
  • It is legal to pay staff in Bitcoin and use it to settle debts, for any recipient that accepts it. For employees and consultants, it is a wage or stipend, just like FIAT. They can convert into cash immediately—or retain crypto it to pay their own bills)

It’s not difficult to read between the lines. Edleman makes a clear recommendation, although he can not yet advise this—certainly not on the record. His personal forecast for long term adoption and appreciation, especially of Bitcoin, matches my own analysis. His new affiliation with Bitwise (a pretty bold move) demonstrates certain commitment.

This ends my analysis of Edelman’s strong endorsement. But it raises another important question:

If large financial institutions are likely to offer Bitcoin products and services—and if credible analysts & advisors are chomping at the bit to recommend this new asset class—shouldn’t we invest in Bitcoin now?!

Ironically, I do not recommend hording or investing in cryptocurrency, even as a collectable. Why?! Because of the big “Investment Catch-22”. I don’t discourage investing in Bitcoin because I fear that its value will lessen. It is for a completely different reason. And so, my advice against investing is half-hearted.

Currently, Bitcoin and altcoins are widely misunderstood. Many people have these false impressions…

  • It is not backed by anything
  • It interferes with tax collection
  • Cryptocurrency facilitates crime
  • Governments will never allow it
  • They do not convey compelling benefits over government-issued currency
  • They water down the overall money supply
  • Their deflationary nature threatens economic growth
  • They are easier to lose and subject to scams & hacking
  • They do not facilitate refunds, rescission, recourse and customer claims
  • They interfere with a government’s ability to control its monetary supply

All of this is untrue, except the last item—and that one is a tremendous benefit.

Additionally, blockchain currencies fluctuate widely in real market purchasing power, many altcoins and all ICOs are scams, and acceptance is far from being ubiquitous. Clearly, widespread adoption requires stability, infrastructure, trust and ubiquity.

This cannot happen until two things occur:

  1. The fraction of transactions in normal business and retail commerce (purchases, salaries, debt payment and settlement) must significantly dwarf the fraction that is driven by investors, hoarders and speculators.
  2. A significant number of established brands, services or retailers must begin publishing prices in Bitcoin and honoring those prices throughout a defined sale period (e.g. until the next catalog is published or until the next production run).

Things are beginning to change, but for such a positive and transormative mechanism, that change is frustratingly gradual.

A series of falling dominos is already in process. But, the end game is retarded by those of us who invest in Bitcoin, because we are removing a limited resource from circulation and contributing to volatility. We do this, because we realize that—in the long run—Bitcoin can only go up in value. Yet, our investment at such an early stage (before consumer adoption) makes the infant sick.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He advises The Disruption Experience in Singapore, sits on the New Money Systems board of Lifeboat Foundation and is a top Bitcoin writer at Quora. Book a presentation or consulting engagement/.

Sarah Huckabee Sanders: America’s Tariq Aziz

Sarah Huckabee Sanders, please tell me—I earnestly wish to know…

Are you completely daft?!

• Have you no honor?      • No self respect?      • No backbone?      • No shame?
• No concern for your future career?      • No concern for sexual assault victims?

I mustn’t be unfair.
Let’s recall a bit of recent history…

Five days ago, in the wake of Judge Brett Kavanaugh’s testimony before the U.S. Senate, President Trump showed sympathy toward Dr. Christine Blasey Ford. Regarding her claim of attempted rape by Brett Kavanaugh—and her fear of being killed by pressure to her mouth— Trump acknowledged that she was “very credible” and that she is “a very fine woman”.

What a difference 5 days makes!

Shortly after Dr. Ford and Judge Brett Kavanaugh testified in an open Senate inquiry, Republican Arizona Senator Jeff Flake was cornered in an elevator by two woman survivors. This led him to announce that he would not confirm Kavanaugh unless the FBI was given orders to investigate claims of alcohol fueled violence toward women.

If you live in the United States, and have not been squirrelled away on a camping trip, Buddhist retreat, or secret skunkworks project, then you already know this. It’s yesterday’s news. But today, Trump railed into Blasey Ford, making her out to be a liar and a political operative. At a red state political rally, he attacked this “fine woman” by mocking her memory, claiming that she recalls having one beer, but forgets where, when and with whom she was with at the time of the alleged attack. Trump goes on to claim that she remembers only having a drink and nothing else.

In fact, Dr. Ford recalls the names of others present, what she was wearing and very specific details of the attack. But, beyond the flat-out lie, Trump pretended to be Dr. Ford, by shrieking and whining in the first person—just as he did while flailing his arms in mockery of a handicapped reporter during his election campaign.

Nothing can be said about these low points in American politics other than to note that we are surviving a period in which the Oval Office is occupied by a child, a bully, a liar and an ignorant human being.

But this post is not about Trump. It is about Sarah Sanders, articulate and passionate defender for a dunce.

Now, let’s go back further than 5 days
— Let’s turn back the clock 15 years

Who remembers Tariq Aziz? He was Iraq’s deputy prime minister and then foreign minister, under Sadam Hussein. His early military and political careers weren’t notable to anyone living outside of Iraq. But you couldn’t help to marvel at this guy during and after Operation Iraqi Freedom, the US led an invasion—first to find weapons of mass destruction—and later to find Sadam himself. Throughout the war, Aziz was thrust squarely into the spotlight as spokesman and poster boy for Sadam’s regime.

With the veracity of a broken cuckoo clock, Aziz insisted that the American dogs were being defeated in a string of bloody battles; that Allied soldiers were scurrying like mice, and that no Iraqi had been affected by the imperialist aggression. If it weren’t for news from hundreds of reporters (and photos through the bomb sites of coalition planes), you could almost believe him. But ultimately, the facts demonstrated the opposite of what he claimed. The schism between facts and fantasy revealed Aziz to be more than a lackey. He became a court jester and fodder for late night comedy.

As the Iraq army crumbled, troops deserted, Sadam’s sons were shot to death and Hussein ran into the forest to hide. Throughout it all, Aziz could have focused on the immorality or questionable legal basis for the American invasion. But he didn’t. Instead, he continued to make fun of Allied operations and insisted that American’s were losing. With conviction and character, he said that American’s were scared, retreating, deserting and on the run.

If the war weren’t so bloody, the Aziz diatribes would be comical. But, it was bloody—thousands of Americans and a half million Iraqi soldiers and civilians among the dead.

There probably weren’t any weapons of mass destruction—and history may ultimately condemn USA for initiating war when we should have focused ISIS terrorists and on finding Osama bin Laden. But, what made Tariq Aziz both memorable and laughable was his incredible loyalty to a dictator. He defended and distorted whacky behavior with passionate fervor.

Getting back to Sarah Sanders…

I won’t draw out the comparison, but for one minute, consider the similarity between Tariq Aziz and Sarah Sanders. They are in the same business: Putting lipstick on a pig. Defending the indefensible!

And today, Sarah defended the mockery of a sexual assault victim, the bullying by her boss, and the lies of a man who has no shard of credibility. Why? Can she find no other employment?

