NASA director reverses on climate change, after 1 month

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

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

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

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

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

Sometimes, flip-flopping is a good thing

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

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

What changed?

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

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

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


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

Extra PCs laying around? Why not mine Bitcoin?

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

Question

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

Answer

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

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

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

The problem arises from a combination of things:

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

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

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

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


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

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


Bitcoin mining farms —

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

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


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

Shifting Politics: Perhaps Texas can be redeemed, afterall

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

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

But seriously. What’s not to love?

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

The Demographics

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

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

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

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

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

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

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

What will it take for Bitcoin to be widely adopted?

Will governments ever approve of Cryptocurrency?

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

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

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

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

Many pundits and analysts have the impression that shifting to cryptocurrency—not just as a payment instrument, but as the money itself—will never be supported by national governments in spite of its popularity, the popularity that has led to software like Gunbot to be introduced to automate a person’s trading of cryptocurrency. A popular misconception suggests that a cryptocurrency based economy has these undesirable traits:

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

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

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

How Does Crypto Help Governments?

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

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

Yes. Eventually…

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

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


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

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

Technical Analysis: Can it predict future asset value?

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

Related:


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

What Countries use US Dollar and Why?

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

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

What gives value to paper?

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

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

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

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

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

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

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

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

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

Why would any country substitute the currency of another country?

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

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

Is Adoption of the US Dollar growing around the world?

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

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

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

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

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

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

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


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

Selfish Ledger: Google’s mass sociology experiment

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

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

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

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

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

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

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

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

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

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

Credit for snagging this video: Vlad Savov @ TheVerge

The USD is Tulip Mania—BTC is not

Please don’t pay any attention to this posting. It is not for you… *

This graph presents indisputable fact: It compares US dollar growth as reported by the US government and Bitcoin growth (for all time), extrapolated by pure math.

I wish that this would put to bed the fake news, conspiracy theories, and “nothing backs it” nonsense. Unfortunately, seismic shifts in architecture or process take time for society to understand and accept. Early adopters will be the fortunate buckos. Timid or clueless denizens will complain bitterly about the unfair advantage of those who wise up before it hits a 6 figure exchange rate. Eventually, comparisons with legacy currencies will be utterly meaningless. It will become the currency. It will be the gold-pressed latinum of universal recognition and intrinsic value.

15 years from now, some will look back on our era and claim that the Winkelvoss twins were lucky. Risk, patience and an understanding of economics is not ‘luck’. They have the gift of prescience.

Bitcoin cannot be manufactured. Despite it being open-source and easily copied, it is very unlikely to be displaced by an altcoin or ICO. The fact that there will never be more than 21 million original bitcoin presents incredible opportunity to the frugal and wise—for a short time.


* Hopefully, few people will heed the siren call. Investing is Bitcoin might be good for you, but it is bad for the community. How so?! The more that individuals or institutions hoard, speculate or invest in Bitcoin—as opposed to driving adoption by actually using it—the longer it will take to gain traction as a functional payment instrument, or as the money itself.

So, this article is not for you. Move along. These aren’t the droids you’re looking for.

Credit: (title & image): Peter Bergstrom
Did you catch the omage to both Star Trek and Star Wars? Look again

Where are the aliens? Solutions to Fermi Paradox

The Fermi Paradox poses an age-old question: With light and radio waves skipping across the galaxy, why has there never been any convincing evidence of other life in the universe—or at least another sufficiently advanced civilization that uses radio? After all, evidence of intelligent life requires only that some species modulates a beacon (intentionally or unintentionally) in a fashion that is unlikely to be caused by natural phenomena.

The Fermi Paradox has always fascinated me, perhaps because SETI spokesperson, Carl Sagan was my astronomy professor at Cornell and—coincidentally—Sagan and Stephen Spielberg dedicated a SETI radio telescope at Oak Ridge Observatory around the time that I moved from Ithaca to New England. It’s a 5 minute drive from my new home. In effect, two public personalities followed me to Massachusetts.

What is SETI?

In November of 1984, SETI was chartered as a non-profit corporation with a single goal. In seeking to answer to the question “Are we alone?” it fuels the Drake equation by persuading radio telescopes to devote time to the search for extraterrestrial life and establishing an organized and systematic approach to partitioning, prioritizing, gathering and mining signal data.

Sagan explains the Drake Equation

Many of us associate astronomer Carl Sagan and Hollywood director, Stephen Spielberg, with SETI. They greased the path with high-profile PR that attracted interest, funding and radio-telescope partnerships. But, they were neither founders nor among the early staff. The founders, John Billingham and Barney Oliver assembled a powerhouse board of trustees, which included Frank Drake (Sagan’s boss at Cornell), Andrew Fraknol, Roger Heyns and William Welch. Among first hires were Jill Tarter, Charles Seeger, Ivan Linscott, Tom Pierson and Elyse Murray (now Elyse Pierson). Of course, Carl Sagan was advocated for the search for extraterrestrial intelligence, and he joined SETI as Trustee near the end of his life.

