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.

This is why blockchain-backed systems are generating excitement. Implemented as distributed and permissionless, they take uncertainty out of accounting, voting, legislation or research, and replace it with trust and security. Benefits are bestowed without the need for central authority or arbitration. The blockchain not only solves a fundamental transaction challenge, it addresses communication and arbitration problems that have bedeviled thinkers since the ancient Egyptians.

Related:

—Ellery Davies, CRYPSA Co-chair
Cryptocurrency Standards Association

Will Bitcoin End the Reign of Government?

When my daughter was just starting primary school, she would look inside a book for the pictures before reading the text. She was old enough to read without pictures, but she wanted to get a quick synopsis before diving in. “Look, Dad! a bunny is carrying a giant clock into a rabbit hole.”

White Rabbt-01This is my first article without pictures. At least none of Bitcoin, because the copper coin metaphors are tired and inaccurate. At the user level, owning bitcoin is simply your stake in a widely distributed ledger. Ownership exists only as strings of secret code and public code. There is no physical coin.

Since the only pictures in this post show a white rabbit with a big clock, let me give you the quick synopsis: The answer is “No”. Bitcoin will not end government, nor its ability to tax, spend—or even enforce compliance.

But there is an irony: Most lawmakers and regulators have not yet figured this out. They perceive a great threat to their national interests. That’s why Andreas M. Antonopoulos runs around the world. He briefs prime ministers, cabinets and legislators with the noble purpose of demystifying and de-boogieing Bitcoin.

Does Bitcoin Help Tax Cheats?

As the original Wild Duck, I tend to be perceived as a Libertarian. (It’s a label of which I am not all together comfortable—but I like that it places my ethos far from the ‘Tea Party’). While I hope that my government doesn’t believe fear is a necessary motivator, I understand the need for taxpayer reporting, measurement and compliance. After all, it’s human nature to dislike paying taxes. Many individuals dodge taxes, if the perceived risk of being caught is low. Sociologists also point out that people are willing to cheat a system, if they perceive it to be sufficiently big or impersonal—i.e that their individual contribution is meaningless.

[ASIDE]: For this reason, Akamai Technologies ends their free-soda-&-snack policy whenever an office grows beyond 30 people (I learned this during a job interview a few years ago). People who would normally respect the policy begin pocketing free sodas for their home or friends, if (a) they no longer know everyone, or (b) they perceive the extra burden is just a drop in the corporate bucket, and not a burden on their office peers.

I suspect that most early proponents of Bitcoin are partially motivated by a desire for low taxes and privacy. While I don’t feel that these individuals are bad for the cause (after all, I am one), I feel that it is unfortunate that they appear to be the overwhelming majority of users & supporters. Let’s dismiss, for the moment, the fraction of voices that want to completely end government and taxation…If you believe in any taxes at all, then government needs compliancy mechanisms, including methods that measure, verify and ultimately arbitrate or prosecute offenders. (Don’t blame me…I’m not even the messenger here. Just an observer).

My point is that in their effort to control a country’s monetary supply (and the interbank loan rate, etc) and in their effort to ensure taxpayer compliance, a great many governments view Bitcoin as a threat. In the past, I felt that my job was to evangelize the public on the benefits of cryptocurrency, and to a great extent, that’s what CRYPSA is all about. But in recent months, I have become confident that Bitcoin will become ubiquitous. It doesn’t need me to be an evangelist. The freight train is now rolling downhill. But…

Andreas Antonopoulos-01s
But as an engineer, author, speaker and occasional consultant, I have found a new calling. Like Andreas Antonopoulos (my idol), I have found a calling in de-boogieing Bitcoin to lawmakers and regulators. I demonstrate that (a) cryptocurrency represents far more of an opportunity than a threat to a national interests, and (b) the future is coming at ya’.
So, either: Stand pat; Get out of the way; or Hop on!

I can give an audience filled with old-school conservatives compelling reasons to “hop on”. Ultimately, blockchain technology coupled with true, permissionless, p2p transactions will shake up established mechanisms and enforcement protocols. They will force new ways of thinking. But cryptocurrency will not end the reign of government—nor even end the ability to tax, enforce and spend. It will simply change the way they do these things. It will also change the way we conduct polls, vote, arbitrate disputes, perform scientific research and much more.

Bitcoin and the blockchain are not just technologies. They transform the way in which many tasks are performed. But it’s not just about efficiency. These technologies offer mechanisms to level the playing field. TWhite Rabbt-02hey bring fairness and representation to processes that were opaque and perhaps even relied on the excuse of opaqueness.

Ultimately, Bitcoin may render certain government departments redundant. Nations will begin to question their need to directly control monetary policy. The impact at the department level is no reason to fear Bitcoin. Overall, it represents great opportunity and not a threat. In my opinion, the changes will benefit everyone.

Bitcoin is not an us-against-them instrument. It is win-win. Of course, perception counts. Misunderstanding potential and confusing it for a threat is a fundamental problem. Wild Duck and CRYPSA share a passion to help make it a very short-term problem.

Japanese Court: Bitcoin Cannot be Owned

July 2016 Update

Bitcoin is coming of age in the Land of the Rising Sun. The Japanese
cabinet has approved a series of bills that legitimize virtual currencies
and promote FinTech even beyond that of other nations.

Responding to this nugget from Engadget:

Tokyo District CourtTokyo’s district court has ruled that it’s not possible for people to own bitcoin, and therefore they cannot sue for compensation in the wake of Mt. Gox’s collapse.

The ruling comes days after the head of the world’s largest bitcoin exchange was arrested on charges of fraud. Judge Masumi Kurachi felt that bitcoins do not possess “tangible qualities” to constitute owned property. Mt. Gox held thousands of individual accounts, and so there’s plenty of angry customers looking for compensation.

A Wild Duck Response to the Tokyo court…

A personal stake in Bitcoin is every bit as real (and a bit more tangible) than a personal stake in Yen, Dollars or Euros. Fiat currency is backed by the knowledge that your national government will demand tax payments in kind. But is it tangible? Like any invention of humans, that’s a matter of perception.

a) Dollars / Yen / Euros

Dollar_closeOver the long term, national currency is likely to be debased by debt, social welfare, war, political ambition, and a desire to redistribute fruits of labor, typically to assuage political ambitions. A built in mechanism of inflation forces a hidden tax and enables legislators to spend beyond the consent of their constituents.

b) Bitcoin

Bitcoin_BlueBitcoin on the other hand is backed by math. It is an asset without the potential for inflation or manipulation. It is a pure supply-demand currency and a pure 2-sided network—completely unfettered by the chaff that comes with central banks and national treasuries.

A stake in Bitcoin rises over the long haul, because the total quantity of currency is capped. As it is adopted for payments and commerce, a fixed pie is sliced thinner and thinner. This results in increased value per unit. Result: A deflationary economy without the baggage of sluggish economic.

Japan has made a foolish pronouncement; one that will ultimately embarrass their courts. Declaring Bitcoin ethereal is laughable when you consider that paper money is no more tangible than an unfulfilled promise. Likewise, declaring the theft or mismanagement of Bitcoin unworthy of recovery or restitution is no different than declaring the theft of art unworthy of restitution. Consider that each Mt. Gox account holder has proof of a real dollar investment position and an appreciation that is reported and tracked by exchanges all over the world.

Wake up Japan. You have so much more to offer the world than a distorted interpretation of a new technology.

Ellery Davies is Co-Chair of CRYPSA,
Cryptocurrency Standards Association

Planned Parenthood: Undercover Video Kicks Up Firestorm

When I started this Blog, I committed to publish clear and blunt Wild Duck opinions on even the most controversial issues. But I also made a promise to myself to refrain from commenting on a few things, simply because I didn’t want to use my Blog for these issues, nor defend my belief system:

  • Personal vendettas against vendors, no matter how egregious the practice
  • Religious beliefs of any public figure
  • gagThe abortion debate

Two Down; One to Go

Despite pure intentions, the gag rule had to go. I have already violiated the first two prohibitions…

a) Personal Vendettas

First, there was my interminable frustration over a ludicrous string of billing errors by Verizon (it was resolved only after 3 years, 150 phone calls and 120 statement credits). Incompetence and disrespect for customers of this magnitude begs to be shared.

Rent-a-Terstappen desk-s2Then, there was the unforgivable lies, deceipt and theft by Rent a Terstappen—the Dollar / Thrifty car rental franchise at the Frankfurt airport. If they tried these tricks in the US or anywhere else in Europe, the franchise owners would be in jail and the corporate office would be decimated by a class action suit.

Finally, Keurig/Green Mountain has finally removed restrictions from their Keurig 2.0 brewer,due, in part, to this scathing review of their haughty business practices.

b) Religious Beliefs

Religion keeps popping up, just like Whack-A-Mole. I have finally come to realize that it was an unrealistic and unnecessary editorial restriction. I don’t really care to debate your faith or my background—I just don’t feel that any reasonable and representative government should recognize, support, defend or lie in bed with any religions, period.

First, there was the town that wanted to balance the display of a public Christmas tree with a public Hanukkah menorah (Editor’s Tip: Get rid of both. Neither belong on public property). Then, there was the US congressman who believes that the universe is 6,000 years old and the New Testament is his working job manual. He is a member of the Space Sciences committee and makes decisions that affect NASA.

Finally, I wrote a popular piece that justifies an agnostic belief (or is it a lack of belief?). And, of course, I have frequently published stories about Islamic extremism and Daesh (aka ISIS OR ISIL). Anyone who participates, contributes or sympathizes with the so-called Islamic Caliphate SO-oo-o needs to be dragged out and shot.

…And so, now there is but one frontier to cross. That is, my self-imposed prohibition on treading into the topic of abortion and public policy.

c) Abortion

Looking over the first three years of this Blog, I find that abortion has rarely been mentioned; only referenced in two political articles.

