Author Archives: Ellery

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Who is Ellery? https://awildduck.com/?p=1 Bitcoin/Blockchain speaking: Links at top right

What is Lightning Network? How does it work?

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As executive director at CRYPSA (The Cryptocurrency Standards Association), I enjoy the privilege of awarding any one article, seminar or course our highest editorial award without requiring nomination or a committee vote.

An anonymous contributor to Cointelegraph wins our first ever Flying Duck Award in the category of Guide, Tutorial, Course or Academic Unit.  [continue below image]…

A tutorial at Cointelegraph remains the most most clear and simple explanation of Lightning Network we have seen. It astounds me that this 2300 word article is both undated and apparently uncredited. We don’t know if it was written by an editor, a regular columnist or an outside contributor.

The Lightning Network addresses a serious scaling issue in Bitcoin that was predicted from the very first discussions in the same crypto Newsgroup that Satoshi described his electronic cash payment system. It is a protocol that improves bitcoin’s scalability and speed without sacrificing trustless operation. It is a major step in overcoming the scaling problem.

If you want an introduction to the Lightning Network that you will readily understand and be able to convey to your friends and colleagues, look no further. Although breezy and geared toward a layperson, this piece covers the gamut of a serious academic treatise:

• What is Lightning Network?
• How does it work?        • Who developed it?
• Where, when and why will it be used?
• Pros                              • Cons
• Should I use Lightning Network?

2020 CRYPSA Award for Best Article or Editorial
Classification: Guide, Tutorial, Course or Unit

* Disclaimer

It’s humbling to give this award to Cointelegraph, a competitor in the area of Bitcoin news, education and courseware. I have written more than 1200 articles this year on Bitcoin, blockchain, ICOs and all manner of cryptocurrency issues. But this one article is best-in-class.

We are not affiliated with Cointelegraph. No one at A Wild Duck has written for that organization nor been compensated by them—ever. This blog post will be their first knowledge of an award which, was simultaneously announced by CRYPSA (The Cryptocurrency Standards Association) and LinkedIn Bitcoin, a group with 55,000 active subscribers.

IOT needs decentralized, long-range connectivity. It’s finally coming

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No matter how cheap or fast paid internet service gets, the Internet of Things (IOT) won’t take wings until we have ubiquitous access to a completely decentralized, open-standard network that does not require a provider subscription. This month, we may be a step closer.

Let’s talk about internet connected gadgets. Not just your phone or PC—and not even a microwave oven or light bulb. Instead, think of everyday objects that are much smaller and much less expensive. Think of things that seemingly have no need to talk with you.

Now think of applications in which these tiny things need to communicate with each other and not just with you. Think of the cost of this “thing” compared to the added cost of continuous communications. Do so many things really need to talk in the first place?

First, there were Trackers…

Have you tried one of those tracking devices that help you find a lost bicycle or wallet? Tile is the most visible brand. They offer trackers shaped like dog tag, a fat button or a credit card. They recently began offering users the ability to replace the battery. In the past, you had to buy new trackers every year.

Trackers are useful, but connectivity is either…

  • Very expensive: Each devices requires a mobile phone data plan
    —or—
  • Intermittent and short range: Tile uses Bluetooth and relies on a community of owners to “pick up” on your lost or stolen object. This only occurs if another user stumbles into close range and with their Tile app active on a mobile phone.

Tile was cool in its heyday, but that day is passing as we transition into the Internet of Things (IOT). It took me a few years to fully embrace the need for an internet of “things” or how it differs from the internet that we use every day. In an effort to more quickly bring about your own Ahahh! moment, consider just one example.

The Chandelier (an example with apologies to Sia)

Consider a huge chandelier across the domed ceiling of a grand opera house. It has 85,000 tiny LEDs that can throb and pulse during animated light shows. Each individual light is replaceable—only 10¢. But getting a scaffold and a maintenance crew to the 50 foot dome takes 6 hours and costs almost $500.

Every month, one or two of the tiny lights go dark (or get stuck on the wrong color). Fortunately, expensive maintenance can be delayed. A few bad LEDs cannot be seen from the auditorium below. They are only a problem when many lights go dark:

a) More than 2% of bulbs —OR—
b) More than 8 bulbs in any cubic region of 250 LEDs —OR—
c) More than 3 bulbs positioned at a critical juncture of special-effect animation
d) Any LED programmed to be green for more than 250 mS during the Disney Little-Mermaid animation

These minimum operating conditions may sound complex, but they were determined at the time of installation by meticulous trials with a focus group and survey forms. Dozens of volunteers looked up at the chandelier and watched several programmed light shows.

Trying to count faulty lights and measure them against these criteria before each performance is nearly impossible. Should we chuck these standards and just leave the maintenance decision in the hands of whomever is managing the facility each night?

No. Standards are good. There is a better way.

Imagine if all the little LEDs could communicate with each other and generate a weighted vote as to whether maintenance is required. Now, imagine that the added circuitry to communicate between LEDs—and even to managers and maintenance staff—cost no more than the LED itself. Just pennies for the circuit. No communications infrastructure or subscription is needed at all.

This example may seem a bit extreme, but it is taken from real life, and a perfect example of the Internet of Things. This is just the beginning. As IOT takes off, a connected society will venture far beyond Bluetooth trackers into applications that we cannot yet imagine.

But how will the internet things be connected—especially if so many devices are tiny, inexpensive and portable? We cannot expect every dog collar and portable asset to have a mobile subscription plan and an IMEI/MEID.

And short range tracking (like the Bluetooth Tile) is not too helpful for keeping tabs on your dog when he gets off leash. Or perhaps you want to track an asset that is less precious—for example, a soccer ball. You don’t just want to find it, you want to study game dynamics as it is kicked across a field. What about your favorite earrings? They belonged to your great grandmother. Imagine that they could never be misplaced. With IOT, everything possible. Apps and benefits are heading toward us like a freight train.

IOT doesn’t require 5G speed, but to be truly transformative, it requires ubiquitous, low-power and free connectivity. Coverage must be thorough, at least at a community level.

Do We Really Need IOT?

You bet we do! Just envision possibilities.

With miniaturization and the rapidly dropping cost of electronics, there are some tiny or inexpensive things could benefit greatly by constant connectivity. Today, my washing machine and air conditioner are WiFi enabled. Connectivity is even built into light bulbs.

But early connected smart home gadgets are designed primarily to talk within a home. When traveling, you might want an alert if water is leaking into the cellar. But let’s face it: When at the office or on vacation, most people don’t care to dim the kitchen lights or know when a load of laundry is ready for transfer to the dryer.

This is starting to change. Gadget makers all over the world are preparing for an era of remarkable information and utility that will emerge when devices communicate not just with their owners, but with each other. When tiny things can talk, a world with free, ubiquitous and redundant connectivity, will bring unexpected and remarkable benefits.

How to Get from Here to There?

All this requires simple, free and ubiquitous wide area networking. Most analysts expect that the brave new world will take wings until a popular, widely deployed internet access method emerges—one that does not require a service provider.

Does free internet access, with community wide coverage and a sustainable business model exist?

Enter the people’s network: The Helium hotspot. With a splashy adoption campaign, it is positioned to be the first successful mass-deployment of a very long range, low power signalling standard. If successful, Helium could jump start a category of access and coverage that is just what is needed for the next big thing.

The Helium hotspot, is a crossover between a residential router, and community internet access. Most importantly, it disintermediates the process. No ISP? Don’t worry! It is not required to get into the game and to enjoy significant benefits.

I think of Helium as Rooftop Communications on steroids (an early community mesh network that was way ahead its time). If 5 or more individuals in a typical city set up their own hotspot, every user enjoys shared community access to the Internet—even if only one of participant has internet service. In fact, a bridge to the legacy internet is not even an issue to access resources and data within the community. Every town service, store, event, school and library is online without anyone having a paid subscription to any service provider.

Helium is just beginning to roll out across the world. Early adopters acquire a Helium hotspot and they effectively “own” their city. At first, it works at moderately low speeds and over very long distances. Only a few are needed to kick start a city. When 20 or 30 residents join the party, network speed, coverage, consistency and overall utility become compelling. Not 5G or 4G—but capable of servicing critical needs on the go or as a back up method of Internet access. When this clever IOT network gets traction, it will eventually service most internet needs other than video.

Helium is the first Consumer product to use the low-power LoRa radio standard (Helium calls it “LongFi”). User owned Hotspots form a super mesh-network that the company hopes will cover entire continents. Unlike your router or smartphone hotspot, with Helium, there is no ISP or cell tower. Your neighbors are your peers and your entry ramp to the internet for services that are still on a legacy, subscriber network.

Enter The Blockchain: Seriously—Adoption It is token powered!

As if this weren’t exciting enough, Helium adoption is powered by a blockchain—like Bitcoin. No kidding!

Don’t let this deter you from testing Helium and taking control of your own city. Regardless of your opinion on Bitcoin and crypto, the blockchain is a clever lever to incentivize and reward adoption.

Helium hotspot ads are everywhere, but the first LongFi router is not cheap. Buyers are investing in the long game. Early adopters won’t find immediate value in hosting other users, but you will be amply rewarded as the technology is adopted. Hence, a blockchain token reward mechanism. The Helium reward token a functional cryptocurrency token. Some call it an Independent Coin Offering (ICO). Whaaat?! Hold on! Aren’t ICOs rip-offs?…

I have broad contempt for ICOs (they are all scams!). This fervent opinion forced me to carefully evaluate my enthusiasm for Helium. It almost led me to abandon research and look for an alternate long-range, decentralized communications ecosystem.

But the blockchain does not necessarily make for a bad actor. A functional token with no underlying pyramid scheme is not an ICO. It is a clever mechanism to encourage viral adoption of a chicken-and-egg technology; one that offers enormous public benefit.

Technology Application & Business Model

LoRa can achieve competitive web access speeds at 1~3 Km. Helium hotspots will more likely have mesh-hand-off spacing of 15~20 Km at first. This results in a signal of 5 kbps or less. Depending on how effective are the hotspot and hand-off incentives, Helium may ultimately compete with sky-based WiFi, satellite schemes or community WiFi as a free moderate-speed, internet service.Helium is intended for IOT devices, but can also be used as a last mile layer for user Internet access. During the early build out of infrastructure in any region, it is clearly optimized for low speed IOT communications.

Conclusion:

Helium doesn’t completely satisfy requirements that we set forth in the very first paragraph above. I assume that it uses a proprietary standard to poll and packetize data. (I am not sure of this. Perhaps someone working with the project reach out with a clarification). And at $495 for a long range, low power Helium hotspot/router, it may be a bit early for all but the most bold entrepreneur to experiment with Helium. If you don’t live in a large and densely populated urban area, you are unlikely to find many peers with whom to share spectrum, data and gateways.

But if you open your mind to the possibilities: tools, gadgets and services that can benefit from private networks or municipal infrastructure that was previously the exclusive domain of town governments, railroads and first responders… If you can imagine these things—or a profitable role in accommodating these things—then a personal Helium Hotspot may be in your future.

I plan to jump in with both feet. I will be shaping my career around Helium. It’s a bit early, but that’s the whole point. For me, it is a gamble worth taking.

Related:

50 Year Lie: Sugar Industry Blames Fats

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Whenever someone refers me to a story with alarming facts that should surprise or outrage any thinking human, my spider-sense is activated. Does the story make sense? Is it plausible? If the message contains evidence of being repeated (or forwarded to more than two friends), then whatever is claimed is almost certain to be false.