In The Birth of SETI, Tom Pierson reminisces about the early days of SETI. Also check out SETI pioneer, Jill Tarter, explaining how to write a message that will be understood by an alien civilization.

There is a lot of lore and love surrounding SETI, because its goal pulls directly on our need to understand our place in the cosmos. This week, SETI is going through a bit of transformation as it prepares for the next chapter in the search. So, where are the aliens? Are the funds and brainpower spent on peeping for aliens an investment in our own civilization, a form of entertainment, or a colossal waste?

This fascinating video offers 10 plausible solutions to Fermi Paradox. Fascinating, that is, if you can get past John Michael Godier’s dry, monotone narration. But. take my word for it. The concept and the content is exciting.

Does mystery of Quantum Physics prove God exists?

Ironically, my more popular posts are ones furthest from my passion and core interests. They are larks—never intended to go viral. This is about one of them…

Apart from family, I typically steer clear of religious topics. I identify with a mainstream religion, but it is completely beside the purpose of this Blog, and it is a personal affair.[1]

Yet, here we discuss a religious topic, after all. Let’s get started…


Question

Do atheists agree that the fact that we can’t understand quantum physics is at least somewhat evidence of Allah?

 

An Objective Answer

Do you assert that a failure to understand something is evidence of God?

I don’t fully understand a triple-Lutz (ice skating) or the Jessica stitch (needlepoint)—and I certainly don’t get why an electric dryer leaves moisture on light weight linens, when a gas dryer gets them bone-dry before the plush towels.

Is my inability to solve these mysteries evidence of Allah (or Yahweh, haShem or Y’Shewa)? Of course, not! It has nothing to do with God or religion. The fact that I don’t quite grasp every complex task or unexplained science is not evidence of God, it is evidence of my own ignorance.

On the other hand, I am fortunate to understand quantum physics—both academically and from an innate perspective. That is, behavior of waves and matter on a subatomic scale make perfect sense to me.

You would be correct to point out that certain quantum behavior seems to violate common sense:

  • Probabilistic behavior. (i.e. Schrödinger’s cat is both dead and alive at once)
  • Measure photons or electrons as a wave, and it no longer behaves like particles
  • Entangled electrons (Einstein called it ‘Spooky action at a distance’)
  • The EPR Paradox (entanglement experiment demonstrates causality based on future knowledge. It seems profoundly unbelievable!)

But these things only seem strange, because we do not experience them first hand given our size and our senses. As the math and the mechanisms are understood through research and experimentation, the behavior begins to fit within physical laws as we understand them. Then, we can extrapolate (predict) other behaviors.

For example, as we begin to understand quantum mechanics, we can design a computer, an encryption mechanism—and eventually a teleportation system—that exploits the physical properties and laws.


1 I do not appreciate the outreach of evangelism. In my opinion, religious discussion is best amongst a like-minded community.

An argument against Evangelism

This isn’t a rant against personal faith. It is a rant against the idea that you should ‘push’ your views on unrelated individuals, especially strangers—even if you believe that your view offers salvation.

Anyone who has lived in a home or apartment, dormed at a college or housed in the military has been approached by well-intentioned Mormons, Jehovah’s Witness, Baptists, Hari Krishna or other evangelicals. I hold nothing against such missionaries. They are marketing conscience and faith in what they see as an act of love. Unfortunately, society is worse off for this type of love. They are horribly misguided. They mean well and they may have the inside track on creation, but their understanding of equality and civil liberties is naïve.

Is this a position of Intolerance? — Quite the opposite!

Even in far off lands, instant communication, air travel and nuclear weapons render our fiefdoms meaningless beyond the realms of taxation, defense, and road repair. We live in a pluralistic melting pot. The shrinking planet demands that we coexist. I have always felt that the only thing of which we can be intolerant is intolerance itself.

So, why do I shun religious outreach? Because, arguing that your book is better than mine can only be won on faith—and faith is both personal and unprovable. Sure, tolerance is often built on religious ideals. To function as a society without killing each other, tolerance is a necessity. But, tolerance and humanity are also built into the Golden Rule and every democratic constitution. Any attempt to persuade others to adopt your core beliefs about origin, doctrine or blasphemy is pointless and an affront to everyone elses’ beliefs.

Whew! It took courage to get that off my chest. I hope that my friend, Hiawatha Bray forgives me.

What about the contradiction between science and religion?

I have never seen any contradiction. Only someone who believes that the Earth was created in the past 6,000 years ago sees a contradiction. That belief is as goofy as the sun orbiting the earth.

If there is a God, then I suppose it explains the energy and matter that surrounds us. And if this is the case, he followed up by proclaiming the finely tuned natural laws of physics and biochemistry, and set everything in motion. Oh rejoice in his splendor! Because, after billions of years, life arose—and we are the interim products of an expanding universe. It’s awe-inspiring, but it certainly presents no contradiction.

I don’t consider myself an atheist. And despite offering an agnostic explanation of the universe, my religion is my business and not yours. But, I certainly believe in science! I side with Bill Nye and the late Carl Sagan (he was my former professor). No one with a sense of their surroundings and an appreciation for facts can ignore that the Earth and the universe have existed for billions of years.

