Category Archives: Politics & Law

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

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.

Does decentralized currency thwart crisis intervention?

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Here is another economics/policy question that I was asked to address at Quora.

The US used quantitative easing to deal with one monetary crisis, and a bailout of the automotive and banking industry to deal with another. If nations, economies or individuals begin to embrace a decentralized currency, they will inevitably shift away from government issued money. Won’t this hinder a nation’s ability to intervene in a crisis?

Answering this question goes to the very heart of the ethics and politics of cryptocurrency.

Yes. Without centralized control over monetary policy, government options for intervention in a money crisis would be severely limited. But this fact may lead to a false impression…

First, most money crises begin with government, and so there are likely to be far fewer monetary emergencies.

Here’s how the options would be limited:

  • Governments would have fewer ways to manipulate a public resource. They will still have the ability to budget, tax, borrow, build infrastructure and even wage war. But…
  • Governments could no longer amass debts that outstrip their ability to be accountable. That’s because they can no longer covertly tax via rampant printing of money.
  • They could not “raise the debt ceiling” without demonstrating fiscal responsibility, because they no longer control what everyone uses as money.
  • Government spending (and intervention, such as quantitative easing) would have to be balanced by revenue. Borrowing would be limited to creditors who truly believe in their will and ability to repay debt.

All of these “limitations” are good things—even for the governments and banks involved. It only seems limiting, because our understanding of what is money is tainted by millennia of authoritarian systems.

A capped, open source, transparent, traceable, immutable, decentralized, distributed and permissionless money supply is both fair and more robust than Fiat paper, promises or credit.

Let’s explore that last bullet, above. The point is subtle—yet, it is the key to answering your question…

Every individual, household, business, state and NGO must balance its books. If one cannot cover bills, they must find a creditor who believes in their ability to get back to fiscal health. Even nations are eventually forced to balance their books or seek a bail-out from neighbors.

But, this is not the case for the United States. We have had an ability whitewash our largess and declining industrial productivity by printing more money. How has this been possible while retaining a strong dollar?

The US dollar has been the world’s reserve currency for 47 years. This development was one of the most clever, yet potentially damaging developments of the post war order. It led other nations and consumers to treat it like gold (even though the link to any underlying asset or promise was severed by Richard Nixon in 1972).

Now that other nations are shifting this special status away from the US, we are gradually becoming just as susceptible to a house-of-cards collapse as Venezuela, Argentina, Zimbabwe, or Germany between the wars. Our massive consumer market cannot protect us. Eventually, we must ship the fruit of our sweat and intellectual bounty to serve others. After all, for more than a half century, we have been giving them pieces of paper (dollars or treasury bonds) for their TVs, underwear, sneakers, toys and sheet rock.

This unbalanced trade must be reversed. Building walls at the boarder and stiff tariffs are desperate acts that fail to recognize cause or containment. They are certainly not the way to restore a robust economy. There must be a better way for nations to get their houses in order. Fortunately, there is.

A distributed currency built on math, trust and transparency—rather than the integrity of transient elected officials from one nation is far less susceptible to manipulation, inflation or any form of shock. It won’t solve all problems immediately, be it will prevent us from getting further mired in a debt that blows up like a balloon.

The decoupling of a money supply from government will yield benefits that are difficult to imagine today. Money doesn’t need authoritarian oversight like airline safety. The situation is more analogous to the deregulation telephone and package delivery services. Without those blockbuster decisions of the 1980s, we would not have Smartphones or the internet today.

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.

Update: Building (and placing!) a Bitcoin ATM

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A new section about Bitcoin ATM business models
has been added. Jump to “UPDATE – July 2019“

The good news is that building a Bitcoin ATM is easy and less expensive than you might expect. But, offering or operating them engulfs the assembler in a regulatory minefield! It might just be worth sticking to selling bitcoin on PayPal (visit this website for more information on that). You might also wish to rethink your business model -especially user-demand scenarios. See our 2019 update at the bottom of this article.

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

What is Inside a Cryptocurrency ATM?