If the subject is important to me—or if there is any chance that it might influence my view of the world, I check it at Snopes. The reputable web site confirms or debunks many urban legends and all sorts of viral web hype.

You never know what you might learn at Snopes. You can easily be lured into a rabbit hole, digging into the site beyond whatever prompted your visit in the first place.

Fact-checking can be fun! For example:

  • Debunked: There are no alligators living in New York sewers. If a resident flushes a baby alligator in a toilet, it cannot survive the temperature or the toxic soup that flows through the sewers of a big city. Florida: perhaps; New York: impossible!
  • Debunked: Ronald Reagan did not write a diary entry in which he describes his vice president’s son (the future president George W. Bush) as a shiftless ne’er-do-well, who roams about the White House.*
  • Confirmed: This one is true! In 1976, during the filming of TV series, Six Million Dollar Man in Long Beach California, an arm fell off a scary, fun-house prop. A film crew found that it was the cadaver of outlaw Elmer McCurdy, who died in 1911.

I’m still occasionally guilty of passing along a story I long believed was gospel. In a few cases, it didn’t occur to me that something accepted as fact might be an urban legend—or that my acceptance of a tall tale is colored by my opinions about economics, society and business. Hopefully, this is a rare and diminishing lapse. I have learned to fact check narratives—especially if I feel compelled to pass one along.

Conspiracies Theories: Often false!

In general, I am unlikely to suspect a conspiracy behind events of the day—with the exception of national politics, where conspiracy is a natural and pervasive tactic. The problem is my optimistic view of human nature. While businesses have a profit motive and a responsibility to stakeholders, I feel that most are driven by ethics and that executing a plan within the bounds of ethics is simply good for business.

Let me tell you about one viral, big-business story that I had believed for decades and another that I did not believe until I was presented with too many facts to refute.

1. No Conspiracy Here

There was no secret meeting or conspiracy by titans of the car, rubber, oil or steel industries to kill off public transportation and alter city layouts to drive auto sales. Streetcars were already mired in politics and graft; family, income was increasing, and the car was already becoming popular.

That tall tale says that Harvey Firestone, Henry Ford and John D. Rockefeller conspired to eliminate street cars and redesign the urban landscape, so that Americans would need individual family cars, rather than use public transportation—Or that this is the reason that we must drive to a big mall today rather than live in towns centered around a community center, church, city hall and general store.

The theory claims that the three automobile bosses had a secret meeting in San Francisco with a goal of increasing sales of cars, rubber, steel and oil. (In some versions of the story, Rockefeller (oil) is replaced Andrew Carnegie (steel). Ironically, I only learned that the entire story was an urban legend as I started to write this introduction to the true story below.

2. Shocking Conspiracy — This one is true

More than any other lie, here is a food industry conspiracy crafted and delivered by big business. It manipulated one of our most trusted universities, a major medical journal and the public psyche. The result: Thousands of Americans died and millions were misled into obesity and heart disease. More than any other fiendish plot, this one event has killed people and damaged human health more than any other conspiracy in modern history.

In 1967, the sugar industry shaped 50 years of research into the role of nutrition and heart disease, including many of today’s dietary recommendations, by paying Harvard researches to lie about the role of food in obesity and heart disease. They schemed and succeeded at shifting blame from sugar to fats.

Believing lies: I grew up becoming fully indoctrinated!…

For much of the next five decades, the wheat and grain industry promulgated the lie to enormous advantage. I grew up thinking that bread, pasta, rice and potato are terrific sources of healthy fiber and minerals (much like vegetables)—and that they ensure clean pipes. I thought that oil and fats are bad, because they deposit plaque in arteries. It never occurred to me that oils can maintain healthy weight, that your brain needs fat, that carbs lead a body to manufacture the fat that causes cardiovascular disease.

I believed that skim milk is less fattening than whole milk and that margarine is healthier than butter (dairy), tallow (beef fat) or lard (pig fat). Perhaps most damning: I believed that Canola oil (synthetically extracted from rape seed) was a healthy oil, because it is unsaturated. Today, I have learned it is toxic.

How does a 20th century academic
with advanced degrees get so misled?

Answer: I succumbed to a startlingly successful conspiracy; a long game in which it is now difficult to punish sugar industry perpetrators. Ultimately, they will be held to account by journalists, and a new generation of doctors, researchers and academics.

The New York Times article linked below appeared in 2016. More recently, the story is finally going viral. Citation by other reputable outlets is growing quickly.

Some conspiracy theories are true. Instead of passing along an urban legend, forward the shocking truth about sugar and carbs to a friend or colleague. Share this blog article. Think of the good achieved if you turn around the diet of just one acquaintance.

Related:

* Fiction: Ronald Reagan did not write this; (I believed it for 30 years):

“A moment I’ve been dreading. George brought his ne’re-do-well son around this morning and asked me to find the kid a job. Not the political one who lives in Florida. The one who hangs around here all the time looking shiftless. This so-called kid is already almost 40 and has never had a real job. Maybe I’ll call Kinsley over at The New Republic and see if they’ll hire him as a contributing editor or something. That looks like easy work.”

— Incorrectly attributed to Ronald Reagan in a diary entry published May 17, 1986

You Cut, I choose—and Danish Sound Dues

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It has been a while since this Blog featured Kitch. That’s our term for silly vignettes, personal aphorisms or sheer nonsense — but still in keeping with our journalistic mission, of course!

This is Kitch, but it is a also true story. I was there. Now you can be a fly on the wall.

When I was a child, my father would often bring home a large baked treat for me and my brother to split. Imagine a huge eclair or giant scone.

I don’t think we have Greek heritage, but our favorite treat was baklava. Even today, visions of honey, walnuts and filo dough lead to drooling anticipation.

When this tradition started, Dad would give the treat to my brother, and say “Charles, cut this treat and give half to Ellery”. But I would inevitably end up with the smaller piece. Perhaps my brother did this inadvertently, but either way, it seemed unfair.

My dad got wise to the scheme and came up with a new rule: Charles would still cut the treat, but I got to choose which piece was mine. We called this rule: “You cut, I choose”.

So, do you suppose that it worked? You bet it did! From then on, whenever Dad came home with a treat, Charles would run to the tool box and get a tape measure, a protractor and a compass. Eventually he refined the process, adding a precision scale.

Cutting a parallelogram into even portions is pretty tricky. Imagine how much harder it is when our oldest brother was in town from university. Now, it must be divided into three equal portions. Yet, from every single perspective—mass, area, volume or calories—Charles became a master craftsman. Each portion had the exact same size.

I wonder if Dad got the idea from 16th century Denmark.

Cargo ships entering the sound were taxed at 1 or 2% of the value of cargo on board. But ship captains routinely under-reported the value of cargo. At first, the port authority enforced the tax by employing dock workers to impound each ship and take a detailed inventory. The job was costly and unpleasant. And it led to delays that would endanger perishable goods.

Of course, some things were difficult to value and this led to contentious disputes. How much is a pack mule worth if has only one eye? Are those jewels genuine and flawless? Even tulip bulbs fluctuated wildly in value.*

So, Danes came up with new method of assessing taxes. In fact, this clever idea dates back to 1429 when the novel assessment method was legislated by King Eric of Pomerania. Sea port authorities returned to trusting each ship captain to report inventory value. But local companies, bankers and tradespeople were invited to inspect each claim as the ship docked. If anyone felt that products were assessed lower than fair market value, the government or the experts could liberate the entire cargo at the exact cash value claimed by the captain. No penalty—just a perfectly fair exchange.

Problem solved! Once implemented, no one under-reported the value of cargo. In the rare case that a client had purchased materials at an unusually low price, ship captains would offer the tax man a higher value—simply so that goods were not bought out from an inland client who was already under contact.

Dad passed away 8 years ago. But I really wonder if he knew about this story when he came up with the rule “You cut, I choose”. The two rules seem eerily connected across the centuries.

* Tulip bulbs were even a currency during the 16th century. There hangs another tale!

  • Related: Danish Sound Dues; Clever law leads to fair tax assessment

    The Sound Dues were a toll on Øresund, a strait that forms the Danish–Swedish border. It  was often ⅔ of Denmark’s state income in 16th and 17th centuries. The dues were introduced by King Eric of Pomerania in 1429 and remained in effect until the Copenhagen Convention of 1857. (The toll was waived for Swedish ships between 1660 and 1712).

Ejected Star: How fast is fast?

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30 years ago, astronomer Jack Hills demonstrated the math behind what has become known as the “Hills Mechanism”. Until this week, it described a celestial event that had never been observed.* But astronomers have always agreed that the physics and math should make what he described possible outcome, if suitable conditions are in play…

Hills explained that under the right conditions, a star might be accelerated to incredible speeds — and might even be flung out of its galaxy. The conditions:

  • A binary star passes close to a black hole, like the one at the center of our galaxy
  • The orbiting stars are caught in the gravity of a black hole, but because of their speed and distance, they are not sucked in.

If conditions are right, one star ends up orbiting the back hole while the other is jettisoned at incredible speed, yet holding onto its mass and shape. All that energy comes from the gravity of the black hole and former momentum of the captured star. [video animation, 20 seconds]

This week, astronomers found clear evidence of this amazing event and traced it back to our galactic center: Five million years ago — as our ancestors learned to walk upright — a star that passed close to the black hole at The Milky Way center was flung away at a stunning 6 million kph. It is traveling so fast, that it is no longer bound to our galaxy or our galactic cluster. It is headed out into the vast intergalactic void.

How fast is fast?

  • Rifle Bullet: Can exceed Mach 3 (2,300 mph)
  • Apollo Rocket: Reached 25,000 mph; Earth escape velocity.
  • Juno Probe: 165,000 mph, a record prior to 2019. (It used Jupiter’s gravity to accelerate)
  • Parker Probe: 213,000 mph (Nov 2019), but will soon reach 430,000 mph

* Prior to this week, astronomers have observed a few stars traveling inexplicably at incredible speeds. But this is the first time, that they have traced the trajectory back to a black hole and the conditions described by Jack Hills.

Reference:

A Brief History of Public Internet Access

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Reader, Tamia Boyden asks this question:

In the 90s, how could we access the internet without WiFi?

In the process of responding to a reader, we have compiled a short history of public and residential Internet access. Whether you lived through this fascinating period of social and technical upheaval or simply want to explore the roots of a booming social phenomenon, I hope that you find the timeline and evolution as interesting as I do.

Before answering Tamia’s question, let’s review a snapshot of the highlights. This short bullet-list focuses on technical milestones, but the history below, explains the context, social phenomenon and implications.

Short Version:

• 1965 Hypertext link described
• 1970s TCP/IP packet protocol
• 1983 TCP adopted by Arpanet
• 1989~91 Http protocol
• 1991 Public access begins
• 1995 Netscape Mozilla unveiled.
World’s first web browser

Question: In the 1990s, how could we access the internet without WiFi?

Answer
We didn’t need WiFI in the 1990s and we don’t need it now. In both era’s, you can simply attach your PC to the internet with a network cable. If your PC does not have an Ethernet port, you can add a miniature USB-Ethernet adapter. They are inexpensive.

