FOR or AGAINST: Registry of Tainted Bitcoins

The founders and co-chairmen of the Cryptocurrency Standards Association have a friendly—but passionate—disagreement on the need for a public registry that lists tainted bitcoins. Arguments For and Against a registry are presented below. To view the arguments side-by-side, click the image below (same content):

Tainted Bitcoin Registry

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Gifts: Which of these things is not like the other?

Time for a pop quiz: Which of these things does not belong?


wristwatch      • wallet      • pen      • chocolates     • eyeglasses

Actually, it’s a trick question. If your giving to a man, four of these five gifts do not belong on your list—Not, unless you want smiles and gratitude as fake as a $3 bill.

I am a frequent contributor to Quora. For the most part, I write about Bitcoin and economics, but occasionally, I answer reader queries about physics and math. Sometimes, my answers are voted to the top of the heap.

Today, I was asked to describe what would qualify as the world’s worst gift. The topic is fluff, of course—but now and then, fluff can lead to a good thought experiment.

Of course, the concept of a good gift or a bad gift is highly personal. If you are allergic to flowers, then a bouquet of roses may be a very bad gift. Likewise, giving a bra may mean one thing to your lover, something different thing to your neighbor’s daughter, and with a completely different meaning when presented to your heavy set, male boss.

This may be my own emotional boil, but I have always told my family to avoid gifting me a wallet, watch, personal jewelry or a fountain pen. Today, I would add a mobile phone. (That is, unless my preferences have been published in a registry or gift list). For me, any of these gifts is very likely to qualify as a “worst gift”.

Why?! It’s not that I don’t like these things. In fact, it is the opposite. But I would rather make the choice for myself. To illustrate, think of the old standby for any businessman: The neck tie. Imagine how the giver feels when they realize that you never wear it. Imagine how you feel, when you realize that your little girl has never seen you wear it to work.

Some of these things shown above are functional and some are just ornamental, but each combines personal taste with identity and an individual’s unique sense of aesthetics. The choice of an accessory projects a unique style and taste. Unlike a box of chocolates or a dozen roses, the other gifts are not fresh or consumed and the giver expects these durable and personal items to be worn or used at some point down the road.

Without close consultation, you wouldn’t buy your friend eyeglasses or an expensive ring—even if you knew the prescription. For most men, a lot of thinking goes into the purchase of a cell phone, a wallet, a special pen or a watch.

Here’s a better idea: Skip the material gift altogether. It simply compels them to reciprocate, potentially leading to further stress. Instead, tell that special person how much he/she means to you. Offer to clean the house, take them to the doctor’s office, or sit with them in the aftermath of a personal tragedy.

Leather-iPhone-Wallet-by-PortelMost important, show your friendship and understanding when they are at their lowest. To help someone less fortunate, bring them on your next family vacation. These gestures demonstrate friendship, empathy and a sense of importance in your life. They mean more than a big screen television.

In case some generous reader disagrees—insisting on a culture of giving material things—consider getting me a wallet this holiday season. But not just any wallet. Get this one by Portel. I don’t use an iPhone, but I dig the slim fit and weathered style!

Ellery Davies is co-chair of The Cryptocurrency Standards Association and former
CEO of Vanquish Labs. He writes for Lifeboat Foundation and Naked Security.

Quantum Theory: ‘Spooky Action at a Distance’ seems real

This is an update to a June 2014 article posted here at A Wild Duck
and reprinted in June 2015 by Lifeboat Foundation.

In one of my first articles reprinted by Lifeboat, I provide an experimental methodology for demonstrating (or proving) the instantaneous ‘communication’ between quantum entangled particles. Even though changes to one particle can be provably demonstrated at its far away twin, the very strange experimental results suggested by quantum theory also demonstrate that you cannot use the simultaneity for any purpose. That is, you can provably pass information instantly, but you cannot study the ‘message’ (a change in state at the recipient), until such time as it could have been transmit by a classical radio wave.