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

Of course your programming and user interface makes all the difference in the world. And your ATM must interface with an exchange-yours or a 3rd party exchange.

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

I Have Built a Prototype. Now What?

Desktop ATM. No cash dispensed

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

Parts Cost: Bill of Materials

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

Regulations: A Threat to Your Business

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

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

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

Why is There a Camera in my ATM?

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

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

With Regulations, Can Bitcoin ATMs Generate Profit?

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

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

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

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

_____________

UPDATE – July 2019: ATM Business Model Requires Urgency

The economics of Bitcoin ATMs is thoroughly uncompelling, unless you own or administer a public area with high foot traffic. Even with lots of traffic, the business model has a problem…

Bitcoin is easily acquired and exchanged online-both legally and illegally. Often, I urgently need to find a bank ATM, especially when travelling. But, despite being an avid proponent and adopter of cryptocurrency, I can’t imagine needing a crypto ATM. Needing virtual exchange is rarely urgent, and there are better alternatives than standing in front of a machine. After all, we each have a better machine in our pockets.

Online trading is easier and safer than via ATM. Even user anonymity is better online than standing in a public place and using a kiosk equipped with a camera.

Therefore, the business model of placing equipment requires scenarios in which the needs of prospective clients have urgency. Urgency adds significant value to local service. But again, there is a problem…

The problem with using urgency to build a local delivery model for ATMs, is that Bitcoin is a virtual product. Even a seller or exchange in China can deliver an online money exchange instantly.

Consider this reverse analogy…

Suppose that you are responsible for setting up a video projector in a hotel ball-room. The conference is already in progress and hundreds of people are looking toward a blank movie screen. You suddenly discover that your video cable is defective and wireless options will not work . You need an HDMI cable and a thunderbolt adapter immediately. It must be at least 18 feet long and be a recent model to support the audio channels and resolution of your presentation.

QUICK-Find me an exact match!

The local Best Buy store has the cable in stock. It’s $89.99 and the store can have it at the front desk in the next 10 minutes. Your frugal partner finds the same cable online for $29.99 (2-day delivery) or $9.50 shipped from China (about 2 weeks).

Which do you choose? Is it just a cable that you need? No! The value that you require is a compatible cable in your hands within minutes – preferably from a local and experienced vendor, in case there is an installation or application problem.

In almost any scenario-even catering to impulse buyers-a Bitcoin ATM can’t match the value of someone delivering a compatible cable instantly. If it is a commodity that you are selling (Bitcoin is a commodity), then a profitable business model requires that you sell speed, convenience or privacy. Cryptocurrency ATMs lose on all three fronts.

That last paragraph above is my freebie to the next ATM vendor who seeks my consulting services. Test your model, before seeking help in penetrating a market that is tough to define and defend.

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

Why Does the West Breed Imbeciles?

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Umair Haque is director of the London-based Havas Media Lab. He is a frequent contributor to Harvard Business Review, which also published his popular book, The New Capitalist Manifesto. Haque is also a popular author at Medium.com. He has 128,000 followers…

That’s where I came across his latest article today. Haque is witty and writes in a breezy, acerbic style. As with Wild Duck, his Blog and Medium articles traverse an eclectic array of topics—not just politics. But when he wades into Washington, he is somewhat left and profoundly thoughtful. He expresses thoughts in the vein of CNN commentator, Fareed Zakaria.

In one recent article, Haque speaks eloquently about the need to bear witness—and that, in the face of hatred, this is not an easy task.

In his newest article at Medium, Haque argues that Donald Trump is a product of a bigger problem. He asserts that the west (US, UK and other western democracies) are generating a Tidal Wave of ignorance, demagoguery, and self-inflicted catastrophe.

So what is it that makes America lead the world in denying climate change, evolution or the age of the universe? (Whatever you believe it to be, it certainly isn’t 6,000 years! Even a 5th grader knows about carbon dating dinosaur bones or the time it takes light to arrive from other galaxies).