Likewise, before internet service was available to almost every home and business, you could access the internet via telephone modem, or by visiting a library, internet cafe or office that had a leased line for fast access.*

In each case, adoption goes hand in hand with infrastructure build-out, cost reduction and (in the case of WiFi), the desire to move about the home or community more freely.

* Ellery’s brief history of Public Internet Access

1965: The concept of “hypertext” and clickable “links”. But demonstrations were limited to a single computer or a local network. The first mouse was patented in 1967. But for the next 15 years, few people used a mouse or pointing device.

1970s: The Internet and its predecessor, the Arpanet, was a constellation of networked terminal access tools that connected universities and research labs. Finding material and accessing it required command line jargon that limited its use. You could access the web and most standards were in place—but there was no universal browser that incorporated hypertext links.

1983: Apple introduces the Lisa (predecessor to the Macintosh). It included a mouse, which most people had never used before. Not to be outdone, Microsoft offered an aftermarket Mouse for $195 which came bundled with Word and Notepad.

1991: The public gained access in 1991 after Tim Berners-Lee, posted a summary of the project and the http standard that he pioneered.

1995: Netscape introduces Mozilla (later renamed Netscape browser). It kicked off a gradual migration of data from FTP and Usenet servers to web pages (http protocol) and an explosion in services and subscribers.

Final Impediments to Adoption: Complexity & Connection infrastructure

In-home use still required special equipment (a telephone modem) and applications had to be installed from a CD or multiple floppy discs. These apps modified the operating system by adding a TCP stack and a Windows Socket API. Prior to these things being bundled into new PCs, the process was a daunting. And so, for the next 10 years, many people accessed the internet from Internet cafes, schools or libraries.

1999: The WiFi standard was introduced in 1997. But it had technical limitations that limited its appeal. In 1997, 802.11b, the first widely used and supported WiFi standard, brought the freedom of movement into homes. This occurred at around the same time that many people were moving from a desktop or tower computer to a laptop.

WiFi-b and later g and n helped to propel convenient Internet access from anywhere within a home. Over the next decade, consumers came to expect an available WiFi signal in offices, schools, restaurants, hotels and airports.

2003: Rise of Social Media

Myspace wasn’t the first social media platform. Friendster beat it out by almost a year. But Myspace was the first to go viral and nationwide among many demographics. Along with Facebook—which eclipsed Myspace in subscriber growth—social media platforms turned many infrequent users into constantly-connected consumers.

  • Friendster March 2002
  • MySpace August 2003
  • Facebook February 2004
  • Twitter March 2006

2007: Apple and AT&T introduced the iPhone in the summer. Prior to 2007, flip phones offered web access via a crude browser built into Symbian or Palm, the OS used by Nokia, Motorola Palm Pilot and others. But the iPhone kicked off the Smart Phone, a new category of must have consumer gadgets. It propelled ubiquitous, mobile internet access.

1995 ~ 2020

Gradually, the Internet become a mass market phenomenon. But slow connection speeds and the need to suspend telephone calls limited its use. Between 1978 and 1996, telephone modems gradually improved technology from 300 bps to 56,000 Baud (access at ~25 kbps).

After 1996, consumers gradually switched away from using their telephone lines to a dedicated internet service. Homes connect to an ISP (Internet Service Provider) via either existing phone wire (ISDN), TV cables, Fiberoptic or Wireless-to-home.

Today (2019), it is not uncommon to have residential internet access via a Gigabit fiberoptic connection.

— Image credit:  1) Malone Media Group   2) Chris Galloway

Greta Thunberg: Most important message ever

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I am at a loss for words. Seriously, there is not much I can add to the 1st video below.

Information about climate change is all around us. Everyone knows about it; Most people understand that it is real and it that poses an existential threat, quite possibly in our lifetimes. In our children’s lives, it will certainly lead to war, famine, cancer, and massive loss of land, structures and money. It is already raising sea level and killing off entire species at thousands of times the natural rate.

Yet, few people, organizations or governments treat the issue with the urgency of an existential crisis. Sure! A treaty was signed and this week, Jeff Bezos committed to reducing the carbon footprint of the world’s biggest retailer. But have we moved in the right direction since the Paris Accords were signed 4 years ago? On the contrary, we have accelerated the pace of self-destruction.

I want speak out—and, of course, this Blog post is my way of doing it. But I am at a loss for words, because everything I want to say is so deftly articulated by 15 year old Greta Thunberg. I cannot possibly add to or improve upon her message.

Greta is not your typical hero. She is a child, has Asperger’s, and is a high school Sophomore, yet she is a truant. That is, she regularly skips class, because she feels that doing her own thing is more important than education. She is absolutely right…

This week Greta educated the UN, US Congress and former President Obama (because the current president cannot grasp her message). She also led a protest campaign that attracted millions of Millennials in more than 100 cities across Asia, Europe, Australia, and the Americas.

Greta Thunberg is racing to save the world—and all of humanity while she is at it.

Rather than link to her talk before Congress or the UN, or this overly-slick PSA, I choose three videos. The last one is only 49 seconds). Don’t have the time to pause for a video?—not even at bed time? Please reconsider. This one is really, really important. Even more important than not texting and driving. If ever you felt that there was something to communicate to your circle and pass onto your family, this is it. Your children are counting on you.

In the first two videos, Greta makes interesting point. If ever you imagined hearing an alarm bell, your ears should be clanging with these statements…

▪ 1st video, below

Greta was puzzled by an apparent incongruity when she was 8 years old: How is it that a widely reported existential threat has not resulted in a Stop-The-Presses, all out campaign to eliminate the threat? How is it that a majority of people claim to support the cause, applaud at speeches, support the Paris Accords—and yet the burning of fossil fuels has increased and the destruction of jungles & rain forests is accelerating? The carbon budget of the Paris Accords has already been ⅔ consumed! Even worse, scientists now believe that the budget was too relaxed. Even back then (3 years ago) things were worse than we had believed.

▪ 2nd video, below

Although Greta states it without emotion (a symptom of Asberger’s), she was surprised to find that America has climate change ‘believers’ and ‘non-believers’. Without a hint of sarcasm, she explains that in Sweden, everyone understands the facts.

Please view these videos. Is there anything in your day that is more important? I doubt it. Saving the planet is no longer a slogan. It’s our only chance at survival—and that chance is getting slimmer with each day.

1. Ted Talk (11 min), Stockholm Aug 2018

2. Trevor Noah TV episode (9 min), Sep 14, 2019

3. Meeting President Obama (49 sec), Sep 18, 2019

Was SHA-256 cracked? Don’t buy into the retraction!

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SHA-256 is a one way hashing algorithm. Cracking it would have tectonic implications for consumers, business and all aspects of government including the military.
 
It’s not the purpose of this post to explain encryption, AES or SHA-256, but here is a brief description of SHA-256. Normally, I place reference links in-line or at the end of a post. But let’s get this out of the way up front:
 
One day after Treadwell Stanton DuPont claimed that a secret project cracked SHA-256 more than one year ago, they back-tracked. Rescinding the original claim, they announced that an equipment flaw caused them to incorrectly conclude that they had algorithmically cracked SHA-256.
 
“All sectors can still sleep quietly tonight,” said CEO Mike Wallace. “Preliminary results in this cryptanalytic research led us to believe we were successful, but this flaw finally proved otherwise.”
 
Yeah, sure! Why not sell me that bridge in Brooklyn while you backtrack.

The new claim makes no sense at all—a retraction of an earlier claim about a discovery by a crack team of research scientists (pun intended). The clues offered in the original claim, which was issued just one day earlier, cast suspicion on the retraction. Something fishy is going on here. Who pressured DuPont into making the retraction—and for what purpose? Something smells rotten in Denmark!
Let’s deconstruct this mess by reviewing the basic facts:

  • A wall street, financial services firm proudly announces the solution to a de facto contest in math and logic
  • They succeeded in this achievement a year ago, but kept it secret until this week
  • One day later (with no challenge by outsiders),* they announce a flaw in the year-old solution

Waitacottenpickensec, Mr. DuPont!! The flaw (an ‘equipment issue’) was discovered a year after this equipment was configured and used—but only one day after you finally decide to disclose the discovery? Poppycock!

I am not given to conspiracy theories (a faked moon landing, suppressing perpetual motion technology, autism & vaccinations, etc)—But I recognize government pressure when I see it! Someone with guns and persuasion convinced DuPont to rescind the claim and point to a silly experimental error.

Consider the fallout, if SHA-256 were to suddenly lose public confidence…

  • A broken SHA-256 would wreak havoc on an entrenched market. SHA-256 is a foundational element in the encryption used by consumers & business
  • But for government, disclosing a crack to a ubiquitous standard that they previously discovered (or designed) would destroy a covert surveillance mechanism—because the market would move quickly to replace the compromised methodology.
I understand why DuPont would boast of an impressive technical feat. Cracking AES, SSL or SHA-256 has become an international contest with bragging rights. But, I cannot imagine a reason to wait one year before disclosing the achievement. This, alone, does not create a conundrum. Perhaps DuPont was truly concerned that it would undermine trust in everyday communications, financial transactions and identity/access verification…
 
But retracting the claim immediately after disclosing it makes no sense at all. There is only one rational explanation. The original claim undermines the interests of some entity that has the power or influence to demand a retraction. It’s difficult to look at this any other way.
 
What about the everyday business of TS DuPont?
 
If the purpose of the original announcement was to generate press for DuPont’s financial services, then they have succeeded. An old axiom says that any press is good press. In this case, I don’t think so! Despite the potential for increased name recognition (Who knew that any DuPont was into brokerage & financial services?) I am not likely to think positively of TS DuPont for my investment needs.
 
* The cryptographic community could not challenge DuPont’s original claim, because it was not accompanied by any explanation of tools, experimental technique or mathematical methodology. Recognizing that SHA-256 is baked into the global infrastructure: banking, commerce and communications, their opaque announcement was designed to protect the economy. Thank you, Mr. DuPont, for being so noble! 

Stunning 1st image of a Black Hole

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Eight of 347 scientists: Their achievement is above the fold in major newspapers

Yesterday (Sep 5, 2019), the Breakthrough Prize Foundation awarded $21.6 million US dollars to the scientists behind a stunning achievement. They imaged a black hole. Although the image was announced and released 5 months ago, the story is still unfolding.

The Breakthrough Prize is funded by Russian-Israeli billionaire Yuri Milner. It is the highest-paying science prize for researchers in life science, math, and physics.

There are many black holes in our galaxy and some small ones in our own galactic “neighborhood”. Yet the EHT team* focused on M87, a black hole in the center of another Galaxy, 55 million light years from our solar system.

This is pretty far, but it is a massive black hole with a bright accretion disk (stuff around the event horizon), and it is orthogonal to our vantage point. How big is the M87 black hole? It is bigger than our entire solar system!

At this unfathomable distance, it is difficult to image anything smaller than an entire galaxy. But by combining data from instruments and math teams around the world, scientists released in April an actual photograph. To be precise, it is the shadow of a black hole, but it clearly shows the accretion disk, event horizon and a hole in the middle. In fact, it shows a perfect, glowing donut.

* The EHT = Event Horizon Telescope

To achieve the implausible, scientists combined data from 8 radio telescopes around the world, including two operated by the European Southern Observatory in Chile (producer of the first video, below). Although data was captured as radio waves, a team of 347 scientists pieced the information together into an actual image. What you see in the paragraph above is not an illustration based on data. It is a genuine photograph.