Sanders is saddled with the world’s worst job. It must be horrible to be in her shoes. She must defend and justify behavior of a child who commands a once great nation. She must explain misogyny, xenophobia, abject ignorance, mockery of the handicapped and of victims, and a continuous stream of lies. She must defend “sh*thouse nations” reneging on trade agreements and nuclear treaties, rude behavior toward a chancellor and crude behavior in the presence of a Queen. At some point, any reasonable person must ask “Why, Sarah?!!” Why defend the indefensible and distort the obvious. Is it out of a sense of loyalty? Out of patriotism? —Or out of sheer ignorance? Have you always stood firm with bullies and blamed victims?

When Sean Spicer was Whitehouse spokesperson, one could easily overlook his daily Daffy Duck pronouncements. Let’s face it: He was sort of a goofball from the very start. With no history, no pedigree, and no reputation to protect, it was easy to dismiss his absurd excuses. He was just a marionette in the oval office—a ‘Mini Me’ to Dr. Evil.

But when Sanders stepped up to the podium, I was  impressed. She was educated, articulate, impassionate and with an apparent capacity for critical thinking. She didn’t appear to be a pushover—not for the press and not even for the president. For a few weeks, she convinced me that she was part of the checks-and-balances offered by a critical staffer.

Alas, our hopes for a reasonable liason to the chaos in Trump’s head were dashed. And now, they are dashed more than ever.

Sarah: Have you no moral compass? Have you no shame? In what capacity will you work after a Trump presidency?

Disruption Experience Nails It

The Disruption Experience this Friday in Singapore is a blockchain event with a difference. With apologies to the Buick commercial, this is not your grandfather’s conference

I know a few things about blockchain conferences. I produced and hosted the first Bitcoin Event in New York. My organization develops cryptocurrency standards and practices. We help banks and governments create policy and services. And as public speaker for a standards organization, I have delivered keynote presentations at conferences and Expos in Dubai, Gujarat India, Montreal and Tampa, New York and Boston.

Many individuals don’t yet realize that both Bitcoin and the blockchain are as significant as the automobile, the transistor and the Internet. I was fortunate to grasp Bitcoin and the blockchain early in its history. It is never boring to help others understand the blockchain.

And so, I am an evangelist for both a radically improved monetary system and a transformative tool. During the past eight years, I have honed the skill of converting even the most profound skeptic. Give me 45 minutes in front of any audience—technical, skeptical or even without any prior knowledge—and I will win them over. It’s what I do.

An Atypical Conference Venue

As Bitcoin and altcoins begin the process of education, adoption and normalization, the big expos and conference events have begun to splinter and specialize. Today, most blockchain events market their venue to specific market sectors or interests:

For me, Smart Contracts are one of the most exciting and potentially explosive opportunities. As a groupie and cheerleader, I am not alone. Catering to the Smart Contract community is rapidly becoming a big business. Until this week, I thought it was the conference venue that yielded the biggest thrills. That is, until I learned about the Disruption Experience…

Few widely promoted, well-funded events address the 600 pound elephant in the room: What’s the real potential of blockchain trust, blockchain economy or blockchain AI? Take me beyond tokens and currency (please!). How can an international event help us to realize the potential of a radical new approach to accounting, trust and arbitration? Let’s stop arguing about Bitcoin, Ethereum or ICOs…

How can we unleash the gorilla—and grease—
a fundamental change that benefits mankind,
while providing leapfrog technologies for us?

—At least, that’s my spin on the potential of an unusually practical venue.

That question is slated to be answered on Friday at a big event in Singapore. And get this—It is modestly called a “Sneak Peak”. This is what I have been waiting for. The Disruption Experience premiers on September 28 at the V Hotel Lavender in Singapore. But don’t show up at the door. This event requires advance registration. (I do not offer a web link, because I hate being a conference huckster. If you plan to be in the area at the end of this week, then Google the event yourself).

What’s the big deal?

The Disruption Experience team is populated by blockchain developers, educators and trainers who take issue with existing events that focus on monetization. The purity of intention was overrun by greed. And so, they set out to form an event with a more altruistic purpose: Build technology, relationships, mechanisms and educational tools that better mankind. The focus at this event and the conferences that follow is to educate, expose and innovate. The focus is squarely on disruptive technology.

With their team of blockchain innovators focused on benefits and progress, I suspect that attendees will get what we have been searching for: Education, investment opportunities, an edge on new technologies and job opportunities.

Cusp of a Breakout Year

As an analogy, consider the race to understand Bitcoin and consider the engines & motors.

Bitcoin and the blockchain were introduced simultaneously in a 2009 whitepaper. It’s a bit like explaining the engine and the automobile together—for the very first time. One is a technology with a myriad of applications and the potential to drive innovation. The other is an app. Sure, it’s useful and important, but it’s just an app.

For 8 years, Bitcoin was a radical and contentious concept. Of course, there was the mystery of Satoshi and an effort to pinpoint his or her identity. And, a great debate raged about the legitimacy and value of decentralized, ethereal money. But, the interest was reflected primarily on the pages of Wired Magazine or at Geek-fests. Bitcoin was complex and costly to incorporate into everyday purchases and there were questions and gross misconceptions about hacking, regulation, taxes, criminal activity. The combined audience of adopters, academics, miners and geeks was limited.

That changed last year. With serious talk of exchange traded funds, a futures and derivatives market began to take shape. A critical operational bottleneck was addressed. Ultimately, 2017 was a breakout year for Bitcoin. You may not be using it today, but the smart money is betting that it will enhance your life tomorrow—at least behind the scenes.

Likewise, 2019 is likely to be the breakout year for blockchain applications, careers, products and—perhaps most importantly—public awareness, understanding and appreciation. Just as motors and engines are not limited to automobiles, the blockchain has far more potential than serving as an engine for decentralized cash. It is too important to be just a footnote to disruptive economics. It will disrupt everything. And we are the beneficiaries.

What is Interesting at The Disruption Experience?

The Friday event in Singapore covers many things. The presentations and tutorials that quicken my pulse relate to:

  • AI
  • Smart Contracts
  • Serious insight into blockchain mechanics, applications, adoption, scalability and politics
  • There’s even an exciting development in ICOs…

If you read my columns or follow my blog, then you know I am not keen on initial coin offerings (ICOs). That’s putting it mildly. They are almost all scams. But a rare exception is the Tempow ecosystem which encompasses three functional tokens. Stop by their exhibit and meet the officers of a sound economic mechanism that facilitates decentralized trading while overcoming the efficiency paradox.

What can I do at Disruption Experience?

The September 28 event is a preview for January’s Inaugural Event.

  • Listen and learn what Disruption is all about
  • Experience the first Virtual Reality Expo
  • Get to know the speakers and founders of Disruption
  • Hear about the Disruption Utility Token (DSRPT Token)
  • Meet the Disruption Team
  • See Disruption Expos

… and much, much more.

If you get to the big event, be sure to find the organizer and host, Coach Mark Davis. Tell him that I sent you. His passion and boundless enthusiasm for the blockchain and especially for transformative disruption is quite infectious.

Related reading:


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation and is a top Bitcoin writer at Quora. Book a presentation or consulting engagement. He is also an unpaid advisor to The Disruption Experience.

ISS hole: We will look back on Sept 2018

Someday, people across the world will look back on September 2018, much like we look back on the terror attacks of 9/11 or the safe return of Apollo 13 in 1970. They are touchstone moments in world history. For Americans, they are as indelible as Pearl Harbor, the assassination of John F. Kennedy or the first moon landing.