Now, Dutch scientists have conducted an experiment that proves objects can instantaneously affect each other, regardless of the distance between them.
[continue below photo]…

delft quantum entanglement apparatus

[From The New York Times—Oct 21, 2015]:

Sorry Einstein.
Quantum Study Suggests ‘Spooky Action’ is Real

In a landmark study, scientists at Delft University of Technology in the Netherlands reported that they had conducted an experiment that they say proved one of the most fundamental claims of quantum theory — that objects separated by great distance can instantaneously affect each other’s behavior.


The finding is another blow to one of the bedrock principles of standard physics known as “locality,” which states that an object is directly influenced only by its immediate surroundings. The Delft study, published Wednesday in the journal Nature, lends further credence to an idea that Einstein famously rejected. He said quantum theory necessitated “spooky action at a distance,” and he refused to accept the notion that the universe could behave in such a strange and apparently random fashion.

[Read John Markoff’s full article in The New York Times]

* The 2015 Lifeboat article—in which I describe an experimental apparatus in lay terms—was reprinted from this original 2015 article Wild Duck. here at Wild Duck.

Amazon throws perceived threats under the bus

In an incredibly head-scratching move, Amazon has announced that streaming video gadgets that fail to support the full implementation of Amazon Prime will be forbidden for sale at Amazon, even by their partners. This includes Apple TV and Google Chromecast—both of which are more popular than Amazon Fire TV.

amazon-logo-black-sAmazon claims that the withdrawal of streaming devices that don’t fully support their own service will mitigate customer confusion.


No one buying these devices is confused. If this were really about buyer confusion—and not blatant trade suppression—they would simply publish a big, fat comparison checklist on the home page.

Just how dumb does Bezos think his customers are? This is about as smart as Google suppressing any search results that mentions Bing. After all, we don’t want to foster a confused user, right?! But Google recognizes that taking the high ground fosters more trust than blocking your competitors at the door.

What’s next, Jeff? Why don’t you remove apps that stream security footage from private companies, but are not compatible with an upcoming Amazon project? How about de-listing all Android phones and tablets? After all, they might promote confusion with Amazon’s Kindle and Fire products.

amazon bans streaming devicesWhy not suppress all Apple and Microsoft products? After all, Siri and Cortana still have a market edge over Alexa—the persona and research wit of Amazon’s voice controlled speaker.

And what about wireless HDMI? After all, Chromecast is not really a streaming service platform. It’s more of an extension cord that uses web streaming to mimic a video cable.

I suspect that there will be law suits in response to the Amazon decision to de-list hardware vendors who are not licensees and partners. But despite Amazon’s broad and heretofore inclusive offerings, I also suspect that courts will not force them to offer competing products. After all, these products have many outlets. Moreover, Amazon could rightfully point out that Google and Apple don’t sell the Fire TV in their own web stores.

But here’s the thing, Amazon: Selling Chromecast and Apple TV do not constitute promoting competition. Amazon is in many businesses, and one of these businesses is online retailing. In this area, you have deftly scrambled to the top of the heap. You didn’t get there by suppressing competition—you got there through brains, guts and striking innovation.

Amazon Fire TV

Amazon Fire TV: We’re not confused. Please compete on merits and marketing.

Despite the legality of Amazon’s move, it is an incredibly shortsighted blunder. After all, Amazon is not running a storefront for branded merchandise and a few compatible accessories. They are shopping cart to the Earth. The king of retailers. They compete in a rarefied atmospheric aura with only two pretenders to the throne: Aliexpress and Ebay. In fact, they trump everyone else together. They are that significant.

Wise up, friend. Wise up Jeff! It’s healthy to look over your shoulder, but debasing the core mission of selling every legal product makes no sense at all. Suddenly, my go-to place is a competitive censor. For such a bright guy, you have made an incredible blunder. Time to retrench. Time to show a little respect to your customers and your biggest supporters.

…Including me.

Stephen Hawking speaks with virtually no muscular movement

Next January Stephen Hawkings will be 74 years old. He has lived much longer than most individuals with his debilitating condition. In addition to being an unquestionably gifted cosmologist, he has invited controversy by supporting the pro-Palestinian, Israel-BDS boycott and warning about the dangers of alien invaders who tap into our interstellar greetings

Antisemitism, notwithstanding, this man is a mental giant. He is Leonardo. He is Einstein. Like them, his discoveries and theories will echo for generations beyond his life on earth. He is that genius.