As you view the 1st video below, you may not feel that it is new. Even with the Big Bang in question, black holes are certain fact, and images have been circulating for years. But—until now—those were all artist’s renderings. There has never been an actual photo of a black hole. This is a first.

A web search turns up many videos about the achievement. Some are less than 2 minutes, and some are 2 hour documentaries. I like these two videos: [1] a 17 minute video documenting the effort to achieve this milestone and clearly explaining the result—and [2] an 11½ minute Ted Talk:

  1. In the Shadow of the Black Hole
  2. Inside the Black Hole That Made History

Can Bitcoin transactions be made private?

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The blockchain is public, yet a Bitcoin wallet can be created anonymously. So are Bitcoin transactions anonymous? Not at all…

Each transaction into and out of a wallet is a bread crumb. Following the trail is trivial. Every day, an army of armchair sleuths help the FBI. That’s how Silk Road was brought down.

The problem is that some of that money eventually interacts with the real world (a dentist is paid, a package shipped or a candy is purchased at a gas station). Even if the real-world transaction is 4 hops before or after hitting the “anonymous” wallet, it creates a forensic focal point. Next comes a tax man, an ex-spouse or a goon.

The first article linked below addresses the state of tumblers (aka “mixers”). They anonymize an open network by obfuscating the trail of bread crumbs.

Mixers/tumblers aren’t the only way to add a layer of privacy to Bitcoin transactions. The Lightning Network spec includes an optional 17-hop onion routing (just like TOR’s 4 step onion routing). I have not yet seen the feature expressed in wallets or services, but if implemented, it will be even more private and trustworthy than a mixer, because there is no middle party to trust (by you) or squeeze (by investigators). It has the potential to makes any crypto Bitcoin even more anonymous than cash.

Certain cryptocurrencies (not Bitcoin) have anonymity baked in by design. Monero, ZCash and Dash are privacy tokens that use very different approaches to eliminate the bread crumbs. Monero appears to have one distinct advantage: Like the TOR network, it is trustless. But there are benefits to each approach.

The Race to Own One Bitcoin

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Bitcoin has become the most popular cryptocurrency with many people using this experienced Bitcoin trader – diesen Bitcoin Trader Erfahrungen – to help them invest in the crypto market wisely. Owning one full bitcoin is becoming a recognized attainment goal. And thereby hangs a tale.

Even if Bitcoin were distributed to only USA residents, and even if everyone had the same fair share, it amounts to just 1/18th of a coin for each individual. But wait-it gets worse! Many early adopters already have 10 or even 100 BTC. So, the distribution will never be even. That’s what is driving a frenzy over acquiring one full bitcoin.

Is it just a numbers game? Isn’t the unit a bit arbitrary and meaningless?…

The logistics and the math are compelling. I recognized the importance of reaching this personal milestone more than 8 years ago. But I was a nobody. No one cared. Then, in April 2019, we began to see articles in legitimate venues about the goal-articulated in exactly this way. In fact, I borrowed the title of this post from this article in Medium.

Who Says So?

In the Before Time, the drum beat came from me, Charlie Shrem and Andreas Antonopoulos. In the Middle Age, Tim Draper, Craig Wright and the Winklevoss twins contributed to the siren call. But in the Modern Era (the past few days), it has become a mainstream mantra. Coinbase CEO, Brian Armstrong, added his voice to the idea that owning one full Bitcoin is not just an exercise in numerology.

“For better or worse, I do think owning one whole Bitcoin will increasingly become a big deal. Only 21M will ever be produced. Some people already own much more than one.”

-Brian Armstrong, Aug 25 2019

“If you own 1 BTC, you’re mathematically guaranteed to be top 3/1000 richest in the world, in BTC terms. (21m / 7B).”

-Changpeng Zhao, Aug 25 2019

“If you own 0.28 BTC and HODL, you can be certain no more than 1% of the current world’s population can EVER own more BTC than you. A modest investment of $1,830 today can ensure you are a 1%er in a future Bitcoin world.”

-Steve Lee, Aug 25

In a March editorial, Xapo CEO Wences Casares advised investment fund managers: “Most portfolios should allocate up to 1% to Bitcoin“. He also said:

” If Bitcoin does succeed, 1 Bitcoin may be worth more than $1 million in 7 to 10 years.”

– Wences Casares, CEO of Xapo; PayPal Board of Directors

Despite getting religion early on, I have mixed feelings about this. The investor mindset-HODL, flipping and converting to Fiat-is the biggest threat to adoption, ubiquity, fluidity and utility. Currently, 98% of all transactions are driven by people buying or selling bitcoin, rather than using bitcoin to buy lettuce, a new SUV or a family vacation. That’s the problem. Bitcoin will fail to gain mainstream appeal and adoption until the fraction of transactions driven by purchase & sale, salary, debt payment, real-estate and buying groceries dwarfs the fraction driven by traders or conversion into and from Fiat.

Yet, it is impossible to resist the lure of a deflationary commodity during the early adoption era. The supply cap and adoption math clearly point to a rising unit value. What is the point in having the capacity and foresight to recognize a new technology or a radically transformative paradigm if you cannot treat it as an investment asset, while waiting for adoption?

I don’t know how we will push through the chicken-and-egg problem of volatility–utility–adoption–ubiquity. But I am confident that Bitcoin will ultimately reign supreme-not just as a payment instrument-but as a store of value and a leading international currency.

For now, this opinion is still in the minority. Otherwise a commodity with only 18 million units in circulation would have a far higher value than the current exchange rate. It is from this certainty and disparity that opportunity arises.

For those that don’t quite get Bitcoin, owning one full bitcoin seems like an arbitrary goal to achieve. After all, it is a useless token that can be imitated by other-better-cryptos. To these folks, Bitcoin is a fad, a fools gold, or an outright scam.

Do you own a whole Bitcoin? Few will own more than a fraction

What they don’t get is the legitimate, organic, two-sided network that buttresses bitcoin and no other currency. A new-age intrinsic value that surpasses the utility & scarcity of gold, but with benefits that outstrip gold and fiat. The inherent value and the pillars that support value are unlikely to be eroded or transferred, even during periods of technical crisis, hacking or regulatory hysteria.

If something better than Bitcoin comes along, two things will happen to ensure supremacy:

  • Improvements will be folded into Bitcoin. After all, a trusted crypto is open source, transparent and license free. The leader can snag any feature or improvement.
  • If another chit is more fluid, flexible, friction free or private, Bitcoin will remain the background reserve through which other “instruments” derive value. This is already occurring.

So, should you buy into the hype? Should you accumulate one full bitcoin while you still can? At the risk of obnoxious immodesty, here is one more quote. Add it to the list at the top of this article. Then, decide for yourself!

“The handwriting is on the wall. Popular adoption is a work in progress. But it is, nevertheless, fait accompli. This handwriting is indelible.”

-Ellery Davies, A Wild Duck

Related:

Ellery Davies co-chairs CRYPSA and produced The Bitcoin Event in New York. He writes for Quora, LinkedIN, Wild Duck and Lifeboat Foundation, where he sits on the New Money Systems Board.

Betty’s Table: Something completely different

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Let’s start with a backstory. The real story is in the last ⅓, but don’t jump ahead just yet! We’ll paint a backdrop of rich texture and introduce key characters: Me, Betty, my mom and brother, Betty’s son, Gaston and my daughter. But wait! I’m getting ahead of myself.

Do you remember Betty? Of course you do! She was friends with my older brother, Chuck, after he graduated from college. I was still in middle school, but I looked up to her and hoped that she would become my sister-in-law. How cool is that!

I grew up in a Chicago suburb. In this photo from the 1970s Betty prepares a Sedar meal at our home. (Hence, a box of Matzo on the right).

Betty and Chuck never felt the electricity needed for romance. But we didn’t lose Betty to the wind. She formed a close personal and professional friendship with my Mom. They worked together at Mom’s antique store and the two of them started several business ventures.

Eventually, Betty got married and moved to France with her new husband. He had managed a Chicago restaurant, but got a job at much fancier restaurant in Paris.

I visited Paris in the 1980s after graduating from college. Betty had already been there for 4 years, and our families had all but lost touch.

This was an impulse trip. Northwest Airlines started non-stop service to France. To announce the new flights, they cut the fare to $99 with no advance reservations needed. It was as easy as stepping onto a bus. And so, I flew to Paris for a long weekend. I had no plan, didn’t speak the language, and didn’t know anyone—except Betty and her son, Gaston.

When Betty moved to France, Gaston was just 8 years old. Now, at 12, he was speaking French more fluently than his mom. I borrowed him as personal translator and tour guide. (Today, he lives in Poland with his son and daughter).

On the left (1980s), 12 year old Gaston shows me the Eiffel Tower. 20 years later, I visited with my daughter (not shown). On the right, Gaston returns with his daughter. Life comes around!

Betty’s Rising Star

Any friend of our family—or Betty’s family—knows that she is incredibly artistic. She has always been oozing with talent. Regardless of the medium, painting and sculpture are second nature to her. In France, she became a sensation—living and working there for more than 20 years.

But recently, Betty divorced and moved back to Chicago. Eventually, she started a summer arts camp for children in Wisconsin. I am certain that she would have renewed many projects with Mom, but my mother died of Ovarian cancer years ago. That chapter has ended for all time.

Betty continues to thrive as an artist. She paints murals and is constantly offered private commissions to paint a specific thing—or for a special occasion. With rising stature and prolific output, she is doing well.

Poignant and Affective

Now that you have the background, here is a very short story. It’s more about me than it is about Betty. If you’re into happy endings, you may want to wait for the unwritten epilogue. This one is filled with happy memories, but very sad as it reaches present day. That’s because the happy memories may be only in the past.

Today, I experienced a pang of nostalgia and a terrible emptiness. To empathize or console, click to enlarge the photo collage and look closely at each image…

Betty paints a table for Ellery

Photos in the top row were taken 36 years ago. Bottom photos were taken today. This was my kitchen table for all but eight of those 36 years. It got lots of use, even after it was replaced in our kitchen. But now, I can’t bear to look at it. It sings out too many happy memories. Memories of the past. Memories that overwhelm my constitution.

Top Row (May 1983): Mom took the 3 photos in the top row. Betty is customizing an expandable table with a mural for my new home. Flowers and birds line up perfectly, with or without the expansion leaf. Just as with this ostrich egg, Betty’s Escher-like talent can wrap an illustration around a surface and lock it back onto itself like a jigsaw puzzle.  »

Bottom Row (August 2019): The bottom row shows the table being loaded onto a dumpster in front of my home. It saw its last meal a few months ago. Now, I am divorced and alone. My daughter has just left for college on the other coast. She is 2,700 miles away and the home is just too filled with stuff to sell, rent—or even to continue using on my own. I need to downsize. And to be honest, the happy memories of the past are too painful for this table too stay so close to me.

Homework at Betty’s table

In 2011, I flew across the country to care  for my ailing father. Back home, my wife remodeled the kitchen and bought a new glass table. Since then, Betty’s beautiful table has lived in our cellar. But, even after we separated, it came upstairs frequently—as if it wanted to be sat at and used. I have dragged it up and re-assembled it whenever we had a cookout, when my daughter operated a lemonade stand, and even after my wife left the nest. She occasionally borrowed it for an event of her own. I was happy to loan it to her. After all, Betty and this table have been a silent part of our lives for so long.