So, what happened just now? The month isn’t even half over, and the only events we hear about on the news atre related to Hurricane Florence and Paul Manafort. (In case you live under a rock or are reading this many years hence, the hurricane made landfall on the coast of the Carolinas, and the lobbyist / political consultant / lawyer / Trump campaign chairman pled guilty to charges and has agreed to cooperate in the continuing Mueller investigation).

No—I am not referring to either event on the USA east coast. I am referring to a saga unfolding 254 miles above the Earth—specifically a Whodunit mystery aboard the International Space Station (ISS). NASA hasn’t seen this level of tawdry intrigue since astronaut Lisa Marie Nowak attacked a rival for another astronaut’s affection—driving across the country in a diaper to confront her love interest.

So What is the Big Deal This Week?!

It didn’t begin as a big deal—and perhaps this is why mainstream news services are slow to pick up on the latest information. But now, in my opinion, it is a very big deal.

A small hole was discovered on a Russian Soyuz spacecraft (a lifeboat) attached to the International Space Station. That hole, about the size of a pea, resulted in the slow decompression of atmosphere. The air that our astronauts breathe was leaking out of ISS and into the void of space.

So far, the story is unremarkable. Ground scientists issued two comfort statements about the apparent accident. They addressed the possible cause and the potential risk:

  1. This small hole could have occurred on the ground (during construction). Alternatively, it could be the result of a micro-meteorite or even man-made space debris. Perhaps a fleck of varnish peeled off of a satellite and collided at high speed with the massive, orbiting space station. No problem. The ISS and each commuter spacecraft that dock with it are designed to sustain collisions with small particles—even ones that punch a pea-sized hole through the hull.
  2. Air pressure in the ISS and in each spacecraft is only 1 atmosphere. This type of small leak could effectively be stemmed by simply applying duct tape.

The initial news event was interesting to space buffs, but it didn’t seem to present a significant threat to our astronauts, nor require a massive technical response. You may recall that duct tape played a critical role in getting the Apollo 13 astronauts safely back to Earth almost 50 years ago. The crisis that they faced was far worse. The solution required extensive impromptu engineering both in Houston and up in the spacecraft. What an awesome historical echo and footnote to an event that captured the hearts and minds of so many people back in 1970.

But the story does not end with a piece of duct tape. In fact, it just got much more interesting…

After a few days, NASA revealed that the hole was intentionally drilled, and the deed probably occurred while the ship was docked at the space station. Since there is no log of activity with tools in this section of the laboratory, it strongly suggests an act of sabotage by one of the astronauts on board.

And now, we have some new information: Guided by ground engineers, astronauts fished an endoscope through the hole to inspect the outside of the spacecraft. Guess what?! That same drill bit damaged the meteorite shield which stands 15 mm beyond the pressurized hull of the spacecraft. This will add significant risk to anyone traveling back to earth in the damaged ship.

One theory is that a member of the crew wanted to create the conditions to more quickly return to Earth. Now, that return trip may present and elevated risk to occupants.
This story has not yet concluded, of course. It will likely conclude with tragedy or triumph. In the better scenario, no one will die—but successful return and reentry will be followed by a criminal conviction or court martial. I am having difficulty envisioning an alternate outcome.
Read about it here. The story is unfolding, but the details are utterly fascinating.

Still haven’t written for Medium? Be the content, instead!

Are you worried about Bitcoin dipping to within pennies of $6,000 today? That’s a magic buy alarm for me—and it looks like I may not be alone.

Perhaps it is no coincidence that a student intern (and budding author) from Portugal interviewed me today. He is quite knowledgeable about Bitcoin and the blockchain. I did not feed him the questions. It was a standard “Ask an expert” format, and I didn’t think much of the interview at first.

My interviewer, Diogo Fierreira, rolled out a phalynx of questions longer than my arm. They were sweeping and thorough; general and specific. Still, I wasn’t sure how much time I could afford to devote. In the end, I am glad that I stuck with the young columnist and remained cogent. I now realize that this fellah really knows how to market his interviews! By end of day, the entire interview was published at Medium.com.

I have never been published at Medium, but I certainly enjoy the quality and diversity of thought provoking content. Now my little pearls of wisdom are forever enshrined in stone, (Well—at least sandstone!)

Warning: Medium.com claims that this is a 12 minute read. At just over 3,000 words, it is a bit longer than most of my own articles.

Drone Assassination Attempt Foreshadows Future Events

Until this past year, consumer drones carried tiny ultralight cameras, but they just didn’t have the energy or the reserve to carry much else. They certainly could not deliver much of a product or payload. They flew for  15 minutes, lacked the capacity to carry excess weight, and had short range.

But market demand sparks innovation. Amazon and Domino’s Pizza are experimenting with drone delivery. The improvements needed to serve these needs are quickly bubbling down to unlicensed weekend pilots. Hexacopters with 4K cameras, gimbals and retracting landing gear are available for under $400. Tiny foldable drones with 720p cameras are available for $35. Some models don’t even need a pilot on a joystick. You can preprogram the flight path to reach any target using GPS, or you can guide them by making gestures with your hand. The drone actually looks back over its shoulder and responds to your hand-waving commands.

Lance Ulanoff is a cartoonist and robotics fantech expert. But he shares a lot in common with Wild Ducks. He is an eclectic journalist and social media commentator.

This month he began publishing at Medium.com, and I’m glad he did! Lance has a knack for going beyond the Who, What, Why. Even in a short article, he explains the social implications. He provokes us to recognize why it matters.

Lance breaks down the recent attempt to assassinate Venezuela’s president with a drone delivered explosive and raises our social antennae. This news event ushers in a grim technology era. Ulanoff points out that in a short time, it has become inexpensive and fairly easy to send an explosive directly into a national monument like the Statue of Liberty.

Photos: Venezuela President, Nicolás Maduro, reacts to incoming drone. Although the assassination attempt failed, others on the ground were injured.

Uber & Lyft fight drivers over caps NYC

New York legislators are close to deciding an issue driven by Uber and Lyft drivers. They are demonstrating in the streets and demanding a cap on the number of authorized ride-share vehicles.

Mainstream media began covering this dust storm two weeks ago, but the pending decision is putting international attention on the issue of licensing a sector that was credited with eliminating nanny-state legislation. After all, licensing should be confined to the singular issues of transportation safety and not overall commerce.

A cap? What is a cap?! Does this mean that a person with a clean car, a good driving record and no criminal complaints will need a special license or medallion to participate in a ride sharing service? How ironic! Don’t glance in your rear-view mirror, because that is exactly what we used to grant taxi services until…Well, until sometime next year. It’s an old school, anti-free-market concept that we surmounted 10 years ago!

Legacy drivers claim that we need a cap of 80,000 entrepreneur-drivers, ostensibly for two reasons:

  1. They want economic protection. (Duhh!). Drivers who were early to the party are cruising the streets in cars that are empty 42% of the time. They are waiting for their next guest. This quite ironic, because these are the same drivers that disrupted the protections afforded to taxi companies.
  2. They claim that capping ride-share cars will reduce congestion on crowded Manhattan streets, along with pollution and commuter frustration.

But the ride share companies are not backing their drivers. They are lobbying anyone who will listen that we must avoid legislative restrictions.