We may be the product of an intelligent God, but if we are, we will never know. We lack to tools to discern the question that predates all other questions. Pointing to ancient scripture is nonsense. The scripture was written by men, seeking to explain everything that they observed in their times. Yet, these men had a fewer facts about the universe than we have now. The faith that most believers associate with scripture is based on respect for the practices and beliefs of their parents.

Moreover, the men who created these book (the bibles of any religion), also created God. Why? To deal with mortality, explain tragedy, control the masses—or perhaps as a mental exercise. It may even be a byproduct of what they were ingesting and smoking.

What if Apollo 11 had failed? Nixon‘s undelivered speech

In 1969, William Safire was President Nixon’s speech writer. He wrote the short speech shown below, and delivered it to Chief of Staff, H.R. Haldeman. The speech was to be read by Nixon in the event that the Apollo 11 lunar lander failed to launch or that some other problem caused the lander or mothership to crash back onto the surface of the moon.

In 1969, the space race was at full throttle. Russians were first to launch a satellite, send a dog and a man into space,* and perform an extravehicular space walk. America was under great pressure to fulfill John F. Kennedy’s promise and beat the Russians in landing a man on the moon. Today, former engineers at NASA acknowledge that they believed the chances of such a catastrophe were more than 50%.

William Safire was a brilliant orator and linguist, known primarily as a columnist and journalist. He received the Presidential Medal of Freedom (from George Bush in 2006). He died in 2009.

The Apollo 11 disaster speech is pure poetry. It fits Nixon’s demeanor, while inspiring the public to continue support for exploration despite such a spectacular failure.

William Safire’s speech for President Nixon—in the event of a moon landing disaster:

Fate has ordained that the men who went to the moon to explore in peace will stay on the moon to rest in peace.

These brave men, Neil Armstrong and Edwin Aldrin, know that there is no hope for their recovery. But they also know that there is hope for mankind in their sacrifice.

These two men are laying down their lives in mankind’s most noble goal: the search for truth and understanding.

They will be mourned by their families and friends; they will be mourned by their nation; they will be mourned by the people of the world; they will be mourned by a Mother Earth that dared send two of her sons into the unknown.

In their exploration, they stirred the people of the world to feel as one; in their sacrifice, they bind more tightly the brotherhood of man.

In ancient days, men looked at stars and saw their heroes in the constellations. In modern times, we do much the same, but our heroes are epic men of flesh and blood.

Others will follow, and surely find their way home. Man’s search will not be denied. But these men were the first, and they will remain the foremost in our hearts.

For every human being who looks up at the moon in the nights to come will know that there is some corner of another world that is forever mankind.


* The US was first to send an animal into space. On June 11, 1948, Albert 1, a rhesus monkey, was launched on a V2 rocket. But this was a suborbital flight. It cleared the atmosphere but could not have sailed away from Earth’s gravity, nor even achieved orbit. The first animal to attain orbit was launched more than 9 years later. A dog, Laika, launched on board the Soviet Sputnik 2 spacecraft on November 3, 1957.

Source: Watergate.info

Is every Initial Coin Offering a Scam?

OK. Stop! Please, just stop! I get this question every day. More and more people asking about ICOs. I get it… I am an early Bitcoin user, I give blockchain presentations, I write a blog, and I work for a standards association. And so, this is my definitive response to a very pesky question.

Ron, in New York City reads this Blog. He asks this:

I work for an investment bank. Some banks, like Merrill Lynch, are hostile toward Bitcoin and other cryptocurrencies. Others, like Fidelity are dipping their toes in the water. And some, like Morgan Stanley speak with forked tongue—condemning and hedging at the same time…

My employer is preparing to embrace Bitcoin with gusto. Once regulatory guidelines become clear and unified, we will offer crypto trading, options, futures and margin accounts. I am already working on customer literature and compliance training. We will also use crypto as money in all operations—to pay staff & consultants or purchase supplies & utilities We will even accept Bitcoin and Bitcoin Cash as payment from clients.

So, please tell me: Why does our in-house crypto expert constantly warn our managers and clients that ICOs are scams? How can she condemn an emergent commodity? ICOs have sparked a massive new investment class. Are they really scams?

Listen up, Ron! Heed your crypto expert. Follow her advice. With very few exceptions, ICOs are all scams, plain and simple. They are not like Bitcoin or Ethereum.

Why are almost all ICOs scams?

Initial Coin Offerings are scams because of:

  • The way that they are promoted
  • What investors must do to profit
  • Their fundamental purpose: Dodge securities regulations, create MLM pyramids, or facilitate pump & dump. None are sustainable, ethical or legitimate goals!

For those intent on using, investing in, or advising others on ICOs, this article explains how to discriminate a scam from a credible and functional instrument. Note the list of traits just below the red “Scam” button. If the ICO that you are evaluating exhibits even one of these characteristics, treat it like The Plague or the Mark of the Beast. It is most certainly a scam.