But now, it is time to shed a tear and say good bye.

This was a grand table. Just like the love for my daughter, it is still sturdy and functional. I love it and I will miss it. Even though the choice is mine, I cried as I took it out to a dumpster to become buried in a landfill of rubbish. Just like people, it will eventually return to its organic roots.

No one will ever sit at this table again. No one will ever eat at it. No one will ever think of Betty, when they gaze at the beautiful art—except, perhaps, in this sad story.

I wonder how Betty is doing today? I wonder if she ever thinks of Mom. I wonder if she will ever see this article. I may see Betty again, but once the dumpster is picked up, I will never again see Betty’s beautiful table. Perhaps, you will shed a tear with me. I just don’t know if I did the right thing.

I considered including a photo of my daughter’s princess wand next to my Halloween wig. But for now, I cannot bear to share it. Wig and Wand at the top of a box in a trash dumpster—too much to deal with.

The dumpster will be at my home for 10 days, as I sweep out a lifetime of memories—mostly happy ones. Why am I sad?

Spending Bitcoin in Person is Easy (What happens in background is elegant)

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Today, I was co-host of an online cryptocurrency symposium-taking questions from hundreds of visitors. A common question goes something like this:

Can Bitcoin be used in person-or is it just for internet commerce?

Well, most cryptocurrency transactions are used through trading. If you want to find out how to trade Bitcoin then take a look at this review on Bitcoin System to learn more. However, not all transactions are down to trading and a growing number of transactions are done for the exchange of goods.

Our panel had a moderator, and also an off-screen video director. As I cleared my throat in preparation to offer a response, a voice in my ear reminded me that it was not my turn. The director explained that another panelist would reply. It was a highly regarded analyst and educator in Australia. Realizing that she was calling the shots, I deferred.

I was shocked as I listened to this far off colleague suggest that Bitcoin is not useful for in-person payments. I wonder how he explains this to the grocers, tailors, lawyers, theme parks and thousands of retailers who save millions of dollars each year by accepting bitcoin-all without risk of volatility and even if they demand to instantly convert sales revenue into Fiat currency.*

“Of course it can be used in person, Numb-nut! Yes, even the stuff you get off of Zipmex and other platforms.“
(I kept this thought to myself. I know better than
to criticize another panelist).

An in-person transaction, such as paying for a meal after consumption, is an ideal use scenario. It benefits everyone: The seller captures greater value and the buyer is unlikely to need bank-brokered arbitration. He only needs a receipt. He will never demand a 90-day return warranty, claim that he was shipped an empty box, nor complain about the amount charged.†

But this isn’t about my clueless colleague. It is about the ease of using Bitcoin in person and the interesting stuff that happens in the background. Let’s look at a simple purchase scenario – and then we’ll dig in to marvel at the settlement process. This is a true story, told in 7 bullets. It occurred in the summer of 2015-just 5 years after the very first use of bitcoin to purchase anything (Bitcoin Pizza Day was May 22, 2010).

  • It’s 2 AM on a moonlit Sunday morning. Driving from Boston to New York, I rehearse the Bitcoin presentation that I will deliver at a startup clinic hosted by LaGuardia Community College and the Cryptocurrency Standards Association. Wracked by hunger, I pull off the last exit in Connecticut and find the Darien Diner. Great food! My meal costs $12.
  • As I take one last bite of midnight quiche, I realize that I forgot my wallet! No cash; no driver’s license. Although I have a smartphone, it is brand new. I have not yet loaded it with credit cards. But I can access to my passwords and accounts.
  • I scope my surroundings. The waiter is the only one on the main floor. He is also the cashier. Seeing no other customers or staff, I figure that the owner or cook is in the kitchen; probably the only other person on site. I approach the cash register, hoping that the waiter will accept my apology-and trust that I will pay on my return trip in a few days. Before I launch into a poor-man’s excuse, I spot a placard shown below. Bitcoin is among the diner’s accepted payment methods. Pretty neat for 2015!
  • Bitcoin accepted hereI ask the cashier how I can pay with Bitcoin. His response catches me off-guard: “I have no idea…They told me that you would know.” What?! Does this guy recognize me? Does he know that I am on my way to give a Bitcoin lecture? This seems very unlikely. Gradually, I understand what he means, and I know what to do…
  • I point my smartphone at the QR code (It’s taped to the cash register next to the words: “We accept Bitcoin“). In fact, this restaurant is fully on board. I am amazed to see that a display on the register offers a custom code that is encoded with the exact meal cost. That’s really cool! So, I shift my camera to that code.
  • Immediately, my wallet asks if I would like to add a tip. (It’s hosted by an online exchange, but an application wallet will also work). I add $3 and press SEND.
  • A thermal printer next to the till spits out a narrow receipt. At the very bottom, where it would typically say “Paid with MasterCard ending in ?3862”, it says “Paid with Bitcoin“. The buzzing sound of that receipt printer tells the cashier that I am good to go. Good food in the tummy and a bill has been paid. Case closed; Return to car; Drive to New York. Note to self: Find other Bitcoin vendors on trip.

What Really Happened?

In the seconds between authorization and a printed receipt, fascinating things occurred around the world. Seriously Fascinating-just like magic! It is transforming the way payments work and-eventually-the way we view, understand and manage cash. ‡

  • When I clicked SEND, a limited subset of Bitcoin credentials was presented to a massively distributed, worldwide network of miners. In effect, I informed the bookkeepers that I wish to have $15 transferred to the restaurant’s public address.
  • Seconds later, my original credentials are voided (this solves the ‘double spend problem‘) and a transaction is added to a public ledger called the blockchain. My stake in that ledger now reflects slightly reduced wealth-all without a bank, government, repository, treasurer or monetary policy. In fact, there is no authority at all, except fair and transparent rules of math; something we all agree upon.

But wait! It gets even more fascinating…

The “miners” that settled the transaction and provided the new Bitcoin credentials needn’t have any awareness that they just facilitated payment for a meal at a diner in Connecticut. From their perspective, these individuals and large server farms in Iceland, China, Israel, and South Africa-and in college dorms spread across the world-are engaged in a massively distributed gaming competition. They are competing for rewards based on solving a math problem.

As you review that last paragraph, imagine the elegance of the global network. Imagine the power, robust nature, and benefit that comes from it’s redundant and decentralized architecture. Imagine the brilliance of an anonymous genius who goes by the name “Satoshi”. Imagine the incentive for disparate bookkeepers to play a critical role in balancing a world-wide ledger. Imagine that authorities cannot shut down the network or even slow down adoption or the pace of transactions. Imagine the trust that individuals, businesses, NGOs, banks and governments no longer need to can put in a monetary supply and mechanisms of accounting. (Never again must we trust institutions to record our transactions or protect our wealth). Imagine a world where this trust benefits everyone uniformly, fairly, and without a path to graft or inflation.

Bitcoin and the blockchain-introduced together-are not minor, incremental contributions to economics, bookkeeping, trust or commerce. They are overwhelmingly significant to the future of human society and every institution and inhabitant.

Notes / Caveats / Clarifications

† You may have heard that bitcoin transactions are immutable. This is a simplification. The public ledger is immutable, but transactions are reversible, if terms are clear to both parties. Just as with Ethereum, smart contracts are built into the technology. So are hooks to centralized mediation, if that’s what the agreement calls for. Charge-backs, refunds, warranty demands and other arbitration are all possible. These features are built into Bitcoin, but rarely used in this early era.

Most Bitcoin transactions today are payments; they are not charges. Although they do not typically accommodate bank-brokered returns, rescission and charge-backs, these are all possible, and often without requiring an authority to broker the dispute. But these traditional safeties or mitigation must be agreed upon in advance. No longer does the seller have all the power, or the buyer need to run to a credit card processor to complain. Sales are either immutable or brokered by a 2-party contract.

This is not your grand-daddy’s payment mechanism. It is so much more evolved!

‡ In 2017, Bitcoin went through a period of intense growing pain. Transactions became so slow and costly, that in person transactions became impossible, especially for any amount less than $500. If you needed a transaction to complete in less than an hour, you would need to enlist in a bidding contest. A quick confirmation could cost upwards of $30 US.

The restaurant payment related above was an on-chain transaction. Today, transactions that use the Lightning Network overlay may occur within a private channel apart from the blockchain. But ultimately, every change in bitcoin ownership results in an individual or aggregated entry onto the blockchain.

* Crisis in late 2017 and 2018

Sadly, in researching this article, I learned that the Darien Diner no longer accepts Bitcoin. Problems with transaction cost and delays in late 2017 and early 2018 discouraged a great many retailers. No one purchasing a $12 meal will pay $30 in fees, and a cashier is not going to wait 2 hours to validate payment from a customer who has already eaten a meal and wants to hit the road.

That glitch sparked a terrible flight from retail adoption. Even now (Q3 of 2019), retail penetration is sharply off its peak. We are barely clawing our way back to the early adoption rate. Vendors lost faith, and many don’t yet realize that their POS investment can now be safely be reactivated. Lightning Network to the rescue!

The Next Crisis

Another crisis is looming, but it too will be solved.

Although the Bitcoin network is fast and inexpensive, the proof-of-work method used by miners to arrive at a distributed consensus consumes far too much power to scale. Mass adoption would consume more power than the world currently generates.

And here’s the kicker: The mining incentive ensures that any new, inexpensive energy that might be discovered in the future would be gobbled up by miners with no additional benefits to society (or even to the Bitcoin network). All the new, free (or cheap) power would be diverted away from homes, businesses, manufacturing and public works. The incentive for grabbing every cheap watt is very much like a cancerous growth.

Clearly, this is not sustainable. Bitcoin mining already uses more power than all of Argentina. But great minds are working on the problem and alternative methods of guaranteeing a fair, crowd-sourced accounting consensus are being tested, analyzed and debated. We will get through this complex problem, and hopefully-this time-without demoralizing a key factor in the tetrad: Consumers, developers, vendors & miners.

China currency devaluation & US response

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Today’s post is all about Why was it done? And What will be the effect?. But first, let’s recap what just happened…

In the past year, the exchange rate between the Chinese Yuan Renminbi and the US dollar has drifted between 6.75 and 6.95 ¥/$. But this morning, it shifted. The Yuan was intentionally devalued by the Chinese government to punish (or perhaps to provoke) the Trump administration.

Let’s start with a little recent history—narrated with a big dose of editorial sarcasm…

Yuan-Dollar Exchange RateTrump is not happy with China’s economic growth, leadership in 5G infrastructure, success in launching satellites, building new airliners, and of course their construction of islands off their own coast. (Do you suppose that the Chinese would make a fuss over construction projects in the Gulf of Mexico, even if it served a military purpose?!)

And so, Trump held rallies and press conferences. This is what he does best. He mumbled some trumped up complaints about an uneven playing field, and he slapped a series of escalating tariffs on Chinese imports.

Naturally, the Chinese retaliated by limiting their purchases of soybeans and pork, and they asked their own companies to scale back the purchase of US food, materials and machine equipment.

This led to a tit-for-tat. That’s not a surprise. A negative outcome was virtually guaranteed by the US president. Eventually, Trump followed through with even higher tariffs on even more goods, because that’s exactly what he said he would do—And since the Chinese didn’t cave to his demands, he became worried about sounding tough and saving face.