A Wild Duck Opinion…

Uber and Lyft are absolutely right in championing the fight against a legislative cap and thereby removing free-market economics from the transportation sector. These drivers are owner-operators. There is already effective vetting of safety and criminal records. They are not employees of a municpal service. They are entrepreneurs exploiting a smart-phone app to sell their own services. It is no different than programmer who uses an app to write and distribute his own software.

Putting legislative caps on the number of participants in a new-era, free enterprise service, or limiting hours of operation is antithetical to a democratic and empowered free market constituency. It smacks of a Communist mind set. The armchair economics of protestors (drivers who feel threatened by newer drivers) and even well-researched data of credentialed economists) plays no role in an organic, facts-on-the ground growth industry.

I am not suggesting that an unlicensed or criminal driver should get away without vetting. But attempting to impose restrictions that are unrelated to health, safety or the environment will have unintended consequences, such as:

  • Underground apps that do the same thing with even less restrictions
  • Pushing innovation and profits off shore — or —
  • Ceding the market to foreign countries

Licensing has always been intended to serve the public good and not thwart innovation, growth and individual entrepreneurs. Unfortunately, it is often used to protect early entrepreneurs and exclude newcomers. That’s not how it should work—certainly not in a free country.

If you can’t take the heat of fair market competition, then innovate.

 

How Fear Affects Ideology

A very brief comment…

Is Conservative-vs-Liberal an expression of the same spectrum as Fear-vs-Trust?

The video below offers an interesting take on the difference between conservatives and liberals. It’s short, entertaining, and it clearly explains a reasonable hypothesis.

I am not sure what my few Trump-supporting friends would say about this analysis, but I don’t see it as divisive. It’s just an observed correlation without any judgement.

Spoiler: It ends with a call for us to all move toward the center… Not necessarily the center of the political spectrum (conservative -vs- liberal)—but toward the center of Fear -vs- Trust, which the video strongly correlates with our individual politics.

How Will Bitcoin Work When Mining Rewards Run Out?

Let us frame the question, by reviewing what miners really do…

Miners play a critical role in the Bitcoin network. Their activity (searching for a nonce) results in assembling an immutable string of blocks that corroborate and log the universal transaction record. They are the distributed bookkeepers that replace old-school banks in recording and vouching for everyone’s purchase or savings.

From the perspective of a miner, there is no obvious connection between their activity and the worldwide network of bitcoin transactions and record keeping. They are simply playing an online game and competing against thousands of other miners in an effort to solve a complex and ongoing math problem. As they arrive at answers to small pieces of the problem, they are rewarded with bitcoin, which can be easily translated into any currency.

What is the Problem?

One day, mining for rewards will no longer be possible. The fundamental architecture of Bitcoin guarantees that mining will end. The pool of rewards that were held in abeyance as incentives is small and will run out in 2140—about 120 years from now. So, this raises the question: How will we incentivize miners when there is no more reward? (Actually, they won’t really be miners anymore…They will more accurately be bookkeepers or ‘validators’)

Is there a Solution?

Fortunately, there are many ways to offer incentives to those who validate transactions and maintain the books. Here are just a few:

  1. There is a current mechanism in which transactions bid for priority (speed of validation). Today, this mechanism augments the mining reward—particularly during periods of network performance. For example, the extra payments rose to $30 and more for individual transactions just before lightning network was adopted. In the future, it could replace the reward as the basis of a reward system.
  2. At the 2015 MIT Bitcoin Expo, Andreas Antonopoulos proposed a reputation ranking & reward system based on gaming theory. The ideal is that would result in a sufficient reward to maintain continuous network operation. Reputation points are not just a bragging point, but is likely to translate into real-world gravitas and financial opportunities.
  3. I believe that, one day, every user will be a micro-miner, and this will address the issue of incentives. For example, if users can avoid all mining fees by validating one transaction for every 10 of their own, we might see the widespread adoption of wallets that are full or partial nodes, rather than limited to the function of key storage.In this vision, micro mining will be achieved on a phone, a wristwatch, or a linked device at home. It will not result in an escalating race for increased power consumption…

I believe in this last solution and I have proposed it as the path forward at crypto/blockchain conferences.

Today, this idea seems implausible, because of the memory and computational requirements for running a full node. But, there have been big advancements in the effort to support micro-mining—which does not require such resources. Additionally, it is likely that the current proof-of-work mechanism used to arrive at a distributed consensus will be replaced by another mechanism that does not result in a competition to see who can consume the most electricity.

More about the sunset of mining incentives:


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Is Bitcoin Erasing 300 years of Monetary Evolution?

Today, economist and Nobel laureate, Paul Krugman, wrote in the New York Times, that Bitcoin is taking us back 300 years in monetary evolution. As a result, he predicts all sorts of bad things.

A significant basis for Mr. Krugman’s argument is that the US dollar has value because men with guns say it does.

Is Bitcoin erasing 300 years of monetary evolution?

Running with the metaphor that fundamental change to an economic mechanism represents ‘evolution’, I think a more accurate statement is that Bitcoin is not erasing the lessons of history. Rather, it is the current step in the evolution of money. Of course, with living species, evolution is a gradual process based on natural selection and adaptation. With Bitcoin, change is coming  up in the rear view mirror at lightning speed.

The Evolution of Money

When a medium of exchange is portable, fungible, divisible, unforgeable and widely accepted, it becomes money. For at least six millennia, barter was gradually replaced by various mediums of exchange.

  • Obsidian —» Cowry shells —» Gold —» Promissory notes (backed by a Bank, employer or wealthy industry) —» Fiat (national currency)

But what backs these forms of money? What gives them value?

The first 3 currencies above were accepted as money on 5 continents. They were backed by their scarcity and unique characteristic properties (Aristotle called this intrinsic value). But even gold cannot serve as a widely used currency today. Although it is portable and scarce, it is not easily tested or subdivided in the field; it is risky to transport and difficult to track; and it is not suited to instant electronic settlement. But what about Fiat money. What backs it?

What Backs National Currencies?

Fiat has been backed by various different things throughout history. They are all compromised attempts to establish confidence and trust. They are compromised, because the fall short of one or more facets of trust.

In the list below, monetary backings in Red are what Mr. Krugman calls “men with guns”. That is, he claims that government demands give value to the dollar:

  • Value tied to gold —» Promise of redemption —» Legal tender (public must accept it for all debts) —» settlement of taxes —» The “good faith and credit” of workers

Unfortunately, the transition away from a trustworthy basis and the constant temptation of kings, dictators and politicians to print money based on credit (or nothing at all—as in the case of our fractional reserve system), has created a house of cards that few people believe is sustainable.

Bitcoin changes all this.

Finally, a crowd-sourced trust basis was invented (or discovered). It is unhackable, un-inflatable, unforgeable and immutable. Most important, it allows a government to be decoupled from its own monetary policy and supply. This is a remarkably good thing for businesses, consumers, creditors, trading partners—and especially for governments.

And Bitcoin is backed by something better than guns, gold or promises. It is provably scarce, capped in supply, completely fair, and built on a massive, crowd-sourced network of bookkeepers and auditors. It is the first currency—and quite probably the last—built on genius math and indisputable trust.

Despite the gross misunderstandings and misconceptions of early pundits, it does not interfere with a government’s ability to tax, to spend or to enforce tax collection—and it does not facilitate crime.