The problem isn’t that abortion is a contentious issue. A Wild Duck thrives on contention. In case you hadn’t noticed, I love to justify my opinions. fetusBut, the ethics and legal recourse are difficult to debate, because the Pro-Life camp believes that abortion is murder. If one party to a debate believes that the other side is engaged in unjustifiable homicide, the two will forever be locked in a stalemate. Sure, abortions will go on. But, depending upon prevailing winds—religion, ethics & politics—they will either be legal or illegal.

FWIW: Wild Duck is Pro-Choice

I am staunchly Pro-Choice. There! I have said it. But, beyond the next few paragraphs, I don’t care to justify my opinion on the issue. It could not possibly serve any point.

A women’s right to choose the disposition of her body, her womb and her unborn baby (or ‘fetal parts’, depending on your ilk) should be supreme and inviolate—until a child is born and is breathing apart from the mother. Pro-choice is not a nihilistic philosophy. Advocates do not set out to end the life of a fetus. We simply believe that incredibly difficult and personal medical decisions belong with family and physicians rather than government.

Pro-choice advocates believe in family and their capacity to make tough personal choices. We don’t survey the ethics and religious doctrine of neighbors and we don’t bring a community of pundits, analysts, and our neighbor’s clergy into the bedroom or our doctor’s office. Callout-abortionThere must be a clear delineation between an individual’s medical and ethical decisions and the rights granted to a new life—even if a fetus could survive apart from the mother. I feel strongly that government should stay uninvolved. The dividing line (the point at which society should forcibly intervene or punish) should be the birth of a child.

Sure, a fetus is viable and every bit as human just before birth, but a mother doesn’t abort at a late stage with callous recklessness. It is a very tough choice. One must ask if this difficult choice should be made by family with their doctor, or by a government, reigid rules and popular consent. The decision demarcation cannot be conception or anytime before birth.

I have often hoped that, someday, a simple, easily obtained medication (like Plan B) would make this entire debate moot. But nothing is that easy. Abortion options that are too quick, too simple and too easily concealed raise other serious questions… Has the family weighed all options? What if someone slips an abortion pill into a woman’s drink? I will not address these questions. This article is about a current news event.

Planned Parenthood: Signs of Trouble

One issue that is squarely in the spotlight this week is the sale of fetal body parts. When there is a potential for money to exchange hands, the incentive can drive the decision to abort or even influence a doctor’s methods and practices. For this reason, federal law prohibits the sale of human body parts. But it allows for the the donation of tissue and organs and it allows for the use of human tissue in medical research.

This video, released two days ago, has sparked a firestorm. It has also sparked the fury of Republican presidential candidates, Rand Paul and Ted Cruz. They promise congressional investigations and a push to defund Planned Parenthood.

In the video, Deborah Nucatola, a senior director of medical services for planned parenthood, casually discusses abortion procedures and organ harvesting with an undercover investigator for a right wing group. Clearly, the investigator is after a smoking gun and he wants to generate media hysteria and a congressional backlash. He succeeds in spades. But what exactly does the smoke point to?

One day after the story broke, defenders of Planned Parenthood argued that although the discussion was in a shockingly cavalier, nothing illegal was offered or discussed. Dr. Nucatola mentioned a paltry $30 or $100 dollars to cover the added cost of having the doctor save and preserve specimens. Although details are gruesome, the fee clearly does not constitute “selling body parts” including some that may be illegal. Yesterday, The New York Times, defended Planned Parenthood in this article. Factcheck.org (admittedly, a democratic web project) makes the same point here.

But Is The Video Damning? You Bet.

I support Planned Parenthood. For nearly 100 years, they have been a beacon of truthful information, respect and victim empowerment. They balance fanatic zealots who seek to undermine a woman’s natural right to have providence over her own body.

The tangible issue raised by the undercover video is whether the incentive to sell or even donate fetal tissue and organs influences the choices made by pregnant women or the methods employed by abortion providers. And, of course, whether it influences the motives and actions of Planned Parenthood. But no one is selling body parts. This was not the 600 pound gorilla—the intangible issue hit home by the video. It is the tone with which life-terminating procedures are discussed. It comes across as cavalier and disrespectful…

I stand with Planned Parenthood, but I do not stand with supporters who feel that the video is anything less than destructive. Callout-Planned_ParenthoodIt points to a problem with attitude, ethos and consistent signaling. The video reflects poorly on Planned Parenthood and their mission.

Likewise, another undercover video from Inhuman, captures Planned Parenthood CEO, Cecile Richards, in a wink-and-nod at the very end of the video. This, too, reflects poorly on Planned Parenthood. While it is likely that Ms. Richards was simply patronizing a visitor that she wanted to get rid of, it doesn’t reflect well on the organization or it’s mission.

Perception & Reputation

The survival of every organization—even churches, governments and non-profits—relies, in part, on a marketing component. I am less concerned with how the enemies of Planned Parent spin this video than I am with how it perceived by it’s supporters.

The bottom line is that the brand has been tarnished. Recovery will be arduous and, perhaps, long in coming. It is not a forgone conclusion that Planned Parenthood will recover. But it is also a fact that Planned Parenthood stands for freedom, privacy, woman’s rights, and the sanctity of family. Even if the organization is damaged or destroyed, we must never forget the noble mission for which they stand.

Related

Privacy –vs– Anonymity

My friend and business partner, Manny Perez holds elective office. As New York State politicians go, he is an all around decent guy! The first things colleagues and constituents notice about him is that he is ethical, principled, has a backbone, and is compassionate for the causes he believes in.

Manny wears other hats. In one role, he guides an ocean freighter as  founder and co-director of CRYPSA, the Cryptocurrency Standards Association. Manny-guitar-sWith the possible exceptions of Satoshi Nakamoto and Andreas Antonopoulos, Manny knows more about Bitcoin than anyone.

But Manny and I differ on the role of privacy and anonymity in financial dealings. While he is a privacy advocate, Manny sees anonymity —and especially civilian tools of anonymity—as a separate and potentially illegal concept. He is uneasy about even discussing the use of intentionally architected anonymity in any financial or communications network. He fears that our phone conversation may be parsed (I agree) and trigger a human review (I agree) and that it could be construed as evidence of promoting illegal technology. This is where we differ… I agree, but I don’t care how anyone who is not party to a private conversation construes it! Yet, I see anonymity as either synonymous with privacy or at least a constituent component. You can’t have one without the other.

Manny was raised in Venezuela, where he was schooled and held is first jobs. He was involved in the energy industry. He acknowledges that experience with a repressive and graft-prone government, lead to a belief in a more open approach: free markets coupled with a democratic government.

Perhaps this is a key source of our different viewpoints. Manny comes from a repressive land and has come to respect the rules-based structure within his comfort zones of banking, energy and government. He is a certified AML expert (anti-money laundering) and believes strongly in other financial oversight rules, like KYC (Know Your Customer) and RICO (Racketeer Influenced and Corrupt Organizations Act).

Because Manny is appreciative of the opportunity and benefits conveyed by his adoptive country, he may overlook a fact that whispers in the minds of other privacy advocates: That is, we may one day need protection from our own government. After all, who but a conspiracy nut or white supremacist could imagine the US government suppressing its populace. Sure, they engage in a little domestic spying—but if you have nothing to hide, why hide at all?!

This week, Manny posted an open letter to the cryptocurrency community. His organization, CRYPSA is at the intersection of that community with law, technology and politics. His letter addresses privacy, anonymity and transparency, but the title is “How can you report a stolen bitcoin?” For me, the issue is a non-sequitur. You needn’t, you shouldn’t, the reporting superstructure shouldn’t exist, and in a well designed system, you can’t.* More to the point, the imposition of any centralized reporting or recording structure would violate the principles of a decentralized, p2p currency.

To be fair, Manny is not a sheep, blindly falling into line. He is shrewd, independent and very bright. But in response to my exaggerated and one-dimensional Manny, I have assembled some thoughts…

1. Privacy, Anonymity and Crime

Bitcoin pile-sThe debate about Bitcoin serving as a laundering mechanism for cyber-criminals is a red herring. Bitcoin does not significantly advance the art of obfuscation or anonymity. There have long been digital E-golds and stored value debit cards that offer immunity from tracking. They are just as easy to use over the Internet.

Moreover, it’s common for crime or vice to drive the early adoption of new technology, especially technology that ushers in a paradigm shift. The problem with linking Bitcoin to crime is that it drives a related debate on transparency, forensics and government oversight. This is a bad association. Transparency should be exclusively elective, being triggered only after a transaction—if and when one party seeks to prove that a payment was made or has a need to discuss a contractual term.

On the other hand, a good mechanism should render forensic analysis a futile effort if attempted by a 3rd party without consent of the parties to a transaction. We should always resist the temptation to build a “snitch” into our own tools. Such designs ultimately defeat their own purpose. They do not help to control crime—Rather, they encourage an invasive government with its fingers in too many people’s private affairs.

CRYPSA is building tools that allow Bitcoin users to ensure that both parties can uncover a transaction completely, but only a party to the transaction wishes to do so!. For example, a parent making a tuition payment to a college can prove the date, amount and courses associated with that payment; a trucker or salesman with a daily expense account can demonstrate to his employer that a purchase was associated with food and lodging and not with souvenirs. And, of course, a taxpayer under audit can demonstrate whatever he wishes about each receipt or payment.

But in every case, the transaction is opaque (and if properly secured, it is completely anonymous) until the sender or recipient chooses to expose details to scrutiny. I will never accept that anonymity is evil nor evidence of illicit intent. Privacy is a basic tenet of a democracy and a government responsible to its citizens. CRYPSA develops tools of transparency, because commerce, businesses and consumers often need to invoke transparency—and not because any entity demands it of them.