Mr. Trump claims that the Chinese government pays these high tariffs, rather than US consumers. And he doesn’t seem to realize that when no one is willing to pay, it retards commerce. When no one is buying, it is no longer a debate about who pays. Import tariffs don’t protect workers or industry, they simply thwart trade.

Yesterday, in the wake of increasing tariffs by the Trump administration, China devalued its currency, announcing an exchange rate of 7 ¥/$. This is not too radical. In fact, it is in line with recent history. After all, even a communist regime is limited in how much they can bend the exchange rate against another major currency. If they try to manipulate more than a little (or for more than a short period), they risk three undesired results:

  1. It bounces back with a vengeance
  2. Citizens lose buying power and they become enraged. Eventually, they revolt or begin using other currencies. Governments hate losing control over currency.
  3. The government goes bankrupt. After all, you cannot really manipulate the results of massive capitalist forces.

But the devaluation irks Mr. Trump. Having a sparing partner who keeps getting up off the floor, is stronger than you, and who claims the high moral ground is really infuriating. It gets under Trump’s orange skin—especially since he likes to hug the American flag at rallies.

Of course, manipulating currency is not unique to the Chinese. Although Trump probably doesn’t recognize or acknowledge it, America regularly tweaks interest rates through an obscure and mysterious agency called the Federal Reserve. That same agency licenses banks to create imaginary money out of thin air and loan it to real businesses for a profit, under a system called Fractional Reserve lending.

Lately, I have cross-published some of my favorite answers as a Q&A writer for Quora. Here are two answers that were posted this afternoon. In the second answer, we’ll get into America’s unique and precarious position as bearer of the reserve.

Question #1:
Why is China devaluing its
currency bad for the US?
Answer:   It’s not!

What is bad for the US is our continuing trade deficit and our willingness to print currency to continue massive consumption in view of our withering industrial base. That is, we export far less than than we import from China. And the only thing we give them in exchange is paper promises.

We love to consume Chinese products, and we give back few tangible goods beyond soybean & pork, Hollywood movies and jumbo jets (and to our allies: weapon systems). These are legitimate industries, but they do not match the economic power of clothes, toys, computers, car parts, mobile phones, TVs, 5G infrastructure, etc, etc, etc.

Even most of our high-tech chips (an industry that we still dominate) are manufactured in Asia, Israel and Europe.

The reason the US retaliates against Chinese currency controls or tariffs with panic and/or sanctions is because individuals who do not understand economics (or wish to placate nationalistic sentiment) fear that a weak Yuan will continue to promote cheap exports into the US and an inability for US companies to get a fair price for their exports.

What they fail to understand is that a ‘fair price’ ultimately tracks back to what a nation produces and ships out to balance its consumption. Currency manipulation is an illusion* and sanctions cannot fix this.

And don’t even get me started about Huawei… The US is demonizing an innovative value leader in the next generation of communications infrastructure and gadgets for the sole purpose of diverting attention from its own failings and to buy short term advantage. The argument that Huawei’s ties to a communist government would lead the company to spy on western users is not only a red herring, it flies in the face of economic reality.

2. Question #2:

Why did US designate China
as a “currency manipulator?”

Answer

The US took this meaningless step because some individuals in the US government are arrogant, whiny, little brats that do not truly understand the nature of free market economics. They are reacting to declining US productivity and exports—or, perhaps their advisers don’t understand the self-balancing nature of capital markets.

The relationship between two global currencies cannot be manipulated apart from very short intervals. This short term manipulation is driven by short-sighted motives—and it ultimately backfires when assessed against the original goals.

If you depress the value of something by creating an “official” exchange rate, you would quickly bankrupt the government that made such a goofy proclamation. That’s why these announcements rarely produce lasting results. Economists recognize that when you closely track the outcome (with other factors normalized), results are almost always in opposition to original goals.

Chinese currency doesn’t need to be devalued, because the Chinese have been so incredibly productive over the past 30 years. They are producing so many high quality shoes, toys, computers, car parts, underwear and construction materials, that other nations are becoming lazy. Their currency has a low value, because they continue to ship huge quantities of low-price products to us and are willing to continue accumulating dollars. That is, throughout an enormous trade imbalance, they trust our ability to repay.*

This is why China’s Yuan is ‘cheap’. It is not because of anything that the US government does as a reaction to transient political or economic issues.

Likewise, attempting to ban a country from selling products internationally below what it costs in the domestic market is a useless and counterproductive law, even from the perspective of the consumer nation.

There is rarely a justifiable and rational “manipulation”—or more accurately, action—imposed by consumer nations on its trading partners (other than figuring out how to reboot their own industries!)

For every rule of thumb, there is an exception. I can think of a few punitive actions that are justifiable, because they protect things that cannot protect themselves in a free market: The use of prison labor, child labor, slave labor or any production that poses a health hazard (for workers or buyers) or that harms the global environment.

The problem with these practices is not they create an unfair marketplace. Rather, they represent morally and universally condemned activities that kill or subjugate. And so, pressure and uniform restrictions from outside nations helps to quarantine a practice and ultimately make it unprofitable. But economic pressure applied by coalitions or trading blocks for any other reason is destined to fail. You just can’t fly against the headwind of widely disbursed, free market, capitalist economics.

With respect to currency “manipulation”, monopoly trading blocks or underpricing, sanctions are not only ineffective, they are unnecessary. If we allow the economic activity to play itself out in a free, fluid and unregulated manner, these things not only work themselves out, they actually backfire on the manipulator!

* When I refer to America’s “ability to repay” (i.e. for all the things that we have consumed without exchanging products of equal value), I am not referring to handing the Chinese more and more green pieces of paper with portraits of dead presidents. Dollars can be created out of thin air by transient politicians who continuously raise the debt ceiling. This can lead to a collapse in value and the Chinese know this.

Rather, I am referring to the confidence that our trading partners have demonstrated (at least until very recently), that we will eventually restore the vigor and volume of our manufacturing industries—and also be willing to use most of these newly restored resources to work for them and not just to generate products for consumers back home.

Will nations, institutions and large pension funds continue to prop up the dollar at a time when industry is dying, exports are scant, and legislators keep raising debt—kicking the can down the road?

This unfounded trust in the great nation that triumphed in world wars and the space race cannot last forever. What will signal the turning point?

The signal has already been lit. This year, it’s just a flicker, but in the next two years, it may well ignite the tinder that leads to a global forest fire.

The reason that the US can get away with kicking the can so far down the road, is because the US dollar has been the de facto reserve currency for most international deals, even when neither party to a transaction is in the US or serving US interests. The use is milking a convenient truth: He who controls the reserve currency needn’t balance his books—not for a long while!

Very large contracts for ships, airplanes, oil, wheat, weapons and pork bellies are typically quoted and guaranteed in US dollars or dollar equivalents. This is not required by law, of course, but it arises from the fact that buyers and sellers do not trust the forward inflation of each others’ currencies. Since the US dollar tends to inflate very slowly, they agree to use dollars to settle their affairs.

This clearing house effect leads to an enormous US advantage and it is fed even by nations that despise America.

A few years ago, it seemed that the Chinese Yuan might take the mantle from the US dollar as de facto reserve currency. Even currencies of UAE or Qatar seemed like they might supersede US influence, because of their status as a banking hub or massive energy exporter. But this left many nations uncomfortable, because the Chinese government—though capitalist—is still communist. Energy and banking economies have shown signs of instability, and of course, the middle-east is constantly a source and target of terrorist activity.

All of these factors lead commercial interests to wonder if currencies backed by these nations will last for the decades of a big trade deal and if they will be sufficiently protected from manipulation or inflation by future kings or monetary Czars?

Enter Bitcoin

Sure Bitcoin is new; it’s controversial and it is requires a very different way of understanding money. But it is unquestionably fair, democratic, trustworthy and immutable. Nothing else even comes close.

Gradually, economists, banks, enterprises and governments are coming to the conclusion that the choice of a reserve currency is an issue of trust. And what can be more trustworthy than math and crowd-sourced bookkeeping?

What about volatility?

In the end, it’s not about volatility. Even today, payment processors will protect any vendor who accepts bitcoin, but wishes to convert revenue into local currency.

As Bitcoin becomes ubiquitous (not as an investment—but as a payment instrument, and ultimately as the value itself— it will also become stable. Ten years from now, if you observe a massive spike or dip in the dollar exchange rate, you will not wonder “What happened to Bitcoin today”? Rather, you will wonder what happened to the US dollar. That’s because you will be using bitcoin to pay for a head of lettuce, a new car or a vacation cruise, and the vendors will honor their current prices in bitcoin.

Should you toss out that dial-up modem?

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Today, a reader asked me: “Is there any justification for keeping an external modem?”

Of course, the word modem applies to current technologies, such as cable modems and ONT (the modem that connects a home or office to FIOS). But, I am pretty sure that this reader is asking about a POTS dial-up modem (POTS = Plain Old Telephone Service).*

Answer: It is safe to toss out this antique, save it for a museum, or let your 9 year old bring it to Show-&-Tell:

“My daddy used a Moh-dum. It’s how pre-historic humans got online in the Stone Age!! They called it America Online”.

Sometimes, a common tool passes into the realm of anachronism while it still sits in your tool box on your workbench. My daughter is already 18. Yet, she has never wound a watch, dialed a telephone (with a spring-loaded reciprocating dial), or tuned in a car radio. If it weren’t for an eclectic interest in the movie iRobot (Will Smith orders a pair of classic shoes from his grandfather’s era), I doubt that she would have ever experienced tying shoe laces.

But wait! Could a dial-up modem be useful when your lose Internet service—for example, during a storm or other service blackout? Not really. Who ya gonna call?!

If you have an urgent need to get online while your primary service is interrupted, you can create cell phone hotspot or ask a neighbor for temporary access to his WiFi signal. Holding onto your dial-up model is as useful as holding onto two tin cans connected by string. In most countries, you would have a hard time finding a modem that could answer your call at the other end!

If you are older than 35, then here is a friendly sound from your past (click YouTube image below). It is the sound of a dial-up modem connecting to a bulletin board or an internet gateway. If you used this type of modem, then you temporarily without phone service (unless you had an extra line of phone service). You even had to disable call waiting, so that the data connection was not interrupted.

* Incidentally, POTS is, itself, an extinct technology. Even if you have a twisted pair of copper wires entering your home and telephone jacks with red & green wires coming up from the cellar, it is very unlikely that this wire pair goes far beyond the phone pole outside your house. Your analog phone signal was converted from digital data far upstream and multiplexed with many of your neighbors into a high-speed data stream or onto a broadband carrier signal for distribution within your neighborhood and for long distance.

Instead of circuit switching your voice with the person you are talking to, telcos often use intranets and even the public internet, just like individual users with a VoIP SIP.

Modem Trivia

  • Dennis Hayes invented the PC modem. Hayes introduced a 300 bit per second modem in 1977 for $280. By the time that modems were being replaced by ASDL and direct connect cable services, the fastest 56,000 bps modems were often available for free after store rebate.
  • In the mid 1980s, new consumer modems bumped up data speed from 1200 bps to 2400 bps. Around that time, Hayes aired the first TV commercial for a computer component—rather than the computer itself (the Hayes modem). It was years before a 1991 TV commercial that promoted the brand and logo of an internal part (“Intel Inside”), rather than the product being advertised. Nutrasweet attempted the same ingredient branding at around the same time. Still later, in 1993, Intel introduced the Pentium CPU.