Bitcoin is new, but the goal of distributing trust is not as radical as you might think. It addresses a problem that economists and mathematicians have pondered since Aristotle and the ancient Greeks…

Background

Ever since the transition from real gold to government notes, bank notes and bank ledgers—economists have wondered if value can arise from a public trust that is durable, distributed and stateless. Until 2009, the answer seemed to be that this was impossible because of the double-spend problem.

But 9 years ago, something changed; and the change is dramatic. It will take an additional decade for most people to understand and appreciate this change…

In the first paragraph, I cited Mr. Krugman’s statement that the US Dollar has value because of “men with guns” (a reference to the fact that its use is legally compelled for payment of any debt and for government taxes). But this is not what gives it value. The dollar, the Euro, a Picasso painting and a fresh serving of hot french fries all derive their value from supply and demand. Bitcoin is no different. The trick is to generate viral demand and a ubiquitous infrastructure needed to achieve a robust two-sided network.

In the white paper that introduced both blockchain and Bitcoin (the first blockchain application), Satoshi taught us that a widespread and easy to access communications network (the internet and universal access to smartphones) can give rise to value that is based on a different type of trust. Instead of trust in a government, a bank, or testing the chemistry of a precious metal, value can arise from trust in a formula that is ubiquitous, redundant and constantly monitored and vetted.

All of these things have a value based on demand and the available supply. But with Bitcoin, the medium of exchange (and additionally the store and transfer of value), can be achieved by math, distributed trust and a pure, two-sided network.

So, is Bitcoin taking us backward in time, utility, safety and governance? I have never been awarded a Nobel Prize—but it seems pretty clear to me that Bitcoin is taking us forward and not backward.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Online Privacy: Learn Tor, VPN, VeraCrypt, LasPass

I have a special request. Actually, this is a personal plea to my readers…

Next month, I host two evening privacy workshops near Boston. I could use a teaching assistant to run around and help newbies install software as I present to the class. But what I really need help with—is getting the word out. Please help…

This time, it’s not about Bitcoin or the blockchain. It’s about taking control of your online identity and browsing activities. It’s about privacy and anonymity. It’s about your communications, your personal data and your disk or cloud storage.

All that data belongs to you and not to your ISP, employer, a hacker, the government, or marketers. And it is surprisingly easy to cover your tracks. In fact, with the proper tools, taking control of your identity and privacy is safe, simple and transparent.

In just 3 hours, attendees will learn install and use TOR, VPN, VeraCrypt and LastPass. They will also get an excellent feel for the function and benefits of a virtual machine.

Anyone attending can choose either Aug 8 (Marlboro) or Aug 22 (Natick). Renting a presentation room in the Natick Library is expensive.

Please help me promote an effective and exciting evening of learning. Get the word out. Check out these announcements: [Sign-up page]   [Meetup page]

Bonus Points: Do you recognize the photo on the left? Be the first to leave a comment with the name of the plastic privacy bubble and the 1960s TV series that featured it. The winner gets two free passes to our privacy workshop that can be transferred to anyone.

NASA director reverses on climate change, after 1 month

For millennia, our planet has sustained a robust ecosystem; healing each deforestation, algae bloom, pollution or imbalance caused by natural events. Before the arrival of an industrialized, destructive and dominant global species, it could pretty much deal with anything short of a major meteor impact. In the big picture, even these cataclysmic events have not destroyed the environment—they just change the course of evolution and rearrange the dog pile. A new alpha animal emerges and thrives.

But with industrialization, the race for personal wealth, nations fighting nations, and modern comforts, we have recognized that our planet is not invincible. This is why I serve on the board of Lifeboat Foundation. The foundation is all about recognizing the limits to growth and protecting our fragile environment.

Check out this April news article on Trump’s appointment of Jim Bridenstine, a vocal climate denier, as head of NASA. NASA is one of the biggest agencies on earth. Despite a lack of training or experience—without literacy in science, technology or astrophysics—he was handed an enormous responsibility, a staff of 17,000 and a budget of $19 billion.

In 2013, Bridenstine criticized Obama for wasting taxpayer money on climate research, and claimed that global temperatures stopped rising 15 years ago.

The Vox News headline states “Trump’s next NASA administrator is a Republican congressman with no background in science”. It points out that Jim Bridenstine’s confirmation has been controversial — even among members of his own party.

Sometimes, flip-flopping is a good thing

In less than one month, Jim Bridenstine has changed—he has changed a lot!

After less then a month as head of NASA, he is convinced that climate change is real, that human activity is the significant cause and that it presents an existential threat. He has changed from climate denier to a passionate advocate for doing whatever is needed to reverse our impact and protect the environment.

What changed?

Bridenstine acknowledges that he was a denier, but feels that exposure to the evidence and science is overwhelming and convincing—even in with just a few weeks exposure to world class scientists and engineers.

For anyone who still claims that there is no global warming or that the evidence is ‘iffy’, it is worth noting that Bridenstine is a hand-picked goon. His appointment was recommended by right wing conservatives and rubber stamped by the idiot-in-chief (the original stooge for the ultra right). He was a Denier—but had a sufficiently open mind to listen to experts and review the evidence.

Do you suppose that the US president is listening? Do you suppose that he will grasp the most important issues of this century? What about other world leaders, legislative bodies and rock stars? Will tey use their powers or influence to do the right thing? For the sake of our existence, let us hope they follow the lead of Jim Bridenstine, former climate denier!


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Extra PCs laying around? Why not mine Bitcoin?

I get this question a lot. Today, I was asked to write an answer at Quora.com, a Q&A web site at which I am the local cryptocurrency expert. It’s time to address this issue in my own Blog.

Question

I have quite a few PCs lying around my home and office. Some are current models with fast Intel CPUs. Can I mine Bitcoin to make a little money on the side?

Answer

Other answers focus on the cost of electricity, the number of hashes or teraflops achieved by a computer CPU or the size of the current Bitcoin reward. But, you needn’t dig into any of these details to understand this answer.

You can find the mining software to mine Bitcoin or any other coin on any equipment. Even a phone or wristwatch. But, don’t expect to make money. Mining Bitcoin with an x86 CPU (Core or Pentium equivalent) is never cost effective—not even when Bitcoin was trading at nearly $20,000.  A computer with a fast $1500 graphics card will bring you closer to profitability, but not by much.

The problem isn’t that an Intel or AMD processor is too weak to mine for Bitcoin. It’s just as powerful as it was in the early days of Bitcoin. Rather, the problem is that the mining game is a constantly evolving competition. Miners with the fastest hardware and the cheapest power are chasing a shrinking pool of rewards.