We are not required to place our telephone conversations on a public server for future analysis (even if our government saves the metadata or the complete conversation to its clandestine servers). Likewise, we should not expose our transactions to interlopers, no matter their interest or authority. The data should be private until the data generator decides to make it public.

2. Reporting a Transaction (Why not catalog tainted coins?)

Manny also wants to aid in the serialization and cataloging of tainted funds, much like governments do with mass movement of cash into and out of the banking network. This stems from an earnest desire is to help citizens, and not to spy. For example, it seems reasonable that a mechanism to report the theft of currency should be embedded into Bitcoin technology. Perhaps the stolen funds can be more easily identified if digital coins themselves (or their transaction descendants) are fingered as rogue.

The desire to imbue government with the ability to trace the movement of wealth or corporate assets is a natural one. It is an outgrowth of outdated monetary controls and our comfort with centralized trust-endowed. In fact, it is not even a necessary requirement in levying or enforcing taxes.

Look at it this way…

  1. Bitcoin transactions are irreversible without the identification and cooperation of the original payee (the one who received funds). Of course, identification is not a requisite for making a transaction, any more than identification is required for a cash purchase at a restaurant or a newsstand.
  2. There are all sorts of benefits of both anonymous transactions and secure, irrevocable transactions—or least those that cannot be reversed without the consent of the payee. This is one of the key reasons that Bitcoin is taking off despite the start-up fluctuations in exchange rate.
  3. Regarding the concern that senders occasionally wish to reverse a transaction (it was mistaken, unauthorized, or buyer’s remorse), the effort to report, reverse or rescind a transaction is very definitely barking up the wrong tree!

The solution to improper transactions is actually quite simple.

a) Unauthorized Transactions

Harden the system and educate users. Unauthorized transactions can be prevented BEFORE they happen. Even in the worst case, your money will be safer than paper bills in your back pocket, or even than an account balance at your local bank.

b) Buyer’s Remorse and Mistaken transactions

Buyer beware. Think before you reach for your wallet! Think about what you are buying, from whom, and how you came to know them. And here is something else to think about (issues that are being addressed by CRYPSA)…

i.   Do you trust that the product will be shipped?
ii.  Did you bind your purchase to verifiable terms or conditions?
iii. Is a third party guarantor involved (like Amazon or eBay)?

All of these things are available to Bitcoin buyers, if they only educate themselves. In conclusion, “reporting” transactions that you wish to rescind is a red herring. It goes against a key tenant of cryptocurrency. It is certainly possible that a distributed reverse revocation mechanism can be created and implemented. But if this happens, users will migrate to another platform (call it Bitcoin 2.0).

You cannot dictate oversight, rescission or rules to that which has come about from organic tenacity. Instead, we should focus on implementing tools that help buyers and businesses identify sellers who agree to these extensions up front. This, again, is what CRYPSA is doing. It is championing tools that link a transaction to business standards and to user selective transparency. That is, a transaction is transparent if—and only if— the parties to a transaction agree to play by these rules, and if one of them decides to trigger the transparency. For all other p2p transactions, there is no plan to tame the Wild West. It is what it is.

* When I say that you should not report a stolen coin, I really mean that you should not run to the authorities, because there is nothing that they can do. But this is not completely accurate.

20130529_102314a1. There are mechanisms that can announce your theft back into a web of trust. Such a mechanism is at the heart of the certificate revocation method used by the encryption tool, PGP (Pretty Good Privacy). CRYPSA plans to design a similar user-reporting mechanism to make the cryptocurrency community safer.

2. Authorities should still be alerted to theft or misuse of assets. They can still investigate a crime scene, and follow a money trail in the same way that they do with cash transactions, embezzlement or property theft. They can search for motive and opportunity. They have tools and resources and they are professionals at recovering assets.


 

Disclosure: Just like Manny, I am also a CRYPSA director and acting Co-Chairman. (Cryptocurrency Standards Association). This post reflects my personal opinion on the issue of “reporting” unintended, unauthorized or remorseful transactions. I do not speak for other officers or members.

Will Hillary Gag Her Critics?

My friend, Peter, is at it again. He’s the dude with a geographic license to wear loud, floral print shirts that don’t tuck in. We used to be friendly competitors in the email security space. But we both switched careers long ago and we are now fast friends at a distance.

I said “at a distance” because we are separated by both land and politics. At 5100 miles (8200 km), we are geography separated as far as two people in USA can be! And the political distance between a bible-toting redneck and a blue-blooded Libertarian is nearly as great! Actually, I am exaggerating the metaphor… Neither of us is at the fringe—but as the pendulum swings, we each tend to be adrift from the center!

I have always been impressed with Peter’s ability to initiate passionate and popular debate. While this Blog elicits between zero and ten comments for each article, a simple post on Peter’s Facebook wall gets 75 responses, often within hours. His capacity to generate discussion and debate not only speaks to Peter’s breadth of contacts, but more importantly to a keen sense of hot-button issues!

Last week, Peter asked his friends to opine on Hillary Clinton. He was critical of her desire to vet Supreme Court nominees based on their willingness to restrict free speech rights for campaign commercials that slander a candidate in proximity to an election.

His question refers to this article. [Click below to read in a new window]

Hillary

Actually, the use of the term slander is my spin. Slander invokes a very different legal bar, and it is not a form of protected speech. But Hillary openly opposes the airing of any critical opinion in the days leading up to an election.

Peter asks:

If you and your friends pool your resources into a corporation making a movie that comes out 30 days prior to an election criticizing candidate Ted Cruz, should you be arrested? If you answered “No”, then I hope you also agree with the Supreme Court’s ruling on Citizens United.

 

A Wild Duck response…

I have read and understand the Powerline Blog piece on Citizens United. I fully agree with the Supreme Court decision. And, of course, I believe that Clinton should avoid a litmus test that buttresses her effort to thwart our First Amendment.

My initial reaction was to wonder if anyone feels differently? Who can argue with free speech, especially when it comes to politics. Perhaps I live among a small circle of friends, but I can’t think of anyone—regardless of their politics—who would expect or desire a different outcome. (I am assuming that the Powerline article was not slanted—or lacking some germane point!)

Big Business, Money and Free Speech

What if big money backs free speech? Surely, that type of speech should be restricted. Right? Not on your life! The argument that organizations are not people and that they shouldn’t enjoy basic rights just doesn’t hold water. And the argument that money buys elections is just daffy!…

What are we? Idiots and sheep?! There is no such thing as “buying” an election. Not in a country with a free press, free speech and the Internet. Of course, access to money helps any persuasive campaign, just as a well-funded ad campaign helps Coca-Cola sell more soda than Fred’s regional cola. But, when was the last time that you or a family member voted for a candidate because she had more TV ads? If you ask me, modern electioneering is comprised mostly of negative attack ads. I suspect thst expensive messages leading up to an election are more likely to dissuade voters than they are to “buy” votes.

Hillary as President

I have not yet formed a position for or against Hillary as a presidential candidate. But, I would give her a pass for being pig-headed on this issue, at least in public discourse. The ramifications of free speech have hit too close for her to think straight. I doubt that she will find a credible candidate for Supreme Court Judge that would vote to prohibit an opinion piece, regardless of its sponsors or timing.

On Second Thought

church-&-state-sHere, at Wild Duck, I rarely equivocate. My opinions are as pig-headed and bull nosed as Hillary’s. But once in a while, I acknowledge that there may be another side to an issue. (Not the free speech issue. On that, I stand firm). But, on assuming that a candidate—if elected—would not act on their radical or religious beliefs. On this point, I can no longer vote with smug assurance…

I once gave Republicans a pass on the issue of a litmus test. I assumed that they would  never hand pick ANTI-choice justices or ANTI separation of church-state justices. I thought it impossible that any educated individual could be a bible thumper. I was wrong. Clearly, some politicians and judges mix religion with politics or seek to force our sisters and daughters into back room abortions.

And so, Peter, I shall reflect on your question a bit more! Regards from your slightly more liberal friend on the mainland.


 

Like Peter Kay, Ellery occasionally pontificates on politics of the day. But,
unlike Peter, Ellery is apt to opine from a liberal or Libertarian perspective.

Fool’s Mission: Asserting Open Carry Rights

There is a cottage industry afoot that entails making an amateur video of yourself or a friend asserting the right to walk down the street with a gun, but without a badge. After all, we live in a country with a 2nd amendment (the right of citizens to bear arms) and some communities drive this point home by having explicit open carry laws.

LiveLeak.com has recently staked their fame on videos submitted by yahoos, often featuring gang members or reckless youth brazenly taunting police. (“I was just walking down the street officer…minding my own business!)”. In one particularly troubling video, a guy walks into a police station wearing full body armor and carrying an AR15 assault rifle. He calls this behavior a “2nd amendment audit”. Yeah, right! By the same logic, you could test your right of peaceful assembly by surrounding a midnight girl scout campfire with gang members carrying grenade launchers, hand cuffs and duck tape.

There is no confrontation in the police station audit, but check out this video, instead…

Drop to the ground!

This is not a video about race, guns or constitutional rights. It is a video about two individuals and their girlfriends making an a*s of themselves.

It’s not the message about race that bothers me…

In this video, one protagonist is white and the other is black. But before we get into the sub-plot, let’s address the main premise… Do these guys have a constitutional right to bear arms?

Yes they do! But there is no national consensus on what it means to “bear arms”. Do they have a constitutional right to display automatic weapons as they walk down a street? That’s certainly in doubt. If so, then you could extrapolate this to a right to carry grenades and chemical bombs. Do they have a right to openly carry weapons down the streets of this particular community? Perhaps. Maybe. I don’t know.