Note that ICOs are not Altcoins. There is a big difference. Altcoins are forked from Satoshi’s blockchain code. They are open source, license free, permissionless, with a transparent mining history going all the way back to the genesis block. The ownership of all pre-mined coins is known and auditable. There is absolutely no MLM aspect to an altcoin. If there is any central or authoritative component, it serves only to aid in quicker governance decisions or to overcome the energy overhead associated with Proof-of-Work. There is never another valid excuse for an authority, because authorities are choke points.

Many altcoins are legitimate projects designed to trade value, or serve as a functional component of an IOT (Internet-of-Things) process. This is also explained in the definitive guide to Why ICOs are almost all scams. Some of the IOT altcoins attract speculators and hoarders seeking to profit from trades. This is unfortunate, and it interferes with the utility of the token (IOTA is a clear example). But, just as with Bitcoin, speculator interest doesn’t define a scam.

What about altcoins. Are they as toxic as ICOs?

Referring to my own definition, above, many altcoins—perhaps even most—are not scams. But, I am pretty picky on the altcoins that I recommend, because most of the clever features and functional improvements introduced by altcoins will be ripped and folded into Bitcoin. It is inevitable.

Apt metaphor for ICOs

After all, Bitcoin has an enormous lead, it has already achieved a two-sided network, and none of the altcoins are protected by patent, trade secrecy or opacity. By definition, they are free, transparent and without any licensing or proprietary features.

I was never burned by an ICO, but I have certainly consoled friends and colleagues who have been sucked into them. Unlike many columnists and consultants, I am not beholden to issuers. So, if your wondering what is an ICO? It is a puss-filled boil on your privates. You may quote me on that. The article linked above is honest, unbiased and definitive.

 

John Oliver explains Bitcoin, Blockchain & Crypto (with precision & clarity)!

John Oliver is a crossover who bridges the art of a comedian with the reporting and perspective of a liberal political pundit. Even detractors acknowledge that Oliver addresses serious issues with unusual wit and humor.

I never thought Oliver could (or would) tackle the topic of cryptocurrency—at least not with value to the viewer. It is too geeky, and too esoteric. (It also cuts into my mission of evangelism and education). 🙂

He did, and he sparkles! Feel free to jump past the fluff. The Bitcoin tutorial starts at 3:40. Of course, my friend, Shechter, in Long Island New York will bust a gut over what Oliver says at 9:40. It is not only clear and concise, it is accurate and terribly funny!

Whether you are a Bitcoin newbie or a seasoned blockchain coder, this is the video you have been looking for. This one is durable.

Related Videos:

What sets cryptocurrencies apart from each other?

Today, I was asked to answer this question at Quora:

“What sets each cryptocurrency apart from the others?”

“Cryptocurrency” is a broad term. It refers to payment coins, of course—such as Bitcoin and Litecoin. But, because most tradeable tokens attain an asset value, the word is often used to refer to smart contract devices, such as Ethereum, a host of other blockchain based tokens, functional Internet-of-Things tokens, and even ICOs (Initial Coin Offerings). Since people treat ICOs and IOT tokens as investment instruments even if they are useless as a payment mechanism, they all fall within the realm of a cryptocurrency.

So, before addressing the question, let’s distinguish between Altcoins and ICOs. I assume the question refers to Altcoins, and not ICOs…

ICOs are almost all scams. A very few of these are designed to function in a well-defined IOT role (Internet-of-Things). But, any ICO that you are likely to hear about share one or more traits described here.

But Altcoins are different. These are typically forked from Bitcoin or another established blockchain-backed coin. They are created because developers feel that they have solved one or more of the problems that limit the growth or appeal of Bitcoin. For example, Bitcoin has (or recently had) all these problems or perceived limitations:

  • Transaction Malleability (Recently solved with activation of SegWit)
  • Speed of transaction (Now being addressed by Lightning Network)
  • Cost of transaction (Also addressed by Lightning Network early 2018)
  • Very high electrical demand by miners (Still a major problem)
  • Fairness of and speed of distributed governance process (a big problem)
  • Finding a validation incentive after mining runs out (a long term issue)
  • Deep privacy features. These are inherent to Monero and Zcash. (Bitcoin will soon support onion routing transactions to enhance privacy)
  • Disparate goals of miners, developers, vendors and users (still a problem)
  • Limited Smart Contract mechanism (Ethereum is the current king in this realm, with slick methods of administering and executing contracts. Bitcoin will eventually acquire these features & benefits.
  • Like ICOs (these are almost all scams), some Altcoins (not scams) address specific IOT applications. This is a legitimate and non-payment use of blockchain technology. It represents a promising evolution. It is not yet clear if Bitcoin can eventually adopt these features and function in a non-payment, IOT capacity. The intrinsic, stored value aspect of Bitcoin would make it difficult to use in such applications.