Forty years ago, when Stephen Hawking still had mobility, he delivered a paper on a mystery regarding information-loss for entities that cross the event boundary of a black hole.

In the mid 1970s, Astronomers were just discovering black holes and tossing about various theories about the event horizon and its effect on the surrounding space-time. Many individuals still considered black holes to be theoretical. Hawking’s analysis of the information paradox seemed extremely esoteric. Yet, last month (Aug 2015) , at Sweeden’s KTH Royal Institute of Technology, Hawkings presented a possible solution to the paradox that he sparked.

I can barely understand the issue and cannot articulately rephrase the problem. But my interest in the black hole event horizon takes a back seat to my interest in the amazing tool created to compensate for the famous cosmologist’s handicap. Watch closely as Stephen Hawking offers a new theory that provides a possible explanation for the paradox.

Near the end of the video (beginning at 7:22), the camera begins a steady zoom up to Hawking’s face. Unlike a year ago, when he could still smile at a joke or move his eyes, he now appears completely motionless. Throughout his speech, there is no sense of animation—not even a twitch—with or without purpose. His eyebrow doesn’t move, his fingers are not restless, he doesn’t blink anymore.

Hawking-smile-sSo how, then, does he form sentences with scarcely more delay than someone who is not paralyzed? That magic is enabled by a tiny camera that monitors a slowly deteriorating cheek muscle. It is Hawking’s last connection to the outside world. What began as index cards with words and then an Apple II computer, has evolved into a sophisticated upgrade process involving cutting edge analysis of the professor’s slightest tick combined with sophisticated computing algorithms. The camera and software that interprets this microscopic Morse code is tied to a process that optimizes options for successive words and phrases. Drawing on a powerful processor and connected to the Web, gear is constantly upgraded by a specialized Intel design team. They are engaged in a race to offer Hawkings the potential for communication up until he has no capacity for interaction at all.

In a recent documentary by Hawkings himself,* he laments the likely day when he will no longer have any capacity for output at all. No ability to discuss physics and cosmology; no way to say “I need help” or “I love you”; no way to show any sign of cognition. At that time, he reflects, the outside world will no longer be certain that there is anything going on behind his blank stare. They will never really know when or if he wants them to pull the plug. Even more mind boggling, humanity will never know what secrets his brilliant mind has unlocked to mysteries of the cosmos.

* Referring to his 2013 autobiographical film and not the 2014 feature film about his life, Theory of Everything.

What if US had raised interest rates?

At the end of 2015, the US national debt will be 18.6 trillion dollars. With such a big number, it’s tempting to put it in perspective by comparing it with things more easily envisioned. Alas, I can not think of anything that puts such an oppressive and unfair burden into 98e2c31e5c194d21be9fd3922dc45fde9207f454perspective, except to this:

US debt represents a personal obligation of $60,000 for each American citizen. And it is rising quickly. Most of our GDP is used simply to pay down interest on that debt. Few pundits see a way out of this hole.

In my opinion, that hole was facilitated in August bretton_woods-a1971, when the US modified the Bretton Woods Agreement and unilaterally terminated convertibility of the US dollar to gold. By forcibly swapping every dollar in every pocket and bank account with the promise of transient legislators, individual wealth was suddenly based on fiat instead of something tangible or intrinsic.

Feds Meet: No interest rate hike

The benchmark interest rate set by the US Federal Reserve Board is currently between 0 and 0.25%. It has been at or near zero since 2006.

By now, most Wild Ducks know that 20 hours ago, the US Federal Reserve board decided to not hike the benchmark interest rate. The Fed did, however, signal that they still intend to raise interest rates at a future meeting—perhaps in October or December.

The announcement came just after US equity markets closed. But, in what has become a most odd news coverage of a non-event, the immediate reaction was to lift the Asian stock markets, which were still open during the announcement.

I am a frequent contributor to Quora. I field many questions on economics, politics, law, and even physics. You might be inclined to check out my credentials as pundit of macro-economics. Don’t bother…There are none! I am an armchair economist (this is the same as saying: “I am not an economist”). But I certainly follow these things closely, and have an opinion.