But even if their actions are intended to assert their rights or demonstrate a bias toward black males, they are still idiots. Regardless of laws and rights, a society lives on norms of conduct, safety and behavior. Quote me all the rights that you wish; we still can’t have citizens walking down the street with assault rifles or Uzis. Unlike the police, there is no way to know if they have been adequately trained, screened for mental health, enraged by a recent incident, or simply looking for trouble.

These guys are clearly jerks. But it doesn’t mean that I don’t understand their motives. I was once young, arrogant, with a chip on my shoulder, and also an idiot. Too bad that there isn’t a better way to communicate across generations and save these dolts from making the same mistakes in an effort to assert their ‘rights’.

The Narrator’s Other Message

To be fair, the accompanying article explains: “The white guy did not have a gun pulled on him, the black guy never got a chance to say anything before a gun was pulled on him.” The video shows two separate events. One in which a white man is challenged without apparent fear or violence and the other in which an officer draws a gun on a younger black man and yells for him to drop to the ground before engaging in any discussion. Is there a point here about race, balanced law enforcement and prejudice? Sure! But that doesn’t change the fact that both men are idiots.

Let’s be clear. Race is not a main point of the video. In the opening scene, a lunkhead states that he will stage a provocative exercise for “educational purposes” and to ensure that the state of Oregon does not trample on his rights. As to the race angle, there are certainly other ways to research and present sociological data. In fact, it can be done in a manner that solicits the viewer to reflect on their own bias and perhaps take action in changing perceptions and practices. But this certainly wasn’t a primary motive for the white guy wanting to demonstrate his rights. He just wanted to poke a bobcat with a sharp, flaming stick. In his book, it makes him hot stuff; a really big cheese. In my book, he demonstrates about as much sense as a soft boiled egg.

What do you think? I would particularly like to hear from some gun rights supporters. Is it reasonable to demonstrate your rights by walking down a busy street with an assault weapon?

Bad for business: Laws that bully LGBT

I really tried to ignore the brouhaha over Indiana’s thinly veiled discriminatory law. There is little I can add to the public discourse. In my circles, it seems kind of obvious that the Religious Freedom Restoration Act (RFRA) will be short lived. After all, even with a public demonstration of a narrow mind and intolerance, no governor can stand against business for long.

For those who have lived under a rock these past few weeks, a quick study might ask What’s the big deal? After all, we have a federal law with the same name. But there is a big difference!  The federal law protects individuals from government intrusion or coercion, while the Indiana law was crafted with the opposite intent! It allows individuals (business owners or employees) to claim a legal basis for their interaction with others. It sets the stage for commercial discrimination and goofy legal defenses…

Saturday Night Live suggests giving businesses helpful signs to show that they embrace the new law

Saturday Night Live offers a friendly storefront sign to businesses that embrace the new law.

Under this law, a McDonald’s cashier can contest being fired for telling each customer to praise Allah—or for refusing to serve customers who don’t respond in kind. After all, he is just exercising his religious freedom. This doesn’t just open a can of worms—It sends a crop duster to spray worms over the entire state!

This slideshow from Huffington Post presents first-hand quotes and tweets from 26 politicians, corporate heads (Apple, Nike, Twitter, Angie’s List, Yelp, NASCAR, etc).

Some people stand with the Indiana governor, such as former governor Jeb Bush, and senators Ted Cruz and Rick Santorum. But it is revealing to note that no corporation or sports team wants this pretext to commercial discrimination. They are vociferous in distanancing themselves.

Of course, not all politicians stand with Indiana Governor Mike Pence. The governor of Connecticut is a lightning rod in mustering dissent. So are the mayors of Seattle, Denver, and Washington, DC. You can imagine the statement from Oregon’s governor Kate Brown (she is openly bisexual).

Yea, brother! Are you a straight, God-faring Christian?

Indiana Governor Mike Pence: Straight, God-fearing and bad for business

Financial repercussions are beginning to mount. Angie’s List is canceling a $40 million expansion of their headquarters (this means fewer jobs!). The alternative rock band, Wilco, has cancelled a tour stop in Indianopolis. Salesforce.com is cancelling a business deal. The Colts, NCAA and NASCAR cannot easily relocate, but they are apologizing to fans and reminding them that these venues welcome all fans–both on and off the field. Hillary Clinton called it a “sad decision”. The founder of Yelp calls it “unconscionable”.

Governor Pence insists that the law is misunderstood and that it was not intended to be a pretext for commercial discrimination. In response, check out the opening section of a letter signed by Angie’s List CEO and the heads of eight other large corporations. It points out that intent is not really the point. It’s all about effect:

Regardless of the original intention of the Religious Freedom Restoration Act, we are deeply concerned about the impact it is having on our employees and on the reputation of our state. All of our companies seek to promote fair, diverse and inclusive workplaces. Our employees must not feel unwelcome in the place where they work and live. 

To clarify the law, Governor Pence is rushing a corrective ‘fix’ into the legislative docket. That’s just another head slapper. Why bother?! You don’t fix lunacy, you drive a wooden stake through it, bury it, and hope that your opponents forgive or forget.

Wild Ducks wonder how long Hoosiers must wait before Governor Mike Pence rolls back his spiteful and bad-for-business legislation. We also wonder how the governor could have acted on such bad advice. On the other hand, if he acted on his personal conviction, then — red state or blue state — I wonder how he became governor!

Booya! Hong Kong seeks Bitcoin ban

Hong Kong flagIn February, Hong Kong lawmakers called on authorities to ban Bitcoin after more than 25 investors were duped in a Bitcoin scam. Reuters reports that they may have been fleeced of [US] $387 million. That’s quite a scam—Bernie Madoff would be proud!

Coming from Hong Kong legislators, the request to ban a monetary instrument—rather than enhance security and education—is a bit surprising. After all, Hong Kong is a uniquely progressive society. Their dollar is not issued, printed or backed by the government (not the under the British mandate and not even under Chinese unification). Rather, it is issued and backed by 3 commercial banks, each one abiding by a strict reserve policy.

Ban, baby Ban

Effective tonight, stray cats may no longer mate without a permit from the population council

Stray cats must obtain a city permit before mating

I love government bans! —especially edicts that try to prevent feral cats from mating or water from seeking its own level! It arguably produces a best-case event for popularizing a new technology, film, web-site, trend or behavior.

Sure, Bitcoin will be exploited by criminals — perhaps even at 5% of the rate that crooks exploit cash, checks or credit cards. I wonder if Hong Kong has banned those instruments?

Bitcoin is based on an elegant technology that is sometimes difficult to explain. But the results are easily understood. Whether you believe Bitcoin to be a currency, a threat to national sovereignty or a tool for criminals, it is simply a very inexpensive, efficient, quick and secure method of moving value from one party to another. That’s really all there is to it.

Bitcoin-08Of course, Bitcoin is new and it is decentralized. This means that there are a few things to be learned before common practices (and banking-analogous practices) can be made simple and safe for everyone. The Cryptocurrency Standards Association is working on it and so are a great many other programmers & organizations. Don’t bet against it! Bitcoin and the blockchain are one of those new-paradigm technologies that adds value, spreads quickly and is resistant to edict. In the beginning, Ebay, Google AdWords and hyperlinks seemed too difficult to be useful to the masses. It’s no different with Bitcoin. Adoption, tools, safety protocols and utter simplicity will make it a no brainer.

More importantly, Bitcoin does not present a threat to governments or nations, even if it begins to replace currency. (Many scholars think that this won’t happen). Governments can still tax citizens, float bonds, audit transactions, wage war and arrest bad guys — just as they did before and during the era of treasuries and central banks.

A major benefit of Bitcoin (at the very least) will add TENS of Billions of dollars to the economy. And not just supply-side dollars, but real skills and labor. That’s because Bitcoin saves 2~4% on most financial transactions. No fee for credit cards, wire transfers, checks and even commercial letters of credit. That’s why SWIFT is evaluating a switch to Bitcoin and it is why IBM is exploring the blockchain to move commercial funds all over the globe.

It doesn’t stop there. As Bitcoin adoption grows (even if only for debit transactions), a series of reactions will gradually follow. Peek with me into the future landscape of Bitcoin adoption. It’s easy to imagine. The vision is positive…What do you think?

• Related: Ellery’s articles about Bitcoin
Ellery is a founding member of CRYPSA, the Cryptocurrency Standards Association

Canary Watch deduces federal gag orders

The US government and its courts routinely demand personal user information from email services, banks, phone companies and other online, telecommunications or financial services. These demands compel services to disclose details about email, phone calls and financial transactions. They also gain access to hordes of so called “metadata”, which can be just as personal as a user’s phone calls. It includes information about user relationships, locations, browser configuration and even search history. Many of these demands, such as the infamous National Security Letter stipulate that the service may not divulge that they were asked for the information in the first place. In fact, they can’t say anything about a de facto investigation!…

My friend, Michael, occasionally points out that skirting the law with Wink-Wink-Nod-Nod is still likely breaking the law. His point, of course, is that law is often based on intent. So with this in mind, what do you think about this clever reporting service?…

Canary WatchA service called, Canary Watch, lets online services like Verizon or Google send a continuous stream of data that repeatedly states “We are not currently compelled to turn over any data on our users”. Naturally, if the service suddenly refrains from sending the statement, a reasonable person can infer that the government is demanding personal information with the usual GAG order attached.

If you extrapolate this technique, a service like Verizon could continuously broadcast a massive list of usernames (or shorter hash codes representing individual users). These are the users who are not currently being investigated. Any change to the data stream would allow a 3rd party to infer and alert users who are the subject of an investigation.

With the launch of this service, Canary Watch wins the 2015 Wild Duck Privacy Award. This is the type of cleverness that we like! Why? Because it enhances transparency and helps everyone to control their own privacy, if they choose to do so.