The problem arises from a combination of things:

  1. There is a fixed rate of rewards available to all miners—and yet, over the past 2 years, hundreds of thousands of new CPUs have been added to the task. You are competing with all of them.
  2. Despite a large drop in the Bitcoin exchange rate (from $19,783.21 on Dec. 17, 2017), we know that it is generally a rising commodity, because both speculation and gradual grassroots adoption outpaces the very gradual increase in supply. The rising value of Bitcoin attracts even more individuals and organizations into the game of mining. They are all fighting for a pie that is shrinking in overall size. Here’s why…
  3. The math (a built-in mechanism) halves the size of rewards every 4 years. We are currently between two halving events, the next one will occur in May 2020. This halving forces miners to be even more efficient to eke out any reward.
  4. In the past few years, we have seen a race among miners and mining pools to acquire the best hardware for the task. At first, it was any CPU that could crunch away at the math. Then, miners quickly discovered that an nVidia graphics processor was better suited to the task. Then ASICS became popular, and now; specialized, large-scale integrated circuits that were designed specifically for mining.
  5. Advanced mining pools have the capacity to instantly switch between mining for Bitcoin, Ethereum classic, Litecoin, Bitcoin Cash and dozens of other coins depending upon conditions that change minute-by-minute. Although you can find software that does the same thing, it is unlikely that you can outsmart the big boys at this game, because they have super-fast internet connections and constant software maintenance.
  6. Some areas of the world have a surplus of wind, water or solar energy. In fact, there are regions where electricity is free.* Although regional governments would rather that this surplus be used to power homes and businesses (benefiting the local economy), electricity is fungible! And so, local entrepreneurs often “rent” out their cheap electricity by offering shelf space to miners from around the world. Individuals with free or cheap electricity (and some, with a cold climate to keep equipment cool) split this energy savings with the miner. This further stacks the deck against the guy with a fast PC in New York or Houston.

Of course, with Bitcoin generally rising in value (over the long term), this provides continued incentive to mine. It is the only thing that makes this game worthwhile to the individuals who participate.

So, while it is not impossible to profit by mining on a personal computer, if you don’t have very cheap power, the very latest specialized mining rigs, and the skills to constantly tweak your configuration—then your best bet is to join a reputable mining pool. Take your fraction of the mining rewards and let them take a small cut. Cash out frequently, so that you are not locked into their ability to resist hacking or remain solvent.

Related: Largest US operation mines 0.4% of daily Bitcoin rewards. Listen to the owner describe the effiiency of his ASIC processors and the enormous capacity he is adding. This will not produce more Bitcoin. The total reward rate is fixed and falling every 4 years. His build out will consume a massive amount of electricity, but it will only grab share from other miners—and encourage them to increase consuption just to keep up.


* Several readers have pointed out that they have access to “free power” in their office — or more typically, in a college dormitory. While this may be ‘free’ to the student or employee, it is most certainly not free. In the United States, even the most efficient mining, results in a 20 or 30% return on electric cost—and with the added cost of constant equipment updates. This is not the case for personal computers. They are sorely unprofitable…

So, for example, if you have 20 Intel computers cooking for 24 hours each day, you might receive $115 rewards at the end of a year, along with an electric bill for $3500. Long before this happens, you will have tripped the circuit breaker in your dorm room or received an unpleasant memo from your boss’s boss.


Bitcoin mining farms —

  • Professional mining pool (above photo and top row below)
  • Amateur mining rigs (bottom row below)

This is what you are up against. Even the amateur mining operations depicted in the bottom row require access to very cheap electricity, the latest processors and the skill to expertly maintain hardware, software and the real-time, mining decision-process.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Shifting Politics: Perhaps Texas can be redeemed, afterall

I love Texas! I love horses, wide open prairies, cowboy lore, beef, The Alamo and Texas Instruments. San Antonio and the area around El Paso is way cool. I especially love the independent spirit of limited government politics.

I’m not too keen on an economy that is still tied to fossil fuels, but I get it. Texas, Oaklahoma and Pennsylvania were the spigot of a carbon-based industrial revolution. The economy grew up hand-in-hand with the automobile and natural gas piped directly into homes, businesses and powerplants all over the country. It was a time before we became dependent on foreign nations. It was a time before we learned about greenhouse gas and a fragile environment. Gradually, even Texans are accepting the science of man’s relationship with nature—educating children, motivating citizens and retraining thousands of workers.

But seriously. What’s not to love?

Well, for one, there is an undercurrent of rural xenophobia. At least that’s what I have heard. To be honest, I have yet to meet a Texan that does not appreciate Mexico and the contributions of Mexican Americans—even during an extended house hunting trip deep in the heart of Texas, I sensed generous and tolerant citizens. If hate is brewing, it is still buried deep below the surface.

The Demographics

Outside of large cities, much of Texas is a single-party state. And the party is not mainstream Republican. At least not the Republicans that anyone over 40 was taught to respect. You know—the one that stood for limited taxation, but still understood the need for a safety net. The one where neighbor loved neighbor and religion was a personal conviction; not peddled with the conviction of superiority. It certainly is not the party that I once called home—the one that represents shared goals of limited government, personal freedom and modest checks & balances on the redistribution of wealth.

Something happened on the road from Regan to Palin to Trump. The modern evolution of rural, red Republicans is a bastardized version of party politics, alternatively known as Tea Party or Trumpians. It is characterized by head-in-sand intolerance, hate and xenophobia. Its lies are not accompanied by shame nor even awareness. It spews forth misogyny and it changes position with the fears and intolerance of donors. And the biggest alarm: It injects a bible into our democratic system of pluralistic governance. Is that the basis of a democracy? When has that formula ever worked?!

Fortunately, this is beginning to change—and the change is spearheaded by MJ Hegar who is running against Tea Party Congressman John R. Carter, man without a clue. This video is sheer genius! Perhaps Texas will move away from hate and find its footing.

As you watch the video below, consider that Air Force Major Mary Jennings Hegar is a search and rescue pilot who served three tours of duty in Afghanistan. After her helicopter was hit by enemy fire, she continued her rescue mission. She crashed on that mission while returning Taliban fire. She won the Purple Heart and a distinguished flying cross with valor. When she was denied ground combat service because she is a woman, she sued the Pentagon and won.

If you are Republican, try to overlook that Hager is running as a Democrat. In the end, it’s not about party. Parties mash disparate issues into a ‘platform’ and punish candidates for statements or deeds outside their red lines. They are incompatible with independent thinkers who consider the common good (i.e. the collective needs of all constituents). They don’t tolerate officials who vote their conscience.

Reflect, instead, on Hegar’s message. She is tolerant, inclusive, compassionate and willing to continue working for a country that constantly tries to shut doors in her face.

Republican, Democrat, Libertarian or Independent, MJ Hegar is my kind of woman!

What will it take for Bitcoin to be widely adopted?

Will governments ever approve of Cryptocurrency?

The question was asked of me as columnist at Quora.com: Will governments eventually ‘approve’ of cryptocurrency? First let’s agree on terminology…

  1. By “approve”, I assume that you are asking if governments will adopt or at least tolerate the use of crypto as legal tender in commerce. That is, not just as a payment instrument, but as the money itself—perhaps even accepting tax payments in cryptocurrency.
  2. The word “cryptocurrency” is sometimes applied to altcoins and even to ICOs. These are not the same. Many altcoins meet the criteria of the next paragraph, but none of the ICOs measure up (ICOs are scams). I assume that your question applies to Bitcoin or to a fair and transparent altcoin forked from the original code, such as Bitcoin Cash or Litecoin.

A blockchain-based cryptocurrency that is open source, permissionless, capped, fast, frictionless, with a transparent history—and without proprietary or licensing restrictions is good for everyone. It is good for consumers; good for business; and it is even good for government.

Of course, politicians around the world are not quick to realize this. It will take years of experience, education, and policy experimentation.