One big problem facing Bitcoin is that the distributed consensus mechanism that makes it a trusted, peer-to-peer mechanism is based on Proof-of-Work (POW). Coupled with a mining incentive that increases dramatically with exchange rate, Bitcoin is—quite simply—untenable. With consumption topping 33 terawatt hours in December 2017, it already consumes more power than some countries. If even 2% of the world’s payment transactions were settled in Bitcoin, the mining would consume more power than is generated throughout the world. This just cannot continue!

Fortunately, developers and armchair inventors have proposed or demonstrated clever POW alternatives to achieve a fair distributed consensus. Some of these use a Proof-of-Stake mechanism, while others add a limited central-authority nexus to facilitate governance and scaling. Some are built on a modified blockchain that weaken several pillars of a true decentralized, p2p network. Of course, researchers are concerned that these systems deteriorate the decentralized nature of Satoshi’s original blockchain.

But, other systems may allow for a fully distributed and democratic trust platform, such as BFT Replication (IBM) or Distributed Objective Consensus, which was proposed by an amateur mathematician.

In reply to the title question, Altcoins are set apart by their claim to address the above problems & limitations, or to add features.

Will an Altcoin Triumph over Bitcoin?

Perhaps, a few altcoins will thrive, due to specific niche advantages; features that Bitcoin chooses not to address, such as deep anonymity or with a novel utilitarian feature that facilitates a specific Internet-of-Things process.

Unfortunately for altcoins, all coins require public trust and transparency. For this reason, they are open source, permissionless, without licensing, without patent protection and with a fully disclosed pre-mining history. And for that reason, Bitcoin is free to steal any clever advantage that works. It’s all up for grabs and no one can be sued.

In effect, each altcoin as a beta test platform for Bitcoin. Now that Bitcoin is finally addressing the problems of scalability and fair/speedy governance, there is little doubt that it will continue to dwarf other coins.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences around the world. Book a presentation or consulting engagement.

Building a Bitcoin ATM is easy, but…

…But offering or operating them engulfs the assembler in a regulatory minefield!

A photo of various Bitcoin ATMs appears at the bottom of this article. My employer, Cryptocurrency Standards Association, shared start-up space at a New York incubator with the maker of a small, wall mounted ATM, like the models shown at top left.

What is Inside a Cryptocurrency ATM?

You could cobble together a Bitcoin ATM with just a cheap Android tablet, a camera, an internet connection, and [optional]: a secure cash drawer with a mechanism to count and dispense currency).* A receipt printer that can also generate a QR code is a nice touch, but you don’t really need one. You can use your screen for the coin transfer and email for a receipt.

Of course your programming and user interface will make all the difference in the world. Your ATM must interface with an exchange—your own or a 3rd party.

If your plan is to sell Bitcoin and not exchange it for cash, then you don’t need a currency dispensing component at all. You only need a credit card swipe-reader and an RFI tap reader. Some models are smaller than a cookie and sell for under $30. They can be attractively embedded into your machine. In fact, some bank card processors offer them without cost.

I Have Built a Prototype. Now What?

Desktop ATM. No cash dispensed

Once you have a working prototype, you will need to test it with focus groups (alpha test) and at prospective public sites (beta test). You must also harden the production model against tamper and theft and find paying businesses or property owners, so that you can achieve economies of scale. (A reasonable business model requires that you produce dozens of devices each month).

Parts Cost: Bill of Materials

At scale, you can achieve a unit production cost of less than $200. But that’s for a desktop unit that does not accept or dispense cash. A high-quality and attractive machine that accepts cash and is free standing or ready for outdoor installation into a building exterior might cost you $650. You could sell these for $2,500 plus recurring fees to the property owner, depending on venue, or you might simply lease them, just as Xerox did in the early days of office copiers. (In a hotly competitive market, such as Las Vegas, you may need to pay a portion of your profits to the site, rather than profiting from ‘renting’ the ATM).

A Threat to Your Business

But wait! Before you run off and create an ATM venture of your own, with visions of a 350% profit margin, all is not as easy as it seems!…

Cryptocurrency ATMs intersect with a minefield of regulatory licensing and compliance standards. In many regions, they are not even legal for placement in a public area.

In most countries (including all of USA), you must be a registered Money Transmitter. You will need separate state licensing and—since you are moving cash in or out of the banking system—you must be partnered with a federally chartered bank. You will also need to post a hefty insurance bond—perhaps even for each machine and each municipality in which it is placed! These laws convey liability to both your clinet (the property owner) and to you. Many courts will hold the manufacturer of financial or medical products accountable for ensuring that their customers are licensed and compliant with regulations. That is, you may not be able to legally sell your ATM to organizations that have not demonstrated that they qualify to operate one.

Why is There a Camera in my ATM?

In all cases, you must capture photographs of your user and their state-issued ID, because you are required to know your customer and adhere to a slew of anti-money laundering practices. For example, with transactions larger than $2,000 (from anyone who is not known to you and a regular client), you must generate a Suspicious Activity Report. For transactions larger than $10,000, you must comply with RICO (Racketeer Influenced and Corrupt Organizations Act). This requires a camera, interview, and reporting process. You will be generating forms with data supplied by your user and possibly even a real-time verification of the facts they provide.