Wild Duck Privacy Award

Further reading: Activists create website to track & reveal NSA, FBI info requests

Can Saudis say “Je Suis Charlie”?

Update: This article was written 2 weeks before the death of the Saudi leader

On Jan 23, (Friday morning, local time), Saudi King, Abdullah bin Abdulaziz al Saud, died. His half brother, Salman bin Abdul-Aziz Al Saud, ascended to the throne as expected. He promptly assured the international community that policies, alliances and contracts would continue as before.

Je Suis CharlieThe Saudi government is publicly standing with France in condemning the slaughter of editors and cartoonists at Charlie Hebdo, a satire magazine. They were gunned down in the name of defending the prophet’s honor.

Of course, the governments of Saudi Arabia, Tunisia and Iraq are waging war against extremist group Islamic State with expanding air and ground support from a US-led international coalition. Yet, I am sickened by the irony of their “outrage”.

saudi-arabia-domestic-violence-sThe Saudis have no compunctions in savagely beating Raif Badawi for the crime of promoting free speech and debate. They have no problem beating women who drive a car or who travel without a male relative. We must take stock of our affiliations. It’s time to run with those who share our ideals and who appreciate a common humanity. The Saudi royals are neither just, moral or humane.

The fact that so many in the west consider the Saudi kingdom to be moderate or “a friend” is both ironic and a travesty. These are barbarians with starkly warped ideals. Saudi Delegate at UNThey are as backward and ruthless as those who slaughtered the journalists at Charlie Hebdo in Paris. Both groups respond to free thought and debate with righteous violence.

It’s time for western governments and NGOs to recognize that the Saudis are no more evolved than the Ayatollahs in Iran or the Imams and Muftis who promote and export Sharia Law the word over.

Consider the relationship of China with the US and Canada. The Chinese are a major trading partner, but few would suggest that this partnership indicates a shared kinship of political ideology or compatible individual freedoms. China’s government may change some day, but for now, modernization is limited to their economy and with a slightly heightened awareness of environmental issues. Democratic process and Personal freedoms be damned.

Saudi FlagLike China, the Saudis are our temporary trading partner. We must not confuse trade or even military cooperation with friendship and we must constantly reevaluate the limits of our business and financial arrangements. Unlike China, Saudi Arabia bankrolls extremism and exports intolerant ideology that destabilizes the global community. They are no better than ISIL, Boka Haram or the most radical of Sharia-inspired zealots. The Saudi government is barely shy of being an enemy to every free democracy. I am not against constructive engagement. But we should also understand an ideological adversary and maintain a comfortable distance.

Suggested Reading:

Governments head toward Bitcoin without realizing it

This weekend, Ecuador joined at least 5 other countries in walking toward a future that replaces paper and coins with cryptocurrency. But, are these national experiments likely to lead to the future that comes to mind when we think of Bitcoin?

AWildDuck offers this 2-sentence analysis:

  • Most governments and national banks that experiment with cryptocurrency have no intention of empowering citizens nor decoupling their monetary supply from political control
  • But in the end, that’s exactly where they are headed

Ecuador 5000 SucreThese national experiments are fascinating. Including Ecuador, there are at least 6 national efforts to embrace cryptocurrency around the world, including two in Africa, two in Latin America, Iceland and Israel.

It’s unfortunate that each potentate has created a disparate, internal and proprietary currency. Most of these territorial adopters have adopted neither a mathematical supply cap nor a permissionless blockchain. They buy into the legacy ‘wisdom’ that controlled inflation is necessary to stimulate spending and grow an economy.

Perhaps they see cryptocurrency as a an evolutionary mechanism to lower the production and distribution cost of coins and bills and thwart counterfeiting—just as  many countries have switched from paper bills to plastic. That’s a limited view of a very positive revolution in the making. The leaders and central banks of many countries seem to miss the point. It’s not just about new technology. It’s about free markets, limited supply, public trust and citizen empowerment. In fact, it’s all about growth, free markets and the expansion of wealth.

Hopefully, these experiments are just a step toward combining monetary policy with an open digital currency while fostering a grass roots revival of public trust… Eventually, governments will recognize that properly implemented cryptocurrency—one that is free to usurp the national mint—leads to increased faith in government. At least, if one’s  government demonstrates a willingness to decouple politics from monetary policy.

Ellery Davies is a founding member of CRYPSA, the Cryptocurrency
Standards Association. He is also chief editor at AWildDuck. Catch
all of his Bitcoin articles here.

Trust a Bitcoin Exchange without Regulation

Yesterday, after the spectacular failure and bankruptcy filing of Mt. Gox, the world’s largest Bitcoin exchange, Peter Finn, an IBM architect, launched a survey within a LinkedIN discussion group. The single question and multiple choice options were:

“In Light of MTGOX what level of transparency should there be for Bitcoin Exchanges?”

1. None. Exchanges Can do as they please
2. All Public Keys Disclosed and Signed
3. Show Public Keys, Source Code, Processes
4. Fully Regulated, Monitored, Audited

One day after it was published, respondents were decidedly negative on the option #1 (no regulation). They responded like this: 1–14%, 2–28%, 3–28%, 4–28%. I am among the 14%: No regulation. But only because Peter failed to cover all the bases. There is a far better option than regulation. But I am getting ahead of myself…

Regulation in a Decentralized, P2P
market, with Open Source Tools 

Suggesting that Bitcoin be “fully regulated” is like demanding that feral cats be licensed to procreate. Perhaps the point can be better illustrated by a metaphor closer to home: Perhaps we should regulate the use of file encryption or bit torrent clients. After all, they can both be used for circumventing copyright law or transmitting illegal content.

Governments are inevitably weakened by legislating against what cannot be regulated. The US has already tried to regulate encryption (PGP/Zimermann and Clipper chip) and they tried to legislate against the use of torrents (Actually, it was a prelude to torrents. Who remembers Napster?)

You can enact laws and regulations, but when you ignore motives, access and facts in evidence, you promote bureaucracy with a head-in-the-sand morality. Feral cats don’t read edicts. Their compulsion to reproduce is strong and they possess the tools they need to procreate. The same is true for bit torrent, encryption and a fully-distributed, low-cost, p2p payment mechanism that is adding users like a wild fire.

Considered in another light, Bitcoin was created to circumvent—or at least—transcend regulation. For many legitimate users, the whole point of a distributed, p2p network built upon open source tools is to unfetter users and disentangle government.

So the real question is not whether we should engage in useless legislation that ignores the facts on the ground. A better question is “How can we make the Wild West a bit safer?” I understand the need for public trust. ! But trust comes from transparency, accountability and outside audits. It doesn’t come from government regulation. Peter alluded to this in the very last sentence the text accompanying his sruvey. He said:

Certified-01

“Will users decide through consensus that
exchange XYZ chooses to fully disclose?”

Bingo! Create standards and practices—especially for security and transparency. Then, make it simple for anyone choosing an exchange or entering into a transaction to determine if the organization complies with industry best practice. Finally, offer a modest level of consortium insurance (to the user, or at least compliant exchanges), so that public trust can be tied to something tangible.

On Feb 25, one day after championing a joint statement from the few credible Bitcoin exchanges, Coinbase took a big step toward this goal when then invited a research analyst from a competitor to audit their internal security practices and randomly compare a customer transaction log to the public blockchain. The report includes an explanation of the test conditions and the results.

Laws are meaningless in a market that cannot be regulated. But industry standards, audits and certification can certainly step up to the task. They can build trust, confidence and stability. Just as importantly, they won’t interfere with the fraction of users who demand personal, private, p2p transactions without auditing or oversight. After all, we must never forget that these individuals started the revolution from which we will all benefit… even the “legitimate” commercial transactions that require transparency, security and an audit trail.

So, let’s revisit Peter Finn’s survey: What level of regulation should be mandated for Bitcoin exchanges?…

I propose Option #5: None. Exchanges can do as they please. But establish an easily verified, independent certification of standards & practices that can be tested at the URL throughout user interaction. Users can avoid the tool, add the tool, or ignore its warning. The certification (and a gut-simple way to see it & test it), empowers the user instead of the government. It also avoids entangling a new technology with unimaginable potential in red tape.

Incidentally, a group of individuals from this discussion group is working toward this goal right now. Although they have barely completed introductions, the Virtual Currency Collaborative Cryptocurrency Standards Association [CRYPSA] has hammered out a charter that will lead to a set of voluntary standards and practices to facilitate open, transparent, safe and auditable transactions within a community that often takes pride in their inherent freedom from regulation. Taming the Wild West will not be too difficult. And it won’t even be necessary to restrict gunslingers from walking into the saloon at high noon.

Bitcoin Adoption: Series of reactions

What is Bitcoin?

Bitcoin-05Sure—You know the history. As it spread from the geeky crypto community, Bitcoin sparked investor frenzy. Its “value” was driven by the confidence of early adopters that they hitched an early train, rather than commercial adoption. But, just like those zealous investors, you realize that it may ultimately reduce the costs of online commerce, if and when if it becomes widely accepted.

But what is Bitcoin, really? To what class of instruments does it belong?

  • The most ardent detractors see it as a sham: A pyramid scheme with absolutely no durable value. A house of cards waiting to tumble. This is a position of my close friend, JD, a former IRS auditor and the first to comment on this post below.
  • Many people recognize that it can be a useful transaction medium—similar to a prepaid gift card, but with a few added kicks: Decentralized, low cost and private.
  • Or is it an equity asset, traded by a community of speculative investors, and subject to bubble psychology? If so, do the wild swings in its exchange rate diminish its potential to be used as a payment mechanism?
  • Does Bitcoin have the potential to be a full-fledged currency with a “real value” that floats based on supply and demand? Can something that lacks intrinsic value or the backing of a bank or government replace national currency?