In my opinion, ignorance and aversion to science that is a prevalent aspect of western democracy—especially America—is driven by the far right and religious fanatics. It is the stuff that Bill Nye, Bill Maher, Neil deGrasse Tyson and Penn Jillette fight each day.

The late Carl Sagan fought ignorance, superstition and fundamentalism throughout his career and even during his physical decline. (*Blush* Both Bill Nye and I had Sagan as a professor at Cornell). DaVinci and Copernicus recognized the same threat to society. But now, the stakes are much higher. Instead of the personal risk (being burned at a stake), we risk the extinction of all life on Earth.

Fortunately, there are voices that continue this critical mission. Let’s just hope that they aren’t too late, or in vain.

Related

Trump-supporters: Address the ‘disconnect’

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In the past, you have tried to talk sense, but failed. How, then, can you address the disconnect between you and your Trump supporting friends?

If you are like me, you believe that, overall, your colleagues and close friends are thoughtful and intelligent—at least on whatever level led you to be close. You also believe that your friends would not intentionally subvert national interests.

And yet, there is the fact that a few friends and associates are Trump supporters. They may not agree that our activities damage the environment or that a woman has the right to make decisions concerning her body, as you do—but you give them credit for wanting a strong economy, disrupting terrorism, paying down the debt, and factoring fairness and equality into any legislation.

For example, in addition to my nephew, two close friends are firmly in the Trump camp. I like them; I respect them—and yet we are worlds apart on a matter of dire importance to life on this planet. For some reason, we just don’t see 1 plus 1 the same way. They see a dress that is blue and black, while you and I are certain that it is gold and white —»

You also want to believe that your friends understand and respect the reasons that we have checks and balances and that a separation of church and state is the only way to govern a diverse nation.

Agreed. The people that you love or associate with are not anti-American. They earnestly believe that their support of Trump is compatible with core values that you share. And so, this brings me to a conclusion…

There is an incredible disconnect between Trump supporters and those who believe that he must either step down or be removed from office. Supporters don’t see a danger in his decisions and behavior. Many see a man who is keeping promises and building a vibrant economy. They don’t share our sense that he is a threat to the economy, the environment, our alliances, democracy, and—especially—to domestic tranquility.

Let’s say that you accept my conclusion: Trump supporters share our desire for strong and fair nation, but they simply fail to see criminal behavior—or at least, serious shortcomings. How do we illuminate what seems obvious to you and to me, without appearing to condescend and shut them down?

In the past, I have talked down to my friends. I have chided them for what, to me, seems obvious. Of course, taking this tact only insults. It is not at all effective.

A better way to relate

Search for either a smoking gun or a fresh way to view events. The Forbes video of a Rachel Maddow, below, may help. In the first 6 minutes, she ties together a series of disturbing facts that should make any thinking person ask “Why?” Why would Trump do these things? What was he thinking? How could anyone pursue this long string of events? What influences him? Is he working for someone other than the American people?

See if you can get Trump supporters in your circle to get past their preconceptions about MSNBC and Rachel Maddow. The issue here is not the messenger, but the message.

To those of us who recognize the serious shortcomings of the president, the possibility of foreign influence is only one of many serious threats to our national interests. But, this video sheds light on this one threat in a way that may lead a few of your Trump-supporting friends to question their position. It’s not a magic bullet—but hopefully, it will contribute to their analysis.

Click below, and then on the photo of Trump (2nd from top).

Shah of Iran: Fall foreshadowed by 1971 gala event

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In 1941, the Allies invaded Iran, forcing the monarch to abdicate. (Reza Pahlavi was father to Shah Mohammad Pahlavi). While Dad fled to South Africa, a young crown prince became the new Shah.

In 1971, the Shah of Iran threw a party in Persepolis, the ancient capital of the Persian Empire. It was thirty years after taking the throne, but still 8 years before being toppled in the revolution that stormed a US Embassy.

A massive gala party was promoted as the 2500th year celebration of the Persian Empire. But the real motive was so that world leaders could witness the Shah coronating himself. Among a many titles that he carved into temples, coins and scriptures, he pronounced himself “King of Kings” and ruler for life.