If you wonder why you needn’t do these things this when buying or selling your own cryptocurrency, it is because: (a) You are trading your own assets and are not the custodian of customer accounts; and (b) You are a consumer. It is likely that the exchange is required to do all of these things.

With Regulations, Can Bitcoin ATMs Generate Profit?

For the reasons described above, the operational cost of deploying and operating an ATM network (or your equipment for sale or rent) is significantly higher than the up front hardware cost. When you add the need to protect your venture from legal claims arising from process glitches or users that claim they lost cash or Bitcoin, you may arrive at an operational cost that makes your business model unworkable.

Of course, Bitcoin ATMs are profitable in some cases. I have consulted with a few start ups that operate them successfully in Las Vegas casinos, a few airports and race tracks, and at large outdoor fairs. But, for everyday use, the heyday of ATMs is most likely 5 or 10 years off. Before this happens, we need a more uniform and functional regulatory & insurance framework, and a higher volume of users per ATM.

Check out various Bitcoin ATM models below. Few manufacturers turn a profit. In the end, it boils down to location (high volume sites with the right people) and location (legal jurisdiction).


* One ATM startup found inexpensive hardware for dispensing currency by recycling mechanisms from bill-change machines used in game arcades or in hotels next to vending machines. These machines are being discarded, because newer vending machines accept credit cards and smart phone payment. But again, if you only plan to accept a credit or debit instrument for Bitcoin, then you don’t need a cash counter or dispenser.


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences around the world. Book a presentation or consulting engagement.

Multisig Wallet: Protect Bitcoin in case of death or forgetfulness

UPDATE (April 2018): See footnote regarding Coinbase multisig vaults.* The feature will be retired this month, because it interferes with plans to improve support of Bitcoin forks.

Legacy Method of Inheriting Assets

Many Bitcoin owners choose to use a custodial account, in which the private keys to a wallet are generated and controlled by their exchange—or even a bank or stock broker. In this case, funds are passed to heirs in the usual way. It works like this…

An executor, probate attorney, or someone with a legal claim contacts the organization that controls the assets. They present a death certificate, medical proxy or power-of-attorney. Just as with your bank account or stocks and bonds, you have the option of listing next of kin and the proportion of your assets that should be distributed to each. These custodial services routinely ask you to list individuals younger than you and alternate heirs, along with their street addresses, in the event that someone you list has died before you.

Of course, Bitcoin purists and Libertarians point out that the legacy method contradicts the whole point of owning a cryptocurrency. Fair enough.

Multisig to the Rescue

Using multisig would be far easier, if wallet vendors would conform to standards for compatibility and embed technology into hardware and software products. Unfortunately, they have been slow to do so, and there are not yet widely recognized standards to assure users that an implementation is both effective and secure. But, there is some good news: It’s fairly easy to process your ordinary account passwords and even the security questions with a roll-your-own multisig process. I’ve done it using PGP and also using Veracrypt—two widely recognized, open source encryption platforms.

This short article is not intended as an implementation tutorial, but if the wallet vendors don’t jump up to home plate, I may release a commercial tool for users to more easily add multisig to their wallets. It really is safe, simple and effective. (If readers wish to partner with me on this? I estimate that it will take $260,000 and about six months).

What is Multisig and How Does it Protect your Wealth?

Multisig allows anyone with credentials to an account, wallet or even a locked safe to create their own set of rules concerning which combinations of friends and relatives can access their assets without the original owner. The owner sets conditions concerning who, when, how much and which accounts can be accessed — and the heirs simply offer passwords or proof of identity. If implemented properly, it doesn’t matter if some of the heirs have forgotten passwords or died before the original owner.

This can be illustrated in an example. I am intentionally describing a complex scenario, so that you consider a full-blown implementation. Although the ‘rules’ listed below appear to be complex, the process for creating the associated passwords is trivial.

The last 2 rules listed below do not use Multisig technology, but rather Smart Contracts. It enhances an owner’s ability to dictate terms. Here, then, is the scenario…

I want heirs to have access to my assets
at banks, brokers, exchanges or other ac-
counts–but only under certain conditions:

  • If any 4 of 11 trusted family and friends come together and combine their passwords (or an alternate proof-of-identity), they may access my wealth and transfer it to other accounts
    • But, if one is my husband, Fred, or my daughter, Sue, then only two trusted individuals are needed
    • —But not Fred and Sue together (At least one must be an outsider)
  • If any account has less than $2500, then it goes to my favorite charity, rather than the individuals I have listed
  • None of my accounts can be unlocked by my heirs, until I have not accessed them with my own password for 3 months. Prior to that, the Multisig will fail to gain access.

Again, the decedent’s wishes are complex, but executing and enforcing these rules is trivial. In my presentations, I describe the method on two simple PowerPoint slides. Even that short description is sufficient to show anyone who has used common cryptography apps to weave their own multisig add-on.