Regardless of your opinion about Bitcoin, it does one thing that few pundits dispute: Although the exchange value fluctuates, it reduces transaction costs to nearly zero. This characteristic, alone, is a dramatic breakthrough. It was achieved by virtue of its designer overcoming the “double-spend problem”.

Peering Into the Future?

Removing friction is certainly what it is all about. As a transaction medium, Bitcoin achieves this, but so does any debit instrument, or any account in which a buyer has retained house “credit”.

Bitcoin_pullback-sCurrently there is a high bar to get money exchanged into and out of Bitcoin. It’s a mess: costly, time consuming and a big hassle. Seriously! Have you tried using an exchange? Even the most trusted one (Coinbase of San Francisco) makes it incredibly difficult to get money in and out of BTC. Fortunately, this situation is gradually improving.

Where Bitcoin really shines (or more accurately, when it will shine), occurs at the time when more vendors choose to leave revenues in BTC, pending their own purchases from suppliers, shareholder payouts, or simply as retained savings.

When this happens, all sorts of good things will follow…

  • A growing fraction of sellers leave their bitcoin in their wallets, realizing that they will need to spend it for their own labor and materials.
  • Gradually, wild exchange-rate gyrations diminish—not because fewer people are exchanging money, but because the Bitcoin supply/demand value is driven more by actual commerce than it is by speculation.
  • Sellers begin pricing merchandise in Bitcoin rather than legacy units (i.e. national currencies)—because they are less anxious to exchange out of BTC immediately after each sale.

When sellers begin letting a fraction of bitcoin revenues ride—and as they begin pricing goods and services in BTC—a phenomenal tipping point will follow…

  • If goods and services are priced in BTC, then everyone involved saves money and engages in transactions more efficiently.
  • If goods and services are priced in BTC, then the public will begin to perceive exchange rate volatility as a changing dollar rather than a changing bitcoin.
  • Eventually, vendors will begin spending the BTC that they acquire in commerce (or paying staff in BTC), rather than converting quickly back to national currency. More than anything else, this will transform Bitcoin into a stored value unto itself, and not just an exchange chit. This may seem to be a subtle footnote to adoption, but the ramifications are great. That earthquake is the world gradually moving away from centralized treasury-issued bank notes and toward a unified and currency that we can all trust.

People, everywhere, will one day place their trust in a far more robust and trustworthy mechanism than paper promissory notes printed by regional governments. A brilliantly crafted mechanism that is fully distributed, p2p, transaction verified (yet private), has a capped supply and is secure.

What Then?

O.K. So we believe that Bitcoin is the future of money and not just a replacement for credit cards. But what does this really mean? Can the series of cause-and-effect be extrapolated beyond widespread user adoption? Absolutely! …

Adoption of Bitcoin as a stored value (that means as a currency) leads to the gradual realization among governments that Bitcoin is not a threat to sovereignty nor even to tax policy. Instead it presents unbounded opportunity: The opportunity to stabilize markets, eliminate inflation, reduce costs and restore public trust. In short, Bitcoin will ultimately level the playing field, revive entire economies, transform the role of government, and save consumers and businesses billions of dollars each year.

Did I mention that Bitcoin is the future of commerce and a very possible successor to legacy currencies? Aristotle must be smiling.

Lease rooms in the US Treasury to pay off some of the debt brought about by inflation

Uncle Sam can lease the US Treasury building to pay off debt brought about by inflation

Is Bitcoin subversive?

The debate on whether Bitcoin presents a credible opportunity to become a world currency has two components…

You could add a dozen other discussion points, such as “Is the math reliable?”, “Will it be outlawed by government X or Y?” or “How can a virtual fiat that lacks intrinsic value ever be a value store?” But for this discussion, we flush out the two remaining questions of viability that keep insiders awake at night:

• Can it be adopted as a transaction medium, like a gift card or credit card?
• Can it be accepted as a value “in and of itself”, based simply on supply & demand?

Most early adopters and even some governments acknowledge that a historic time may be upon us. It certainly appears that the time may be ripe for a gradual shift to secure, electronic currencies, whether by design or by a groundswell of adoption.

LinkedIN icon (3D)-sI am a frequent contributor to a LinkedIN discussion group that is a place of intense debate. Participants are cryptocurrency enthusiasts, and so the debate doesn’t address the viability of Bitcoin as a valid mechanism. We all believe that adoption is likely—at least as a transaction medium. Rather, our debate is focused on adoption mechanisms, geopolitical fallout and intrinsic value. Among issues that we address are:

1. Must a cryptocurrency be tied to a government backed fiat currency? — Or can it float based only on trust, supply & demand, and a supply that is capped but divisible?

Most in our group believe that it can float and be a value store on its own merits.

2. Does a cryptocurrency need a perpetual supply-growth mechanism to be viable? — Or can it serve commerce and act as its own stored value with fixed supply cap?

Bitcoin has a fixed, ultimate supply cap of 21M units. Some analysts and pundits are concerned that the supply cap will cause large scale deflation as it is adopted, even if used for only a fraction of Internet commerce. They believe that the deflationary mechanism is a liability. Most people in this group believe it is an asset—maybe, even, the whole point.

3. Could government regulation and disparate national rules eventually damn the whole virtual currency experiment?

Most people in this group believe that certain grassroots movements cannot be easily squashed. Moreover, even strong supporters of government believe that—in the long term—Bitcoin presents more of an opportunity than a threat. There really is no maxim that says national governments must be in charge of a treasury and tinker with value, growth and incentives through a national currency. Bridges can be built and wealth can be redistributed through tax policy and by other means. In the age of global commerce and the Internet, we are beginning to recognize that the trust upon which a currency relies can be based on something that is less political and more involatile than regional authorities.

4. Some wonder if a currency can survive without an underlying asset like gold, or the requirement that taxes be paid in the new form. But the US dollar is not tied to a specific asset and virtual currencies do not need to be the mechanism/unit for paying taxes. For those using any currency with a supply cap and growing adoption, dollar conversion will always get cheaper and cheaper.

Does Bitcoin facilitate crime?

Bitcoin-08One member of our group points to the black eye that Bitcoin acquires after news events such as the take down of Silk Road (a market for criminal activity), mismanagement at Mt. Gox, government intervention or high profile hacking. They wonder if an early association with greed, graft, drugs or p○rn○graphy is an inevitable step (or a necessary step?) toward wider market adoption.

That question is not only insightful—it is brilliant! On the surface, Bitcoin has no more role in facilitating crime than cash transactions. But the question is valid, because large amounts of cash are difficult to slip into and out of monetary systems, and it cannot easily be transmitted with impunity.

Vice and markets with prurient appeal often drive adoption of new technology. This connection is a widely recognized axiom by economists. In fact, it suggests a good reason as to why non-criminals should not be alarmed. Even though they represent the underbelly of a paradigm shift, Silk Road and other news making scoundrels or events are playing a role in the early diffusion of a fascinating technology. Law enforcement can address these things as they arise. But, they no more spell long-term doom than p○rn did for the VCR.

This same discussion participant opined that wild gyrations in the Bitcoin exchange rate (the relationship to national currencies) would retard adoption for quite some time.

Bitcoin Volatility: A Wild Duck opinion

The wild gyrations of Bitcoin are a byproduct of (any) rapidly growing and somewhat misunderstood technology. These will iron out. On this point, I am certain. Eventually, as a subset of Bitcoin users store the coins rather than convert them with each transaction, these gyrations will be perceived to be instability in the Dollar, Euro or Yuan and not with Bitcoin. That is, for now, vendors are setting a price in legacy currency (Dollars) and offering to Bitcoin buyers at the current exchange rate. Then, they are converting back out of Bitcoin. But a gradually growing body of vendors will hold their BTC either for future transactions, or because they trust and value it as a holding. This simple fact will gradually iron out the wild swings. As adoption grows; as supply and demand find a reasonable meeting point; and as individuals retain their holdings, the volatility will abate.

The Virtual Currency Collaborative

Incidentally, a newly formed collaborative was formed earlier this week by members of the LinkedIN group, Bitcoin P2P Digital Currency (same thread). It is already playing a role in the long term viability of Bitcoin. These entrepreneurs are defining mechanisms and policies that will ensure that Bitcoin is just as friendly to business and commerce as it seems to be for parties to anonymous or unreported transactions. The Virtual Currency Collaborative (working title—the developer’s site is still under wraps), is the working group that will specify secure, trusted protocols and mechanisms for legitimate businesses everywhere. These businesses often require user identification, escrow, recourse and the support of audits & forensics.

China creates a Bitcoin buy opportunity

When governments seek to inhibit, retard or ban a grassroots movement, it almost always has the opposite effect. Official acts of suppression tend to fuel publicity and growth by shining a light on the activity or venue that some wish to suppress.

The US government apparently knows this. Perhaps that is why a Justice Department official said on November 18 that Bitcoins can be a “legal means of exchange” at a U.S. Senate committee hearing.

  • Mythili Raman, acting assistant attorney general at the department’s criminal division, told the Committee on Homeland Security and Governmental Affairs “We all recognize that virtual currencies, in and of themselves, are not illegal”.
  • Federal Reserve Board Chairman, Ben Bernanke, told the Senate committee that the U.S. central bank has no plans to regulate the currency. He wrote to lawmakers: “Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market”.

Of course, as with any monetary authority, the US government needs to preserve public faith in the dollar, and also avoid an exodus to digital currencies, even if used only for online transactions. But rather than attempting to ban individuals from investing in Bitcoin or using it as a currency, the US subtly discredits Bitcoin by placing fear and doubt in the minds of would be traders. For example, in this interview, former fed chairman, Alan Greenspan, explains with remarkable clarity why he believes it is foolish to accept Bitcoin as a currency.