Persepolis was far across a desert from Tehran and other modern cities. So, the army created a fortified highway caravan with rest-stops for bathroom breaks, refreshment and communication. This may seem like our highway rest stops, but there were no highways in this region. It was all created for the one party.

According to this BBC-Barbara Walters documentary, this big, splashy event led to the downfall of the Shah. It was a party to end all parties—attended by heads of state from 90 countries, including the US, Europe, Asia, India, Communist countries, including kings, queens, presidents, prime ministers and dictators. The United States was represented by vice president Spiro Agnew.

It’s 1¼ hours, but I suspect that you will find at least 10 minutes interesting. This documentary touches on events of the day, including what happened after the party.

Venezuelan Migrants: Columbia opens homes & borders

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With all of the Trump talk on television, American media networks have dropped the ball on newsworthy international events. Here is a humanitarian crisis that we haven’t heard much about lately.

In the 1980s and early 90s, many Colombians fled to Venezuela. At the time, the Venezuelan economy was booming. But now, the country is a poverty stricken dog, due to the colossal mismanagement of strong man, Nicolás Maduro.

Now, Venezuelans are fleeing. Inflation is hitting One Million Percent and the common laborer cannot feed his family. Artists make tote bags out of worthless currency. A hot dog from a street vendor cost the typical worker a month’s wages.

The US and Brazil have taken in 75,000 Venezuelans each. Peru has taken in far more than most countries with 414,000 immigrants. Yet, Columbia has taken in one million so far—and they are granting border crossers legal status. Many Columbian citizens are opening their homes, taking in whole families. Surprisingly, even the overcrowded border town (with massive migration at the port), enjoys booming economic activity.

Sure, there are some violent crimes blamed on new immigrants and one local police chief is trying to stir up Trump-style Xenophobia. But citizens and the national government are not buying it. 200 years ago, Columbia, Venezuela and Ecuador were one country (Gran Columbia, with Bogota as capital). Cross-border migration has been high throughout the past century due to drug wars, the conflict with FARC and various political & economic upheavals. These peoples have shared ancestry. Each country traces its roots to a similar mix of European, African & Native American ties.

Check out this short video. It is a sympathetic look at the current crises, a supportive callout to the people of Columbia and the source of my commentary, above.

Trump: It’s time to make a graceful exit

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Let me be uncharacteristically contrite and deferential. No caricatures or unflattering photo. No reference to the latest news bomb. No jabs at character, demeanor, or conflicting statements. Let’s consider just two things. Saving face and appropritate timing, for those who have supported Mr. Trump or his policies…

Republican friends, I identify with you. We don’t agree on every issue of the day, but I have been a registered Republican—cut from the Reagan mold. I believe in conservative economics, draining swamps & limited government. We share these goals.

But to Trump supporters: Let’s face it. Please! It’s time to cave. It’s time for Trump to make a graceful exit.

And to Mr. Trump: Go in peace. I am sure that your heart is in the right place, but you just weren’t cut out for this job. No trial; no impeachment; no demeaning critique. Go quietly, and return to work on your real estate affairs. If you ever need a pardon, I will support your personal freedom. But do it now. Please.

Sessions & Mueller: Will Trump get away with this?

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Here is an opportunity to do something for our country. Do it for the environment, for women, for minorities, for truth, for the 1st amendment. Do it for the world.

This is not a matter of Republican –vs– Democrat or Conservative –vs– Liberal. It is scholar, leadership and ethics –vs– ignorance, intolerance and an utter morass.

Sign the change.org petition. Protect the special counsel investigation. Defend justice.

Does voting against someone violate a principle?

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These “I Voted” stickers are lined up on our microwave oven—a tradition in our home that began 10 years ago. Each sticker represents an even-year election.

I look up to my older brother. He has always been a mensch in dealing with both personal and business relationships. More consistently than me, he stands for noble ideals. He is not quick to give into self-interest or raw emotion and he always weighs the affect of his actions and decisions on the greater community.

But sometimes, standing firm on principle can backfire. I think that this is such a time.