Many pundits and analysts have the impression that shifting to cryptocurrency—not just as a payment instrument, but as the money itself—will never be supported by national governments. A popular misconception suggests that a cryptocurrency based economy has these undesirable traits:

  • it is deflationary (i.e. that inflation is necessary to promote spending or to accommodate a growing economy)
  • it facilitates crime
  • it interferes with tax collection
  • It interferes with national sovereignty, which leads to “world government”
  • It is not backed by anything, or at least not by anything substantial, like the Dollar, Euro, Pound, Yuan or Yen
  • it interferes with a government’s ability to control its own monetary policy

Over time, perceptions will change, because only the last entry is true. Adoption of cryptocurrency puts trust into math rather than the whims of transient politicians. It helps governments avoid the trap of hoisting debt on future generations or making promises to creditors that they cannot keep—Yet, it does not lead to the maladies on this list.

But, what about that last item? Does an open source currency cause a nation to lose control over its own monetary policy? Yes! But it is not bad! Crypto cannot be printed, gamed or manipulated. Despite perception, it is remarkably resistant to loss or theft. Early hacks and fiascos were enabled by a lack of standards, tools and education. As with any new technology—especially one that changes practices or institutions—adoption of radical processes goes hand-in-hand with gradual understanding and acceptance of benefits.

How Does Crypto Help Governments?

Adopting/accepting a national (or international) cryptocurrency is a terrific way for governments to earn the respect and trust of citizens, businesses, consumers and especially creditors. There is no more reason for governments to control their money supply than there is for them to control communication networks, space travel or package delivery services.

You may not agree that cryptocurrency is good for government, and so I expand on the topic here. But your question doesn’t ask if it is good, it asks if governments are likely to approve.

Yes. Eventually…

First, a few forward thinking countries like Iceland, Japan or UAE will spearhead adoption of a true, permissionless cryptocurrency (or at least recognize it as legal tender) . Later, ‘stress-economies’ will join the party: These are countries that need to control either rampant inflation, a reluctance to tax citizens, treasury mismanagement or massive international debt. A solution to these problems requires restoration of public trust. I wouldn’t be surprised to see Greece, Zimbabwe, Venezuela or Argentina in the mix.*

Eventually, G7 countries will tread into a growing ocean. Not now; but in 5 or 8 years. The conditions are not yet right. It requires further vetting by early adopters, continued development, education and then popular consumer adoption. But all of these things are inevitable. Eventually, governments will recognize that a capped, trusted, transparent, math-based money is far better for all stakeholders than money based on intrinsic value, promise-of-redemption or force.


* We are not discussing countries that plan to create their own cryptocurrency. None of these plans involve a coin that is open source, permissionless, decentralized and capped. They are simply replacing paper with a national debit card. But it is not crypto.

Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Technical Analysis: Can it predict future asset value?

I love clearing the air with a single dismissive answer to a seemingly complex question. Short, dismissive retorts are definitive, but arrogant. It reminds readers that I am sometimes a smart a*ss.

Is technical analysis a reasoned approach for investors to predict future value of an asset?

In a word, the answer is “Hell No!”. (Actually, that’s two words. Feel free to drop the adjective). Although many technical analysts earnestly believe their craft, the approach has no value and does not hold up to a fundamental approach.

One word arrogance comes with an obligation to substantiate—and, so, let’s begin with examples of each approach.


Investment advisors often classify their approach to studying an equity, instrument or market as either a fundamental or technical. For example…

  • Fundamental research of a corporate stock entails the analysis of the founders’ backgrounds, competitors, market analysis, regulatory environment, product potential and risks, patents (age and legal challenges), track record, and long term trends affecting supply and demand.A fundamental analysis may study the current share price, but only to ascertain the price-to-earnings ratio compared to long term prospects. That is, has the market bid the stock up to a price that lacks a basis for long term returns?
    .
  • On the other hand, a technical approach tries to divine trends from recent performance—typically charting statistics and pointing to various graph traits such as resistance, double shoulders, and number of reversals. The approach is more concerned with assumptions and expectations of investor behavior—or hypotheses and superstition related to numerology—than it is with customers, products, facts and market demand.

Do you see the difference? Fundamental analysis is rooted in SWOT: Study strengths, weaknesses, opportunities, and threats. Technical analysis dismisses all of that. If technical jargon and approach sound a bit like a Gypsy fortune teller, that’s because it is exactly that! It is not rooted in revenue and market realities. Even if an analyst or advisor earnest, the approach is complete hokum.

I have researched, invested, consulted and been an economic columnist for years. I have also made my mark in the blockchain space. But until now, I have hesitated to call out technical charts and advisors for what they are…

Have you noticed that analysts who produce technical charts make their income by working for someone? Why don’t they make a living from their incredible ability to recognize patterns and extrapolate trends? This rhetorical question has a startlingly simple answer: Every random walk appears to have patterns. The wiring of our brain guarantees that anyone can find patterns in historical data. But the constant analysis of patterns by countless investors guarantees that the next pattern will be unrelated to the last ones. That’s why short term movement is called a “random walk”. Behaviorists and neuroscientists recognize that apparent relationships of past trends can only be correlated to future patterns in the context of historical analysis (i.e. after it has occurred)..

Decisions based on a technical analysis—instead of solid research into fundamentals—is the sign of an inexperienced or gullible investor. Some advisors who cite technical charts know this. Technicals have no correlation to long term appreciation, asset quality or risks. They only point to short term possibilities.

The problem with focusing on short-term movement is that you will certainly lose to insiders, lightning-fast program traders, built in arbitrage mechanisms and every unexpected good news/bad news bulletin.

If you seek to build a profit in the long run, then do your research up front, enter gradually, and hold for the long term. Of course, you should periodically reevaluate your positions and react to significant news events from trusted sources. But you should not anguish over your portfolio every day or even every month.

  • Know your objectives
  • Set realistic targets
  • Research by reading contrarians and skeptics (They help you to avoid confirmation bias)
  • Study comparables and reason through the likelihood that another technology or instrument poses a threat to the asset that interests you
  • Then, invest only what you can afford to lose and don’t second guess yourself frequently
  • Dollar-cost-average
  • Revaluate semi-annually or when meeting with direct sources of solid, fundamental information

Finally, if someone tries to dazzle you with charts of recent performance and talk of a “resistance level” or support trends, smile and nod in approval—but don’t dare fall for the Ouija board. Send them to me. I will straighten them out.

WTF?! Who says so? Does the author have credentials?

I originally wrote this article for another publication. Readers challenged my credentials by pointing out that I am not a academic economist, investment broker or financial advisor. That’s true…

I am not an academic economist, but I have certainly been recognized as a practical economist. Beyond investor, and business columnist, I have been keynote speaker at global economic summits. I am on the New Money Systems Board at Lifeboat Foundation, and my career is centered around research and public presentations about money supply, government policy and blockchain based currencies. I have advised members of president Obama’s council of economic advisors and I have recently been named Top Writer in Economics by Quora.com.

Does all of this qualify me to make dismissive conclusions about technical analysis? That’s up to you! Wild Duck is an opinion Blog. My opinion is dressed as authoritative fact, because I have been around this block many times. I know the score.

Related:


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

What Countries use US Dollar and Why?

Other than the United States, 5 U.S. territories and 12 sovereign nations use the US dollar as their legal currency. (Note that Micronesia covers six sovereign countries).

Additionally, I have traveled to island nations and some countries in Asia and Pacific that peg their currency to the US dollar. In these regions, citizens accept US dollars interchangeably with their own national currency, and their governments don’t seem to discourage or prosecute such transactions.