Dr. Greenspan is smarter than me and I am certain that he believes what he says. But I respectfully disagree that trust comes only from the Aristotle doctrine of intrinsic value. Even without the backing of a trusted government or bank, investment value can arise from a combination of provable scarcity and widespread recognition.

Short term investment?  —  or
Long term exchange medium?

I prefer to study Bitcoin as an emerging global currency rather than as an investment vehicle. But even as an investment, its potential is inextricably linked to the likelihood that it will catch on as a currency—at least in some sectors or in some countries. So, let’s look at this possibility…

The long term viability of Bitcoin as a currency depends upon sustained trust by a large number of vendors and consumers. That is, buyers and sellers must feel that there will be broad or growing audience to accept the coins that they accrue, and that the value of their savings—or even of daily receipts—will not be eroded by inflation or a sudden lack of faith. (I am not too concerned with wild swings in exchange value during early adoption. These tend to be overlooked by “bleeding edge” adopters or at least the significant fraction of them that have a strong stomach).

Why is Bitcoin falling?

Bitcoin_pullbackThe short answer: it’s not falling for long. It is adjusting in response to politics, but it almost certainly will return to its historical trend.

The upward path of Bitcoin is already the stuff of legend. The exchange rate with the US dollar rose from nothing to $12 in the first 2 years of trading. This year, it peaked at $1240 on Thanksgiving Day in late November, but then pulled back as low as $650 over the next week. The fall was precipitated by a warning from the Chinese government to its citizens. Their announcement did not ban owning or trading Bitcoins, but it warned citizens that it was a very risky investment and also that it must not be used as currency in any transactions.

After pausing at around $700 for a day, it returned to a range of $850~1050 for most of December. But there was another sudden drop last night, on December 17. It pulled all the way into the high fours before settling between $550 and $600. (This posting was written on Dec 18).

But what happened last night? What caused the second nosedive in this graph?

China_effect_on_Bitcoin

Answer: China is at it again. It is using direct engagement rather than subtle persuasion in an attempt to block gradual adoption of a decentralized, uncontrollable phenomenon. Last night, China’s biggest Bitcoin exchange was barred from accepting new Yuan deposits. But it was not shut down. Citizens can continue to sell and trade Bitcoins that are already in their account and the exchange can still accept cash from outside the country.

Some would say that the downward pressure is a natural response to law and public policy. Wild Ducks augment this argument by pointing out that the fall is a temporary and technical effect. More to the point—we see it as a buying opportunity.

Of course, I acknowledge the short term risk and I continue to downplay the role of Bitcoin as an investment. But I can’t shake the notion that early adoption leads to appreciation over the course of a maturing commodity. I also can’t shake extreme excitement over a property of Bitcoin that places it head-and-shoulders above government and bank-backed currencies: The supply is capped. It simply cannot be printed, inflated, or used as a political tool. It also resists efforts of governments to attack personal wealth as the basis for mandatory redistribution, at least without full and wholehearted consent of the governed.

Given the choice of using it as currency later or owning it earlier, why not do both?

Further reading:

Ellery Davies is acting technology editor for AWildDuck. He dabbles in law, economics, and public policy and has been fascinated with Bitcoin for years.

Debt, Obamacare & Recurring Fiscal Crisis

Senator Ted Cruz leands an assault on Obamacare

Senator Cruz: Assault on Obamacare

There are a plethora of opinions about the latest fiscal crisis. Take your pick. Senator Ted Cruz certainly has an opinion, and he will toss America down a hole to prove it.

Actually, the senator and I share significant common ground. We are both deeply concerned about debt and uncontrolled spending. But, beyond these fundamentals, the senator’s foot-shooting tactics, including a quasi-filibuster, doesn’t inspire confidence.

How, do you suppose, that our creditors view these spams of democratic process? Do you think that they worry about default? Do they care if our economy recovers?  I suspect that – like consumer creditors – they attempt to influence behavior and policy to achieve both a payment stream and a long term outcome that is, foremost, favorable to the creditor? Just as with Greece, creditors are certainly entitled to call the shots.

Today, Forbes contributor, Eamonn Fingleton offered an analysis and explanation of the creditor decision process that I find refreshingly clear. It is, quite probably, an accurate prediction of cause and effect as applied to our current fiscal crisis.

Perhaps the reason that Americans lack the intestinal fortitude to ride out a long term investment is because, as a nation, we have been debtors for too long to recall what it is to be an investor!

Americans delude themselves with the fantasy that that a massive debtor has cards to play. They imagine that a creditors’ need for (the debtor’s) continued solvency and unabated consumption gives them strength. But those things aren’t as critical as Americans think. They can always find new customers elsewhere.

It’s a big world and trade barriers are coming down everywhere. The American dream can still be achieved—even with a roaring, world class economy. But to get there from here, we must recognize that we borrowed against our future while the Chinese produced and lent and while the Arabs sucked down our borrowed cash to satisfy our self-imposed oil addiction.

Those events have consequences. Like it or not, the Chinese have earned the upper hand. Today, they hold thousands of dollars of debt over every one of us. This turn of events is not “unfair”. In fact it is wholly fair. That debt is inherent in your TV, smart phone, shoes, toys, auto parts and underwear. Throughout the 90s and 00s, we moved our manufacturing, infrastructure and innovation off shore. All the while, we soaked up Chinese toys, clothes, gadgets, and raw materials and – of course – Mideast oil. We remained faithful to our post war credo:  Consume, consume, consume!

We must stop thinking of ourselves as entitled to anything other than our freedoms, the separation of powers, Hollywood, the Internet and our past glory as historical capitalists (up through the first ⅔ of the 20th century). We are also entitled to our pretty, foreign-made gadgets adorned with American logos. We got these things, because we handed a pawn broker our marker. He trusts us, because he respects the family name. But he is surprised that we keep bowering to pay the bill. In fact, we aren’t really paying the bill. We are simply racking up debt and ignoring the principal.

Now, it’s time to pay our bills. President Obama wants to begin this process while also ensuring that we include universal access to heath insurance. Well, O.K. it’s not really universal access it’s mandatory buy in. Does Obamacare represent socialiaztion of health care? Probably, Yes! Is it the right move in a down economy? Who knows? Do most people support it? I don’t think that we can get a clear answer to that last question, but it certainly seems split across party lines.

But here’s the deal, Congress. Obamacare is a fact! The act was passed and the law was upheld by the highest court. Since then, it has survived dozens of attempts to overturn it. It’s time to apply your remarkable energy to the people’s business!

The US Congress behaves like a whiny child who wants to grab the soccer ball, furlough the players and shut down the stadium. It’s time to accept defeat without using terrorist tactics to make a point. Few Americans want a socialist economy, but through due process, we have chosen to socialize health insurance. Let’s review the logic:

  • I feel that the time for due process is over.
  • You are determined to spend all of your time and resources trying to overturn a done deal.
  • I think that you are crazy.

And it’s very unsettling to lose confidence in our elected officials.

Ellery on ObamacareListen up, Congress! We, the people, don’t like debt. We get your point of digging in. The constant debt increase is not a merry-go-round. It is more like a falling roller coaster with no tracks ahead. We must apply the brakes, and very soon. We get it! But there are two things that we cannot avoid: Paying creditors and accepting political defeat on just how a reduced budget is put together.

Get over it! Accept that you cannot defund a program that was passed and approved. One way or another, we must still deal with the spiraling cost of health care. Now get to work, dammit! Tell us where we must cut the fat and get the job done!

German publisher capitulates to press censor

Today, after a public and legal campaign by The Simon Wiesenthal Center, a German publisher agreed to shut down a pulp magazine that illustrates tales of German soldiers and their adventures during World War 2. [Algemeiner]    [New York Times]

Der LandserBauer Media has published Der Landser since shortly after the Nürenburg trials. Early in the Magazine’s history, some material—or at least its inspiration—was drawn from narratives of former SS officers. Early subscribers included history buffs and strategy enthusiasts. But critics claim that, in recent decades, consumers more likely include Nazi sympathizers and hard core Neo-Nazis. Far from innocent war pulp, they assert that that the publication fans the flame of prejudice and intolerance.

Actually, the magazine looks more like a serial comic book than serious literature. In my opinion, it is a close cousin to those 1960s “Detective” magazines that titillate readers by sensationalizing and exaggerating lurid back-stories of serial murderers and rapists. You know the type—a woman in a bra adorns the cover. With fear on her face, a dark shadow or knife-wielding man lurks behind her. For added effect, the man is almost always shirtless, just like his victim.

Detective Magazine

Der Landser doesn’t need a vulnerable, partially-clad woman on their covers. Instead, they show German soldiers gazing from a trench at Allied troops in the distance and describe Aryan heroics in defending the Fatherland. Enormous planes with Swastikas on the tail provide cover from the skys.

The problem, according to The Simon Wiesenthal Center, is that individuals or army units involved in the stories were provably involved in unspeakable atrocities. Stories that glorify them violate a German, post war, hate law.

There is no doubt that The Wiesenthal Center’s successful effort to banish publication places a spotlight on hate the glorification of mass-murderers. But does that light contribute to reason and debate—and, ultimately, to widespread education, civility and tolerance? I certainly appreciate their position and motive. The Weisenthal Center is all about teaching tolerance. So it certainly seems like their actions are laudable…

The Wiesenthal Center’s goal is laudable, but I question their method. In fact, I feel that it subverts the goal.

I cringe when any goal—even an honorable one—is attained by exploiting the German law which prohibits a free press. In this case, the publisher agreed to fold the magazine, not because it was hurtful or hateful, but because an American organization used an ill-conceived gag-law to put them in fear of their own government. Yes. In Germany, it is illegal to deny the Holocaust and it is illegal to promote Nazi history or even to buy & sell most Nazi paraphernalia. Any display of Nazi symbols or Hitler artifacts is also illegal.