Today, I was asked this:
What would happen if the fed had raised interest rates?

The question asked specifically about the effect on other interest rates, but a more interesting exercise might be to speculate on the state of the economy. Here then, is a Wild Duck response…

If we could freeze all other conditions and avoid the effects of public confidence, likely change in debt, debt rating, etc… If  we ignore these things, then the direct result of raising the interest rate for a given national currency is to attract outside money. That is, we would see an increase in foreign conversion into dollars and a movement of US assets from stocks and bonds into currency or currency equivalents. This is a simple result of the higher payout that one would expect after a raise in interest rates.

In theory, the sift of international assets and investment into dollars does four things:

  • It strengthens the value of the dollar, thereby increasing the take-home potential of US workers and the number of things US residence buy from overseas (because a slightly higher fraction of organizations seek dollars)
  • It increases income for anyone tied to published interest rates, such as many senior citizens.
  • It increases interest payments from anyone tied to published interest rates. For anyone deep in debt on instruments such as credit cards or home equity, this can have a devastating impact—causing minimum payments to rise by many times the interest rate hike.
  • It increases US national debt, because so much of the economy is built on forward loans in the form of Treasury notes. With an interest rate increase, the US must pay more on both new debt and the financing of massive outstanding debts.

This is all theoretical, of course. In practice, one of the first effects is for individuals and institutions to wonder: How can the US possibly pay out on debt at an increased rate?”.  [possible answer]*

One very obvious effect is that many individuals will further lose confidence in the American economy or the will of Americans to honor the national debt. Because of this, the effect of raising the interest rate (for the first time in 9 years) is not easy to predict. Despite massive uptake on US debt, the Chinese and energy producing nations have limits to what they can believe. A subtle switch in their investment activity (or the determination to move away from a dollar-based reserve) will have massive repercussions, especially for the US.

* Some pundits argue that US debt and payments can continue to grow, because the amgrowth and confidence are protected in these ways:

  • a recovering economy
  • increased activity from the new investors
  • need for producer nations to seize on a massive consumer market
  • need for producer nations to invest their gains

But, a growing number of economists, investors, analysts, credit bureaus, and citizens don’t buy this argument! They recognize a pyramid scheme. At best, it kicks-the-can down the road and foists untenable debt on future generations. They would prefer that the US reign in spending and pay down debt.

In this regard, hosting the world’s reserve currency has helped hook the US on debt, and it has ballooned out of control. Transitioning to a firmly capped currency that is not controlled by legislation or a reserve board would help the country avoid a confidence crisis and a debt that pushes bond buyers to look elsewhere. It is high time for our leaders to do what they must do.

In my take, the real question is not “What if the Fed has raised interest rates?” The real question is:

Does the U.S. have the courage to link its currency to something durable
— and beyond control of transient political winds and a debt pyramid?”

Sure, we must still honor the excess of the past 40 years. But with gold, or Bitcoin, at least we will have solid underpinnings and incentives to spend within our means.

Ellery Davies is a member the New Money Systems Board
at He is Co-chair of Cryptocurrency Standards
Association and  editor at A Wild Duck.

What is a Blockchain?

This short post is not about Bitcoin. It’s about a new method of organizing and arbitrating communications that is at the heart of Bitcoin.

We hear a lot about the blockchain. We also hear a lot of misconceptions about its purpose and benefits. Some have said that it represents a threat to banks or to governments. Nonsense! It is time for a simple, non-political, and non-economic definition…

What is a Blockchain?

A blockchain is a distributed approach to bookkeeping. Because it opens and distributes the ledger among all participants, it offers an empowering, efficient and trusted way for disparate parties to reach consensus. It is “empowering”, because conclusions built on a blockchain can be constructed in a way that is inherently fair, transparent and resistant to manipulation.

Blockchain-backed systems have the potential to take uncertainty out of accounting, voting, legislation, research and even medicine. The blockchain not only solves a fundamental transaction challenge, it addresses a communications consensus and arbitration problem that has bedeviled thinkers since the ancient Egyptians.

—Ellery Davies, CRYPSA Co-chair
Cryptocurrency Standards Association