Of course, each individual will need to locate their own secret password, but a biometric or other conforming proof-of-identity can be substituted. Even if several survivors cannot recall their credentials, the multisig method allows other combinations of individuals to access the assets across all accounts.

This article may leave you wondering about the legal process—and this is where I agree with the Libertarian viewpoint: Sure! The courts have a process and heirs should document their access and decisions for tax purposes and to assure each other of fair play. But a key benefit of cryptocurrency and the disintermediation offered by the blockchain is the personal empowerment of access with impunity and without waiting for any legal process.

Let the courts to what they do, while you honor the wishes of your dearly departed.

If this article generates sufficient interest, I may prepare a short tutorial on how to split off your own Multisig passwords, regardless of which wallet or hosted services you use. It will work with any vendor, app or gadget —or— Perhaps, I will refine my homespun solution and offer it as an add-on app that can be used with any wallet, bank account or exchange. Simple, ubiquitous and effective multisig should have been available to even traditional banking customers years ago!


* History of Coinbase support for a multisig vault

Oct 29, 2014 — Coinbase adds Multisig Vault
                           Multisig rule: (3) private keys created. 2 are required to access coins:

  1. User Key
  2. Coinbase Key
  3. 2nd Coinbase Key but only user has passsword

Aug 31 2017 — No more NEW Multisig vaults

April 19 2018 — Sunset of Multisig vaults (and announced earlier, on Mar 20)

Sunset on Multisig vaults: They make it difficult to support forks. A new tool will still support withdrawls after multisig vaults are retired.


Ellery Davies co-chairs CRYPSAhosts the Bitcoin Event and presents at Crypto Conferences around the world. Book a presentation or consulting engagement.

Have there been successful Transaction Malleability attacks?

First, let’s get some basics out of the way…

What is Transaction Malleability?

Here are 2 explanations of transaction malleability: [Coindesk] [TechTalk]

In a nutshell, Transaction Malleability is a weakness in the original Bitcoin implementation that enables a bad actor to change the unique ID of a bitcoin transaction before it is confirmed on the Blockchain. Such a change makes it possible for someone to pretend that a transaction didn’t happen, if all necessary conditions are in place.

As the Coindesk article points out, a successful attack requires certain conditions that make a successful attack difficult or even unlikely. Many analysts referred to it as a bug that should eventually be fixed, rather than an urgent issue.

Was This Flaw Addressed

Transaction malleability was addressed (for Bitcoin) with the introduction of Segregated Witness (SegWit) in August 2017. 1, 2

But Was There a Successful Attack?
Attack? Yes. Successful? It’s doubtful…

In March 2017, five months before SegWit was implemented, a mining pool that administers 2% of worldwide activity launched a malleability attack. No one lost money – and some individuals believe that they did this to emphasize urgency and hasten the adoption of SegWit.

What About Lightning Network?

The Lightning Network is a ‘Level 2’ network overlay, currently being adopted by miners (depending on the service or exchange, it is being incrementally activated in the first months of 2018). To function properly, it requires that transaction malleability be solved. But, in the event that a miner is not SegWit compliant, it can resolve the malleability problem in other ways.

1 SegWit should not be confused with SegWit2x, an upgrade process that was cancelled a few months later in November. 2017

2 In the TechTalk article linked above, the author concludes:

“Transaction Malleability is fixed with Segregated Witness by no longer taking into account signatures when calculating the transaction’s fingerprint. Fixing Transaction Malleability means that the Lightning Network can work smoothly.”


Ellery Davies co-chairs CRYPSA, hosts the Bitcoin Event and presents at Crypto Conferences around the world. Book a presentation or consulting engagement.

ICOs & altcoins rise and fall—yet, Bitcoin endures

At the end of 2017 and the first months of 2018, we witnessed a surge of interest in Initial Coin Offerings or ICOs. Perhaps the word “interest” gives too much credit to ICOs. Most are scams. ICOs are pushed through by vendor hype, rather than pulled through by investor research. They are almost all pump-and-dump schemes.

But what about Bitcoin? It is not a scam, but questions remain about regulation, intrinsic value* and its likelihood to be superseded by something better. Bitcoin skeptics point to two facts: (1) Bitcoin is open source, and so anyone can create an equally good altcoin. (2) Newer coins incorporate improvements that overcome governance and scaling issues: cost, transaction speed, the burgeoning electric needs of miners, or whatever…

While both statements are true, they miss the point. This is not a VHS-vs-Beta scenario. Bitcoin has achieved a 2-sided network and it is free to fold in every vetted improvement that comes along. For Bitcoin, all those other coins are simply beta tests.

Even the functional tokens will unwittingly feed their “improvements” into Bitcoin. For this reason, it is a safe bet that Bitcoin will reign supreme for years to come—perhaps even long enough for the dominos to fall.

Why I rarely consult to ICOs or prospective ICO investors

I recently presented at cryptocurrency expos in Dubai and Gujarat. As a result of these presentations, my organization now receives ICO pitch decks, white papers and business summaries—15 or 20 each week. About ⅔ are sent by investors asking for advice as an investment opportunity, while ⅓ are from issuers seeking accreditation from CRYPSA or at least a quote than can be used as a comfort statement.