Moreover, Germany has enacted repentance by telling its citizens what not to do and how they must behave in matters of expression. By forbidding citizens to trade historical symbols of hate on Ebay or gaze on the twisted cross in a school room, they contribute to ignorance and limit discussions which might guide a postwar generation to better appreciate the sins of their ancestors.

A sister law to this press prohibition forbids Holocaust denial any platform, public or private. Is this supposed to limit hate or ignorance? It does not. It doesn’t even reign in denial. Rather, it drives intolerance underground where it continues to fester. How can the German government fail to recognize this? Germany invented rocket science. But here is a simple axiom that doesn’t require a rocket scientist: Hate and intolerance are countered by a bright light. Exposure, explanation, evidence and rebuttal. Apparently, under German law, these things are verbotten.

In retrospect, I am not too surprised that the German government fails to understand the mechanisms of hate, but I expect more from The Simon Wiesenthal Center. They should not, themselves, use a restricted press and an intolerant government as tools of education & outreach. What’s more? When all is said and done, it simply cannot work.

Can George Zimmerman be Both Killer & Hero?

This Blog covers many topical events, often drawn from the headlines. But some readers have noticed that I have had nothing to say on a high-profile news story concerning an interracial shooting and the subsequent trial of George Zimmerman.

In case you have been living under a rock or are reading this posting more than 10 days after the trial (the maximum duration of human retention), then let me refresh your memory:

  • Zimmerman’s community has recently experienced break-ins and robberies
  • He participates in a community watch (with zealous over-enthusiasm)
  • He is licensed to carry a concealed gun
  • He called 911 about a suspicious individual
  • He decides to investigate on his own
  • Approaching an unarmed African American youth, the two get into a fight
    (the trial was all about who started the fight)
  • Zimmerman kills 17 year old Trayvon Martin, later claiming self defense
  • The victim was lawfully living with a relative in the same community and was walking home after buying candy from local store

George ZimmermanZimmerman claims that he exercised his right to defend himself from mortal harm. A great many people say that he was never threatened and had no right to shoot.

Yes, I have refrained from comment — and yes, of course, I have an opinion. But it’s not black and white (an unintended pun). That is, it is not sufficient to create a “For-or-Against” piece in my über-opinionated and superlative style (some would say it is a smart-a*s style).

For the record, I followed the news as it unfolded and I watched the trial on television. I didn’t write in AWildDuck because the trial was inconclusive and rife with contradictory testimony. No matter what is your position on Zimmerman, it’s difficult to imagine any decision other than acquittal. Of course, this doesn’t mean that he is innocent.

And so this posting is not about the justice or lack of justice for Zimmerman. Rather it is about something that happened just this week…

Mark Gerstle-s

Mark Gerstle: Off my lawn!

Four days after George Zimmerman was found “Not Guilty” of 2nd degree murder in the killing of Trayvon Martin, he was dodging the press and, potentially, a mob of angry armchair jurors turned vigilante. (Certainly, he has reason to fear mob justice). But still, he manages to get out and about…

This week, Zimmerman pulled two motorists to safety from an overturned car on a Florida highway. The car was in immediate peril from traffic and could have easily burst into flames. Mark and Dana Michelle Gerstle were very appreciative. In fact, they were so appreciative that they scheduled a news conference to publically thank Mr. Zimmerman.

At least, that’s what they planned. After thinking about it (and perhaps consulting with friends, colleagues or a three year old), the Gerstles cancelled the public show of appreciation and refused comment or requests for interviews.

I won’t argue with their right to chase reporters from their lawn. A gaggle of hungry reporters can be as unpleasant as a swarm of paparazzi. But why would Mark Gerstle cancel a public statement of appreciation that he had initiated? Did George Zimmerman say or do something after the fact? No! Apparently, they are concerned with either what he did before the fact – or perhaps they honestly fear for their safety. They have suggested that they don’t wish to contradict popular sentiment and that individuals angry at Zimmerman could transfer hostility onto them.

I say Hogwash! Mark and Dana Gerstle are ungrateful b*stards. My opinion is unrelated to the Trayvon Martin shooting or the Zimmerman verdict to acquit.          Continue below photo…

I4 at Rt 46: The crash was less than 1 mile from the shot that killed Trayvon Martin

Can one individual be both evil and heroic?

If accurately reported, then the Gerstles have misguided advice or thinking process…

If they appreciate what Zimmerman has done and if they would have announced that appreciation in the absence of notoriety, then they should do so—regardless of popular sentiment, or their own opinions on his infamous shooting.

That is, even if one believes George Zimmerman is a racist and a murderer, they should not withhold recognition of meritorious behavior (in this case, an act of valor), if that act is unrelated to other aspects of his life.

I am not convinced that George Zimmerman had cause to kill Trayvon Martin, and I am reasonably certain that he profiled and even stalked the youth. The verdict in Florida does not sit easy with me. But none of this has anything to do with his successful effort to rescue individuals trapped in an overturned vehicle after a motor vehicle accident.

What on earth are the Gerstle’s thinking?! Do they really believe that acknowledging Zimmerman’s selfless act lets him off the hook for killing a young man? Do they believe that acknowledging his lifesaving intervention will cause rioters to target their home? Do they fear that it will appear that they are endorsing the Florida verdict to acquit?

None of these fears are relevant or even reasonable. The Gerstles are unappreciative clods. They should look deep within their hearts and ask themselves if they would have preferred to stay in that car.

So sayeth Ellery. What’s your take?
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Here is an ethical conundrum…

Would I stick by these convictions if, say, Hitler had committed an individual act of heroism in the midst of the Holocaust?

No…Probably not. I realize that this presents a logical contradiction and a moral dilemma. But Hitler’s acts were not committed in the ‘2nd degree’. For populations that he targeted (a lesser species in his mind), the premeditated monstrosity of ethnic and social cleansing was justified. Although difficult to explain, a seeming act of kindness from the hand of a monster has no merit or historical consequence, because he has no sense of kindness.

But set aside my take-back on the Nazi angle. I wonder what readers think about the decision by Mark and Dana Gerstle to rescind recognition for a man who quite possibly saved their lives. You already know what I think. How about you?

Update: NSA surveillance, Bitcoin, cloud storage

Just last month, Edward Snowden was honored with our first annual Wild Duck Privacy Award (we hope that he considers it an honor). The vigorous debate ignited by his revelations extend to the US Congress, which just voted on a defense spending bill Edward Snowdento  defund a massive NSA domestic spying program at the center of the controversy.

Although the bill was narrowly defeated, it is clear that Snowden has played a critical role in deliberative policy legislation at the highest level of a representative government. Even if this is the only fact in his defense, why then – we wonder, is Snowden a fugitive who must fear for his life and his freedom?

Snowden saw an injustice and acted to right a wrong. His error was to rely solely on his own judgment and take matters into his own hands, without deliberative process or oversight. But since it is the lack of these very same protective mechanisms for which he engaged in conscientious objection, the ethical dilemma presented a Catch 22.

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Stacks of BitcoinRegular readers know that we love Bitcoin. We covered the stateless currency in 2011 and 2013. Just as the internet decentralizes publishing and influence peddling, some day soon, Bitcoin will decentralize world monetary systems by obliterating the role of govern-ments and banks in the control of money flow and savings. Why? Because math is more trustworthy than financial institutions and geopolitics. You needn’t be an anarchist to appreciate the benefits of a currency that is immune from political influence, inflation, and the potential for manipulation.

Now, comes word of a Texas man charged with running a $60 million Bitcoin Ponzi scheme. The story is notable simply because it is the first skullduggery aimed at the virtual currency — other than internet hacking or other attacks on the still fragile infrastructure. Should we worry. Absolutely not. This story has little to do with Bitcoin and falls squarely under the category of Caveat Emptor. Widows and orphans beware!

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bitcasa-sIn February, we wrote about Bitcasa, the upstart cloud storage service with an edge over diver-sified competitors and other entrenched players: Dropbox, Google Drive, Microsoft SkyDrive, SugarSync, Apple iCloud, etc. WildDucks learned how to get truly unlimited cloud storage for just $49. Now they are launching unlimited cloud storage in Europe starting at €60 per year.

Bitcasa still captures our attention and sets our pulse racing. While we are disappointed that it lacks the RDDC architecture that will eventually rule the roost, their Infinite Drive technology is a barn burner. More than ever, it is clear that Bitcasa is likely to displace or be acquired by their better known brethren.

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Drew Houston-01sWe also wrote about Dropbox, but that posting wasn’t really a review. It was our plea to CEO, Drew Houston (shown at left), to adopt a fully distributed and reverse cloud architecture. That effort failed, but it is still our favorite of the entrenched players. More suited to pin stripe corporate adoption, but in our opinion, not quite a Bitcasa.

In a previous article, we introduced lesser known cloud startups with clever and unique architect-ture that yield subtle benefits: SpaceMonkey, Symform and Digital Lifeboat. That last one was in need of a life preserver. It flopped. But the IP that they created in the area of distributed p2p storage management will live on. We will all benefit.

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Stream Music Flowchart-s2Finally, in May we ran down the benefits of cloud music players and their likely future of streaming your own personal library of movies. Now, Jeff Somogyi at Dealnews has created a nifty flowchart to help you decide among many vendors in a crowded market.

Of course, a discussion of Bitcasa, Dropbox, SpaceMonkey and RDDC wasn’t our first discussion of cloud storage. Shortly after AWildDuck launched back in 2011, we applauded PogoPlug and their ilk (Tonidoplug, Dreamplug, Shiva, and other genres consumer grade network attached storage with internet access. They let you create personal cloud services and even stream media from a drive or RAID storage device attached to your home router.