Hub, switch or router: Which do you need?

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This article was originally an answer to a member of Quora, the Q&A site at which I am a columnist. I am active in bitcoin and computer networks.

The question:

I have a 2nd computer in a room with one network outlet. I prefer to use a network cable and not WiFi. I think that I need a”splitter”.

I realize that each device gets unique data. So it’s not as simple as adding a power strip with extra sockets. I have heard of hubs, switches and routers, but don’t know the difference. Which do I need. Will it cost an arm and a leg?

Answer

All you need is a very inexpensive switch. In fact, the best consumer model discounts for less than $15. I recommend one at the end of this answer, which also addresses your more general question.

So, what is the difference between a hub, switch and router? Let’s dig in…

1. Hub

A “hub” is a relic from the 1990s. Someone using that term today is probably referring to a switch.

In past decades, it was cheaper to use a single communications amplifier without dedicated circuit paths for each internal and external connection.

For example, if your maximum Ethernet speed is 100 Mbps, than this is all that is available to ALL conversations. So, even if someone wanted to backup to a local network device or stream from a disk drive attached to the router, they would be slowing down everyone – even the devices that are accessing the Internet.

2. Switch

But a switch is much better. It supports the maximum negotiated speed of each 2-way connection without slowing down any other connection. So, for example, if port 5 is connected to port 2, it does not impact port 7 which is connected to the WAN/Internet port.

Large models, like a HP J9147A or a 48-port unit shown here are typically managed switches and support Power-over-Ethernet. These costly enterprise features are not needed in a home or small office. In my opinion, the more important operational features have all become inexpensive and mainstream: auto-sense, auto negotiate, auto-fall back, jumbo frame, power save, and more.

3. Router

A “router” refers to the function that keeps track of packets entering and leaving your home or office. It ensures that returning packets get to the proper device. Some routers have only one WAN/Internet port and one LAN (local port). If the router has 4 or 8 ports, then it is really a router with an integrated switch.

If you have just one computer in your home and no wireless devices, the router connects directly between your cable modem (or fiber ONT) and the PC. If you have more than one computer, then you must either (a) have a switch (built-into the router or connected to the one LAN port), or (b) use the WiFi feature or add a Wireless Access Point (WAP).

Bonus Term: WAP

A WAP (wireless access point) is a WiFi on ramp to your network and router. Although it is built into most consumer routers, you can add additional WAPs (or simply use any old router) as an extra WiFi access point, on other floor of your home to extend coverage.

It’s just like an extra broadcast tower in your home. But, because it is wired directly to your router, it is a *much* a better method for extending network coverage than adding a WiFi or powerline repeater. It is also very inexpensive…

Popular consumer brands, like Linksys, D-Link, Netgear, Asus, TP-Link and Belkin, have all but abandoned this product segment. That’s because you can easily turn any old WiFi router into a WAP by turning off the DHCP feature. This allows the ‘main’ router to assign local IP addresses and handle packet routing. The 2nd router simply adds another radio spot to your home or office. Since the router function is much less expensive than the WiFi function, using a router does not add to the cost.

About Speed

In the early 1980s, there was a market war between various network standards and topologies. Most buyers realized that the once mighty Arcnet (created by Datapoint Corporation) was dying and that the winner would be either Token Ring (IBM) or Ethernet (created by Intel, Xerox & Digital Equipment).

Ethernet won that war with its hub-and-spoke topology and a speed of 10 Mbps.

It wan’t long until the speed was bumped up to 100 Mbps (called Fast Ethernet or “100base T”. Today, the sweet spot of price and performance is 1 Gbps. It’s 100 times faster than the original! There are still faster implementations at 10 or 100 Gbps, but these require professional cable installation, expensive gear and some very strict configuration requirements.

If your network might ever be used by multiple users or for video streaming (especially at 4K), be sure that you don’t accidentally purchase the older Fast Ethernet switch or router (or-heaven forbid-an old fashioned hub!). Just 3 or 4 years ago, you might have saved cash on the slower standard, but today, you can find gigabit switches and routers without paying a significant premium. In fact, reputable companies are not making 100 Mbps switches today. That would be like selling a 512 GB USB drive with USB 1 or 2. It just doesn’t make sense.

Now you know the difference between all three terms: Router, Hub (outdated) and Switch (often included with a router). And just for fun, you even know about another related device:A WAP = Wireless Access Point.

Incidentally, even if your router already has a 4 or 8-port switch, you may still need an additional switch. Consider these scenarios:

  • You have more than 4 wired devices
  • One of your cables goes from the cellar to an upstairs office. But, you have a few devices in that office. You can simply add a tiny switch. This is exactly what you need as your ‘splitter’.*
  • You wish to create a subnet to isolates your network devices and activities from another segment. This requires 2nd router instead of just a switch. Not to worry. Decent 4-port routers are available for under $30. In this case, you may not even care about the WiFi feature, which is the most expensive component of routers costing above $50.
* Switch Cost & Reputation

« I just purchased this Netgear GS305 for just $12.50. It’s a gigabit 5-port switch with terrific specs and reliability wrapped into a solid metal box. It sips very little electricity and the footprint is smaller than a slice of bread. I often see larger 8-port switches by Netgear and TP-Link discounted to $17. These are both very good consumer brands.

Open Letter to Cryptocurrency Doubters

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Adam Ludwin of Chain offers this interesting (and, I believe, effective) attempt to explain crypto to high-profile doubters. It is an open letter to naysayers that argues against extreme positions on both sides of the “money revolution” argument.

Check out 8 quips by Jamie Dimon, CEO of JP Morgan Chase. I believed that he had moderated his position after originally panning Bitcoin / blockchain. These quotes contradict that impression. But, they were uttered before October 2016. They may not represent his current position…

Here at Wild Duck, we aren’t fully on board with Ludwin, because we represent one side of what he suggests are two ‘extreme positions’. But we certainly are closer in spirit to his side—especially, his effort to educate those that see zero value to to Bitcoin and no profound opportunities for the blockchain. They see only fad and frenzy.

Bitcoin and the blockchain are radical, transformative instruments. But they as not as radical as some claim. In fact, they address a profound technical problem that has been the subject of research and debate for more than 2300 years. They are a surprisingly natural product of the internet. With instant, inexpensive, portable and ubiquitous communication, it is possible to distribute consensus. That consensus can be applied to any set of records: ledgers, deeds, votes, and a many things that, at first, seem quite surprising—areas that we never previously thought of as a “ledger” or an ownership stake.

A: Let’s begin by reducing two concepts into the very simplest of definitions:

  • Bitcoin is the original, decentralized, permissionless cash.
  • The blockchain is a social consensus mechanism. It crowd-sources record keeping, commitment and all manner of accountability by adding a distributed and robust log that is fair, immutable, testable and measurable. Most importantly, it is open to public scrutiny. Effectively, the blockchain crowd-sources fair play.

B: Next, let’s set aside some growth pains. They are transient:

Both Bitcoin and the blockchain are a work in progress—and so they are flawed. But that doesn’t mean that their survival is threatened. Let’s dispel two common misconceptions. I won’t argue or elaborate here. The arguments are all over this blog:

  1. Bitcoin cannot be overtaken by a better coin with improved features. This is not a situation like Beta–vs–VHS. The entire community is transparent, open source, unlicensed and without proprietary barriers. Bitcoin will simply fold competitive advantages into its architecture. That process involves a messy democratic process among parties with different interests. But, ultimately, the process works.
  2. The blockchain will correct the energy consumption that is consumed in its current implementation. We have already demonstrated that it adapts and that democratic evolution is possible. Brilliant replacements for proof-of-work are in development.

C: Now, the part that the critics cannot accept:

Both Bitcoin and the blockchain will herald a profound and fundamental shift in offering secure, trustworthy, fair, decentralized and autonomous mechanisms—not just with payments (or currency), but across the board: voting, contracts (including settlement and arbitration), Proving ownership or transactions, including property deeds and corporate stakes, provable jury evidence, administrating & enforcing environmental trade credits, verifying scientific research (especially the outcome of blind tests).

These examples barely scratch the surface of fields that will be transformed or made better by blockchain technology.

D: The really radical application was also the very first implementation:

What about Bitcoin. Is it just a payment instrument, or will it become the money?

Indeed, Bitcoin is likely to replace government issued FIAT all over the world in our lifetime (not only as a payment instrument, but as the actual store of value, without being tied to any national currency or to an underlying asset or promise). But what critics don’t yet appreciate is that this will not impact a government’s ability to tax, spend or enforce tax collection.

It will lead to a deflationary economy and it will decouple a government from its own monetary policy. These are *not* bad things. They are good for all stakeholders. Ultimately, Bitcoin will be recognized as far more of an opportunity than a threat, even by banks and governments.

Even if you vehemently disagree with D, it is difficult to argue against C. The blockchain is as fundamental and profound a contribution to society as the pulley and lever. It it so natural an evolution of the internet, that it is more a discovery than an invention. (I am not attempting take credit away from Satoshi—I am only reclassifying his invention as revelation).

Is there an upper limit to future WiFi speed?

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WiFi has become an essential part of every household. From streaming movies to messaging friends to buying your groceries — it’s part of our everyday life. Due to its popularity, companies are rushing to be able to offer the fastest WiFi possible. On top of this, many households are using an powerline adapter to prevent the walls from restricting the signal from the router, allowing them to enjoy fast speeds even if they’re the other side of their house. But what will this fast WiFi lead to? How fast can it get before limits are introduced? As with many recent posts, this was originally a reply to a member of Quora. I am a frequent columnist at this popular Q&A forum.

Is there a theoretical speed limit to
WiFi devices over the next 10 years?

Because of four recent practices,* it is difficult to predict an upper limit for future overall throughput:

  1. Channel bonding
  2. Beam steering (MIMO shaping and directing the antenna pattern)
  3. Mesh Networking (i.e. subdividing a service area into micro-cells). Residential examples: Google WiFi, Netgear Orbi or TP-Link Deco
  4. Ultra wideband or Ultra-high frequency: In 2017, both Netgear and Asus introduced routers with 802.11ad WiFi (‘WiFi AD’). Although it still not widely adopted, it adds a 60 GHz radio to the existing 2.4 and 5 GHz radios, supporting 7 Gbps network speed).

Note that none of these techniques demands a high output power per channel. They all use ‘tricks’ to achieve higher speeds. But the tricks are scaleable. There really is no upper limit to any of these techniques.

Mesh networks don’t increase overall bandwidth, but by reducing the signal power and service area (and having many more access points), there is more bandwidth available for each device.

The 60 GHz used by WiFi AD is so high, that it cannot pass through walls in a typical home-just within a room. On the other hand ultra-wideband transmission has been demonstrated and recently blessed by the FCC, but it is not yet a WiFi standard. With this method, it will be possible to send insanely high-speed, low power signals through walls to cover small areas.

How fast are ultra-wideband radios? How about terabytes per second, depending on distance? It’s difficult to imagine future applications that may need that speed. It dwarfs the real world data input capacity of our senses. Perhaps, someday, you will need to transfer the entire literature of all known civilizations into your brain in less than 2 milliseconds. I suppose that 3 TBs would be good for that purpose.