The market potential for consulting to issuers and high-rolling investors is very alluring. Figuring that we could certify gems and advise the dogs (help them to create a more legitimate token), we put together a business plan to address a massive new consulting opportunity. But guess what?

… They are ALL dogs! That’s right! ICOs are scams. They are not the same as ‘altcoins’, which is a term more commonly used for open source forks of legitimate cryptocurrency platforms.

Now, the SEC has begun to investigate ICOs and for good reason. Most are thinly veiled scams to fleece widows and orphans by ducking under securities regulations. Others are MLM scams, proprietary mechanisms (in which founders or early partners hold all the cards), or they are simply poor/fake implementations of Blockchain services.


* How to spot an ICO scam (Hint: They are almost all scams!)

Few ICO tokens are credible, “functional” mechanisms that serve a purpose other than sheer speculation. What fraction are scams? More than 97% according CRYPSA.

To preserve our reputation, our organization has suspended a business unit created to endorse the few gems. Despite scores of applicants, we simply cannot find many worthy of accreditation, with the exception of a few Bitcoin forks. But, these forks are altcoins, and not really ICOs.

Nearly all ICOs that we analyzed fall into one of these categories…

  • Veiled securities offerings, designed to duck under securities regulations
  • Created for the express purpose of pump & dump (without clearly disclosing caps, reserves or pre-mined stakeholders)
  • A non-functioning coin that can only gain value through MLM. (This is not necessarily criminal, but outside our research and advisory mandate. Such coins are unlikely to provide value without quick, speculative trades and market timing that amounts to “dumb luck”).

So, what are the signs that an ICO is a scam? Is there anything you can do—short of hiring an expert—to evaluate each new proposal that comes along? We don’t advise or recommend holding such risky tokens—but for those attracted to the siren call of ICOs, here are six common tale tell signs that you are dealing with a scam:

  • If you received an announcement of an ‘Air drop’ or a coupon to get 25 or 50% bonus coins, it is a scam.  Stop and think: Walks like duck; talks like a duck.
  • If the value of coins is influenced by your ability to find new investors, it is a scam
  • If the coin is not based on Satoshi’s blockchain reference code, or is not open source, peer-to-peer and permissionless, then it is very likely a scam. (There are certain, limited exceptions)
  • If the coin is based on Tangle, then it is a scam—or at least, it is functionally useless—and therefore it is a bad investment risk
  • If the coin was pre-mined, then it is a scam. All mining by principals, insiders and early buyers must be disclosed and must be at least a full month after the first widely available public announcements
  • If any advertisement, announcement, affiliate contact or press release ends up in the hands of someone who did not independently contact the issuer for information and a prospectus, it is most definitely a scam

Are you like me?

Because most initial coin offerings exhibit these traits, I pass on opportunities to consult or present at organizations and conferences that cozy up to ICOs. This decision limits my participation at many crypto venues, but my conscience is clean and my Bitcoin future is secure.

Resist the siren call and keep your wits about you. You, too, can also avoid the illusory trap of ICOs. Run, hide or just ignore them. “These are not the coins that you are looking for.” (with apologies to Obi-Wan Kenobi and Alec Guinness).

* Related:


Ellery Davies chairs CRYPSA, publishes A Wild Duck and hosts the New York Bitcoin Event. He was featured at cryptocurrency conferences in Dubai, South Africa and India. Click Here to inquire about a presentation.

Trump: Lamenting lost opportunities…

Twice, this past year, I promised that a final missive about our president was my last word, in a blog that resolves to be apolitical. This was a supremely difficult promise to keep—I have clearly failed. I lose sleep over our shared unfortune. And so, here is one more parting thought on a matter that troubles me deeply.

During the winter holidays, I settled into Las Vegas for a few shows and some fun. (Thank you, Ryan, for loaning me a Pontiac sports car!). I shot this photo through my window from Highway 15 as I was approached my hotel on the Vegas Strip.

It is sad that this building still shows such a disgraced brand name. It is sad that our country still wallows in that disgrace. How so?…

It is not so much the lies, divisiveness, misogyny, xenophobia, abject ignorance or thin-skinned bullying that bothers me. It’s not the constant contempt for everything embraced by the past administration (it clearly consumes him). It’s not the blind allegiance to white supremacists (he doesn’t even realize that they are racist). It’s not his goofy battle with the 1st Amendment or his professed support of the 2nd Amendment. And it’s not even the ignorance on issues related to the environment and nuclear threats…

Rather, it is the lost opportunities during moments of crisis and everyday business in which perspective, rational leadership, and respect from peers could really make a profound and positive difference to the futures of people everywhere!

To my good friends Dania, Peter and my nephew, Nate: Note that I never mention the name of any politician or statesman in this post. The name on that building speaks for itself. I respect you, but I do not respect the individual whose name adorns this building. It gleams in the sunset, and towers over Las Vegas. But it shines with shame. It may be beautiful and well maintained, but it represents a crumbling America.