Two years ago, my brother felt that neither major-party candidate for US president was worthy of his vote. And so, he voted for a 3rd-party candidate. I recall his conviction: “I must have faith in the candidate that gets my vote. I will not vote against someone.”

I felt differently. I agreed that the 3rd party candidate was best for the job, but I was more practical about his very low polling number (under 5%). A vote for him would make my voice ineffective. I was more concerned with the possibility of a seriously racist and unqualified man seizing the oval office.

In principle, my brother and I supported the same candidate in 2016. But in practice, I felt that it was necessary to stop a train wreck in the making. I voted against a candidate instead of for a candidate. I voted against racism, bullying, misogyny, leadership without scholarship, a tyrant without integrity, an individual who builds walls instead of bridges—and one who lies about how the wall will be funded.

My brother voted for the candidate with no path to victory. In the interest of fairness and full disclosure, he felt that the other major-party candidate had significant flaws, but he agrees that she wasn’t a train wreck. I would have preferred that he helped to avert the dismantling of all that we value.

I still admire my brother. His word is his bond and his principles are unshakeable. But today, I did exactly what I did two years ago. This time, I hope it makes a difference.

Why vote against someone?

I am ashamed to admit that it has become necessary to vote against something or someone… Against an insipid cancer which is taking our country back to the days of slavery, eugenics, dirty politics and Manifest Destiny in the guise of exceptionalism.

We draw our strength from our diversity, friends—a frightening Truth for those who benefit from their perch. But, we Europeans aren’t the first to enjoy this land. We needn’t be pushed backwards toward ignorance, intolerance and racism. A rising ocean floats all boats. Blacks, Jews, Asians, Mexicans, Native Americans, “unnamed Middle Eastern men” and those who confirm their gender identity are not the problem. They are our strengths—our partner and a solution. Together, we represent a nation of rich diversity, culture and with better opportunity for a successful and vibrant economy.

Far from our differences being a threat, the real problem is intolerance and the assumption of a “zero-sum” game. It isn’t necessary and it isn’t true.

I recognize that there is a legitimate debate over border security, healthcare, gun control, abortion and social programs. Some even feel that there is still a debate over the environment. But, we needn’t be predators. We are not in a battle over territory or the carcass of a deer. Resist racism and intolerance. We can all rise to put this train back on its tracks.

Observations about trust and moral authority (in just this past weekend!)

Getting into Bitcoin? 2 subtle points…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sarah Huckabee Sanders: America’s Tariq Aziz

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

Are you completely daft?!

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

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

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

What a difference 5 days makes!

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

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

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

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

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

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

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

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

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

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

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

Getting back to Sarah Sanders…

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

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

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

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

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

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

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

Uber & Lyft fight drivers over caps NYC

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

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

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

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

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

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

A Wild Duck Opinion…

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

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

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

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

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

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

 

How Fear Affects Ideology

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A very brief comment…

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

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

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

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

NASA director reverses on climate change, after 1 month

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

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

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

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

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

Sometimes, flip-flopping is a good thing

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

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

What changed?

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

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

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

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

Shifting Politics: Perhaps Texas can be redeemed, afterall

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

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

But seriously. What’s not to love?

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

The Demographics

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

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

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

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

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

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

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

What Countries use US Dollar and Why?

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

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

What gives value to paper?

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

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

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

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

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

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

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

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

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

Why would any country substitute the currency of another country?

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

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

Is Adoption of the US Dollar growing around the world?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Watergate.info

Building a Bitcoin ATM is easy, but…

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

» Updated version of this article is here

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

What is Inside a Cryptocurrency ATM?

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

Of course your programming and user interface makes all the difference in the world. And your ATM must interface with an exchange—yours or a 3rd party exchange.

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

I Have Built a Prototype. Now What?

Desktop ATM. No cash dispensed

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

Parts Cost: Bill of Materials

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

A Threat to Your Business

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

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

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

Why is There a Camera in my ATM?

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

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

With Regulations, Can Bitcoin ATMs Generate Profit?

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

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

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

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

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