* I called these technologies “recent developments“. But actually, three of four practices have a long history in military, commercial and industrial applications.

a) Beam steering

Focusing an antenna pattern has been around for more than 75 years. Yagi TV antennas (popular in 1960s and 70s) are highly directional. Some TV broadcast towers are situated near the edge of a service area. They split their broadcast signal, through a phase delay and deliver the waveforms to an array of antennae. This allows them to steer the signal without any mechanical movement. Directional lasers or infrared beams are often used for communications.

b) Channel bonding (or reverse multiplexing)

I had an exceptional router in the 1990s that could combine backhaul services (not just switch from one to the other in case of a drop out). It boosted speed by distributing internet packets over three separate networks):2 separate cable services and an early cell phone modem.

c) Mesh/Cellular coverage

The ‘full-blown‘ implementation was developed by Motorola in the 1980s to accommodate growth in the mobile telephone market. I am not aware of an earlier implementations that included graceful, real-time hand-off of a device in motion. Of course, hotels and large convention centers have used mesh networking for more than a decade.

What is a ‘Paper Wallet’? Do I need one?

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With cryptocurrencies exploding in popularity in recent years, more people are learning about terms like blockchain and wallets. Of course, you have wallets like the oxis cryptocurrency wallet but these digital wallets are your only option – paper wallets are also good for cryptocurrencies. Like many other recent articles at Wild Duck, this post is structured as a question-and-answer. That’s because it was originally my reply to a member of Quora, a Q&A site at which I am a Bitcoin columnist.

What is a ‘Paper Wallet’

A paper wallet is the ultimate offline wallet. It simply means that the private address to your crypto wallet is printed on paper – either as a string of characters, a QR code, or a series of seed recovery words.

If you destroy any electronic copy of your original wallet (e.g. the private keys that give you access to your wealth), then hiding this piece of paper is very similar to hiding a bar of gold. The only way that someone can steal it or know the amount it represents is to get their eyes and hands on something physical. They would need to know that you tucked it into your mattress or behind a secret panel of your cellar wall.

In my opinion, a paper wallet, though secure, presents a big risk to the owner-even bigger than the potential for a hardware wallet to be hacked. We’ll get to this later.

Example of a Paper Wallet »

Here is a paper wallet printed onto a card [click to enlarge]. There are web sites that will help you print one with a new or existing wallet address. One popular site is BitAddress. [Warning!]† After printing and storing the paper wallet in a place that you believe is secure, that you will not forget-and that your family can get to some day in the future-delete all electronic copies of your original address (i.e. if you did not create a completely new wallet in the process).

More about Paper Wallets

Like other wallets (a software app, a hosted account or a dedicated hardware device), your wallet contains a private key that accesses your wealth on the blockchain. But in with a paper wallet, it is secured by hiding the slip of paper where no one can ever see it or peek at it online. Think of it as if you are hiding a valuable diamond.

A paper wallet cannot be hacked, unless it is within range of eyes or a camera. But the diamond analogy breaks down, because a paper wallet has other risks than hacking…

It can be lost, damaged in a flood or fire or chewed by termites or your dog. More likely, it can be forgotten for years. When your heirs finally discover it under the mattress or taped to the back of a painting, they are unlikely to recognize its purpose and simply throw it out.

Hosted Wallet: Complete Opposite of Paper Wallet

You didn’t ask for the opposite extreme scenario. But this is a good time to discuss it.

When it comes to security -vs- convenience & recovery, an exchange-hosted wallet is at the other end of the spectrum. With this type of wallet, you do not control your private keys. In fact, your crypto isn’t even in a wallet dedicated to you. Instead, it is aggregated with assets of all other clients. You are trusting the exchange to track your stake via a traditional account relationship and their own system of ledgers. When you spend or receive Bitcoin (or other cryptocurrency), the transaction occurs within the exchange. It is not transmitted directly to a blockchain or Lightning Network.

Advantages of an exchange hosted wallet:

  1. A reputable, hosted exchange (there are very few)‡ implements and follows rigorous backup, security and disaster practices. These safety practices are probably more diligent, standardized and adhered to than whatever you would do with a software, hardware or paper wallet.
  2. A reputable, hosted exchange maintains your account information and instructions in their records and acts on these instructions. As with a traditional bank or broker, they pass wealth to your heirs or executor, if you list the beneficiaries in your account profile or file instructions with them as a legal executor.

With a personal wallet under your control, it is more likely that your relatives will not know about your wallet, lose it, or fail to distribute assets as you intended. This will change in the future, as multisig becomes standardized and easier for end-users to understand and use. But for now, a traditional custodian (e.g. an exchange service) has the edge in transmitting wealth from one generation to the next.

Disadvantages of an exchange hosted wallet:

  1. Your money could be completely lost if the exchange does not practice very good security practices, is dishonest or becomes insolvent. (It happened with more than half of the exchanges during the first 5 years after Bitcoin was unveiled!). It is less likely today, but only if you choose your exchange carefully.‡
  2. With Bitcoin and most cryptocurrencies, transactions are never anonymous, nor even very private. That’s a myth. But with an exchange hosted wallet, your wealth and activities are even more exposed to outside scrutiny. That’s because reputable hosts are quick to comply with subpoenas, court orders, tax authorities and even local police investigations. They want to be seen as safe. To project this image, they are proactively compliant with oversight and proposed regulations.
  3. Your money can be frozen or seized by the exchange (for whatever policies they deem appropriate) or from authorities outside the exchange. Often, the reasons make no sense to individual clients affected. This happened to me very recently!
  4. Large computer based servers experience technical glitches-which often coincide with your most urgent need to access funds.

† Extreme Caution Recommended

BitAddress has an excellent reputation and has never been the focus of suspicion. Their source code is written in a popular script and is short enough to enable scrutiny by many developers and analysts. Additionally, the creation of your wallet and printout can be performed completely offline (no internet connection). You can further enhance safety by performing the wallet creation and printout from a PC that will never be connected to the internet. (Yes! It is that important to use paranoid practices to avoid exposure of your private keys).

Despite the quality reputation and transparency, I do not currently recommend using BitAddress to create a paper wallet.

  1. At the time of publishing, BitAddress has a problem with their web security certificate. This makes it possible for your web traffic to be hijacked by a DNS spoof. (This Blog does not have a security certificate at all, but you are not using it to store or create confidential information).
  2. Unnecessary risk is introduced by merging the process of creating a new wallet with conversion into a physical printout. Look for a tool that is completely off-line and that enables you to create a QR code or seed words for a wallet address that you already own.

Once BitAddress fixes the problem with security, the following process will protect your private keys from interlopers:

  • Go to bitaddress.org
  • Switch the internet off
  • Save the HTML file in a USD device
  • Restart the computer with a bootable Linux Live CD
  • Make sure that you are offline and open the HTML file
  • Follow the rest on bitaddress.org to create a paper wallet

If you download another tool to create a paper wallet, search for one that is open source and vetted by thousands of developers, users and armchair detectives. Choose one that is hosted by SourceForge or GitHub and carefully read user forums and reviews.

‡ Why are their few reputable cryptocurrency exchanges?

Regulations pertaining to cryptocurrency exchanges are not yet uniform, nor even widely understood. Additionally, there is no Federal account insurance for your hosted wallet. (Currently, the market is too volatile and risky for traditional underwriters to step up).

But, a well-capitalized exchange with high-profile investors is likely to adhere to rigorous security practices and unscheduled audits with public transparency. These reputable exchanges also work hard to comply with federal and regional regulators, and they comply with money transmitter practices, such as KYC, AML and RICO.

In my opinion, very few exchanges meet these rigorous standards, especially in this early era-which is often compared to the Wild West. Two very reputable exchanges are Coinbase (San Francisco) and Bitstamp (Founded in Slovenia and incorporated in the UK; Now, they are based in Luxembourg).

These big, reputable services mitigate the risk of hacking and theft by keeping most client assets in a ‘cold storage vault’ (off line and powered down). Your wealth is only attached to the internet when requested and in the quantity that you need. The rest is never exposed. Your online purchase or transaction is made after you have received email and text messages about the status of your coins.

This is 4th in a series of articles on Bitcoin & cryptocurrency wallets:

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 blockchain consulting.

About the Fuss: Is Bitcoin really so important?

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This afternoon, an automated bot at Quora suggested that I answer a reader question. Quora is essentially an “Ask the expert” web site. It is the world’s largest, cataloged and indexed Q&A repository.

This is the question I was asked to answer:

Some pundits believe Bitcoin is a fad, while others seem to feel that it is better than sliced bread. I like sliced bread.* Is Bitcoin really that cool? —Or is it just a lot of Geeky hype?

One other columnist answered before me. Normally, I pass on an invitation, if a question has already been answered. But in this case, the individual answering the question has yet to see the light. He has wandered into the Church of the Blockchain, but he just didn’t realize that the man sweeping the floor is the prophet.

Here then is my answer, regarding Bitcoin, the blockchain and sliced bread…

I respectfully disagree with Jim Euclid. He answered this question too. Perhaps it is arrogant of me to state with confidence that he will change his mind, if he is still around in another 30 or 40 years. So will everyone reading this.

Bitcoin and the blockchain were introduced together in a white paper by a quasi-anonymous developer in October 2008. He or they used a pseudonym, but communicated with a broad group of developers before and after unveiling the solution to an age old problem of math, logistics and cryptography.

Just over 1 year later, Bitcoin began moving between individual owners. And then it began to re-write the history of economics, bookkeeping, consensus, trust and the very democracy that is so precious to us. It is changing what we understand about so many things. But its true contributions have barely even begun.

Bitcoin is as ‘cool’ an invention as there can be. Like the steam engine, vacuum tube, automobile, television and the internet, it is radically transformative. Each of these inventions has (or will) contribute enormously to human progress and happiness.

The problem that Satoshi solved goes back to Aristotle and has profound social implications for the future of humanity. There is no poetic license or potential for overstating the importance of both Bitcoin and the blockchain. It will impact your life—probably in very positive ways—with a punch that matches the rise of agriculture, indoor plumbing or airline travel.

Sorry, Jim. I respect your opinion, but I see the future a bit more clearly than you. The internet is a vehicle. It is certainly important. But it is only the highway. Bitcoin is the marvel that the internet’s instant, inexpensive and ubiquitous communication was meant to spawn.

I have always felt pride over the fact that I was alive when man first landed on the moon. I was a child and I had nothing to do with that achievement—but somehow, I am gratified that this event intersected with my life.

Unlike the moon landing, Bitcoin has no Jules Verne or cave paintings from past generations yearning to conquer something that is tangible. We have only Aristotle’s insight that money was not yet perfect—and his recognition that issues of democracy and governance seem to have insurmountable impediments. But the problems that Bitcoin and the blockchain address are just as real as the moon overhead. And the solutions they will spawn are even more relevant to our civilization.

I have even more pride that I have witnessed the birth of decentralized, permissionless, distributed consensus—and specifically Bitcoin. It will impact my health, wealth and happiness even more than everything that NASA and space technology have spawned.

Am I smug that I recognized the importance of Bitcoin and the blockchain just 4 months after its unveiling? You bet I am! And even if Jim doesn’t recognize it yet, someday I will rub this fact in his face.

(Kidding…but it is personally comforting to be on the right side of history!)

* Note: In America, the expression “sliced bread” refers to something that is really clever, desirable and coveted. It is often paired with the word “since” like this: That new iPhone is the best thing since sliced bread.

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 blockchain consulting.