What gives value to paper?

Around 350 BC, Aristotle worked for the Greek council, trying to get farmers, weavers, chariot makers and tradesman to use government issued currency for the exchange of goods and services, rather than bartering with neighbors. This would not only facilitate taxation and public works, but it would help farmers to store and forward their wealth, instead of seeing their assets perish with each change of season.

He reflected on what makes a currency trusted and functional. He felt that one critical trait was “intrinsic value”. Today, most economists interpret this phrase as a currency having inherent or self-contained value. That is, it mustn’t be paper nor even a promise of redemption (for example, a picture of Caesar). And it mustn’t rely on the ‘good faith and credit’ of citizens. After all, nations are subject to the whims of transient politicians and any economy can collapse because of war, drought or over-spending. Rather, the money must be made from something of useful and dense value. For example, it could be gold, silver or some useful thing, like chocolate, coveted jewelry or a tool.

Today, money is no longer backed by gold or even a government promise of redemption (offering to exchange dollars for gold, grain, goats or land). For developed nations, this backing—a method of establishing intrinsic value—ended between 1971~1973, when President Richard Nixon dissolved the Bretton Woods Agreement and withdrew the promise of a conversion guaranty.

Instead, today, the value of national currencies floats in response to supply and demand.

Supply and demand is a natural economic mechanism, and for fluid and widely distributed commodities, it can be an elegant solution to the problem of establishing value, function and durability—but only if the supply is capped or very tightly regulated and the issuer is trusted by individuals, organizations and nations that quote prices, save or trade with the currency.

Unfortunately, this is not the case for any national currency across the world.

  • Supply: National currencies increase in supply when the government spends more than it raises from fees, taxes, government owned industries and borrowing—or whenever it cannot meet debt obligations. With fiat currency, the supply is open ended and uncertain.
  • Demand: The demand for a currency is a function of its issuer’s economy: How much are its people producing? How high are their debts? Do creditors believe that they will repay their debts in kind?—at least, someday, down the road.

Today, it’s all about trust—Trust in the ability of a country to return the goods and services that were bought by their people and trust in their government to avoid printing more money, which depreciates savings, redistributes wealth, and cheats creditors through the insipid dilution of inflation.

Whenever a government prints money, it reneges on debt and breeches the trust of creditors.

Why would any country substitute the currency of another country?

One need only look at this Zimbabwe money to understand why an independent nation might substitute the US dollar as legal tender. The same has happened to Argentina, Greece, Venezuela and Germany between the wars.

It was withdrawn from circulation in 2008. At the time, it was worth US 40¢ (40 cents). Today, Zimbabwe uses the US dollar as its legal currency, because its spending value is stable relative to monies issued African central banks. That is, the citizens trust the US dollar to resist inflation—and so they use it to store and trade their hard-earned wealth.

Is Adoption of the US Dollar growing around the world?

The days of our friends and enemies trusting the dollar—or even using it to negotiate large international trades (that is, as a “reserve currency”)—is gradually coming to an end. This is changing, because:

1. Bitcoin is gradually displacing the dollar as the world’s reserve currency. Even though it is slow to gain traction as a commercial and consumer payment instrument, it has all the components of an ideal currency for large international quotation, exchange and settlement.

The fundamental reason for the gradual trust in Bitcoin is illustrated by these graphs. Bitcoin is a capped commodity backed by a robust 2-sided network. Understanding and trust in its distributed consensus mechanism is growing. It cannot be manipulated by transient politicians. Nations that use it for significant transactions cannot be cheated when their trading partner or a 3rd party prints money to cover their own shortfall. It is an ideal reserve settlement instrument.

2. In recent decades, the dollar is built on debt rather than domestic output, a trade surplus, or high quality credit. This creates the potential for a collapse, if US citizens or creditor nations begin to doubt the likelihood of the United States reversing its slumping exports and staggering trade imbalance.

3. In recent years, the United States has lost gravitas in world forums due to the projection of power beyond its borders without a clear mandate or international support, and its recent lack of leadership in issues like the environment, trade accords and arbitrating regional peace agreements. This impression—along with the erratic statements and behavior of U.S. politicians causes both allies and enemies to seek an alternate reserve currency. Why so? …

A reserve currency is an international quotation and settlement instrument—even when the United States is not a party to a sale or transaction, and even if one or both parties is not a US ally. Many countries, banks and producers (of oil, food, military gear, etc) do not desire or appreciate the tremendous side-benefit that accrues to USA.

In effect, when you adopt the currency of one nation as the reserve currency for others, you grant credit to that country, without collateral. You allow them to print money without substantive backing, guarantees or even a balance of trade that makes it likely you will be repaid without the dilution of inflation.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or consulting engagement.

Selfish Ledger: Google’s mass sociology experiment

Check out the internal Google film, “The Selfish Ledger”. This probably wasn’t meant to slip onto a public web server, and so I have embedded a backup copy below. Ping me if it disappears. I will locate a permanent URL.

This 8½ minute video is a lot deeper—and possibly more insipid—than it appears. Nick Foster may be the Anti-Christ, or perhaps the most brilliant sociologist of modern times. It depends on your vantage point, and your belief in the potential of user controls and cat-in-bag containment.

He talks of a species propelling itself toward “desirable goals” by cataloging, data mining, and analyzing the past behavior of peers and ancestors—and then using that data to improve the experience of each user’s future and perhaps even their future generations. But, is he referring to shared goals across cultures, sexes and incomes? Who controls the algorithms and the goal filters?! Is Google the judge, arbiter and God?

Consider these quotes from the video. Do they disturb you? The last one sends a chill down my spine. But, I may be overreacting to what is simply an unexplored frontier. The next generation in AI. I cannot readily determine if it ushers in an era of good or bad:

  • Behavioral sequencing « a phrase used throughout the video
  • Viewing human behavior through a Lemarkian lens
  • An individual is just a carrier for the gene. The gene seeks to improve itself and not its host
  • And [at 7:25]: “The mass multigenerational examination of actions and results could introduce a model of behavioral sequencing.”

There’s that odd term again: behavioral sequencing. It suggests that we are mice and that Google can help us to act in unison toward society’s ideal goals.

Today, Fortune Magazine described it this way: “Total and absolute data collection could be used to shape the decisions you make … The ledger would essentially collect everything there is to know about you, your friends, your family, and everything else. It would then try to move you in one direction or another for your or society’s apparent benefit.”

The statements could apply just as easily to the NSA as it does to Google. At least we are entering into a bargain with Google. We hand them data and they had us numerous benefits (the same benefits that many users often overlook). Yet, clearly, this is heavy duty stuff—especially for the company that knows everything about everyone. Watch it a second time. Think carefully about the power that Google wields.

Don’t get me wrong. I may be in the minority, but I generally trust Google. I recognize that I am raw material and not a client. I accept the tradeoff that I make when I use Gmail, web search, navigate to a destination or share documents. I benefit from this bargain as Google matches my behavior with improved filtering of marketing directed at me.

But, in the back of my mind, I hope for the day that Google implements Blind Signaling and Response, so that my data can only be used in ways that were disclosed to me—and that strengthen and defend that bargain, without subjecting my behavior, relationships and predilections to hacking, misuse, or accidental disclosure.

Credit for snagging this video: Vlad Savov @ TheVerge