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Bitcoin is Trust
Last week, I invited a few friends to come together and talk about Bitcoin. The conversation was wide ranging (read: ill-organized), but interesting.
Three key topics emerged out of the djin:
Here is my summary of our discussion of each:
There are a lot of interesting analogous examples to bitcoin as a virtual store of value / currency. E-gold and m-pesa are examples of two digital currencies backed by tangible value - they are different than bitcoin, but offer interesting lessons.
We explored two historical examples that map closely to how bitcoin is used: Rai Stones and Wampum. Rai Stones are very large limestone petrospheres used on the island of Yap as a form of trade currency. The importance of Rai Stones is that they are recognized by the entire culture as valuable and that transactions and ownership are public; because of this, actual physical ownership is unnecessary (a Rai Stone, irrevocably lost at sea, was even used in the abstract as valid currency).
Our discussion around Wampum offered another interesting lesson; that the value of something can reflect a recognition from both parties of the fact that it took lots of human effort to create.
Moving from Wampum back to the digital world, we discussed the example of virtual currency (Facebook Credits, Linden Dollars, QQ Coins, etc.). Each of these have been used as a store of value for a group. Some of these have even built large transaction volumes, but have been backed by a key central actor and are generally used only in the context of that actor's primary service. That said, It's worth noting that QQ Coins became so popular outside of QQ's primary service, that it was banned for use buying physical goods and services in China. Bitcoin is being used in China today in similar ways, and much of its growth in value over the last 6 weeks has been in response to Chinese activity (and American speculation about Chinese activity).
So we've seen small communities, online and off, trust a new store of value. Creating systems in some cases that thrived for 1000+ years. An open question remains with bitcoin -- can we establish that level of trust on a global scale with a diverse network of actors providing the credibility and liquidity?
So far bitcoin has done this, but there are some key challenges to keeping it legitimate with a number of diverse actors. You can see why, when asked to define bitcoin, the best response was "bitcoin is trust."
Making BTC Legitimate
For it to be an actual currency, there is a need to "think in BTC first." The volatility of BTC makes this really difficult. While A consultant may be willing to peg her consulting rate to BTC, it's unlikely her clients will be interested in stomaching the current volatility of BTC as anything other than a favor to that consultant.
Even current examples of merchants accepting BTC today are usually not holding bitcoin. These merchants use an intermediary to price all transactions in BTC based on an up-to-date exchange rate with US Dollars (or Canadian Dollars, Euros, etc.). The merchant only rarely chooses to ever hold BTC, instead getting daily deposits in their preferred currency. For the average business, cash flow management trumps speculation.
Regardless of any structural issues it may or may not have (e.g. being a deflationary currency), bitcoin today is too volatile to be a legitimate currency. This volatility is encouraging new bitcoin owners and the maturation of an ecosystem around bitcoin. It may be preferable that during the "growth phase" the market is volatile and speculative, but bitcoin's value will have to stabilize before we can start to think of it as a legitimate currency.
If it legitimizes at all, bitcoin is likely to slowly become a robust currency in places where using it to transact is preferable to the pre-existing options (or where there are no pre-existing options). International transactions, online transactions, and unstable countries were brought up as potential proving grounds for bitcoin as a legitimate currency.
At some point, miners will make less mining new coins from the coinbase than they will from transaction fees. When this is true, all miners will have to standardize on charging some sort of fee. Market forces will drive consolidation of miners, which is a serious threat to the stability and viability of the bitcoin ecosystem. The system needs some competition between miners.
We may have to create additional incentives for miners. It's possible transaction fees will cover this, but it's also possible that other incentives could be thought of. We floated the idea of whether the aggregate compute power could be sold to be used for something else. Unfortunately, ASICs have very limited use and do the vast majority of mining. Primecoin is an alternative crypto-currency that offers a different way of submitting proof-of-work that is intrinsically valuable (and therefore could be used to additionally subsidize mining).
There was an entertaining suggested use for all the pooled compute resources of ASIC bitcoin miners: try to crack the security of wallets holding lots of BTC and steal their money. Impressively, someone in the group had already done the math on whether this was feasible -- at the current global hashrate, it would take 2 million years to break the encryption of a wallet.
We didn't dive deeply on alternative coins, other than to note that the people interested in these coins as vehicles of value creation are driven almost exclusively by speculation, not by belief that it will be a better currency, and that the markets are less liquid and far more volatile. Alt-coins are where the technical community tries new types of features and works out philosophical disagreements on how crypto-currencies work best.
What Does Bitcoin Allow You to Do?
Going back to our examples of Rai and Wampum from before, the most interesting aspect of each is that they served as both a currency and a way to encode key information - specifically being used as a record of critical events. Rai stones are used to mark social transactions (e.g. marriages, treaties and alliances) and Wampum belts are woven into patterns that represent ideas - allowing them to be used for keeping records, acknowledging treaties, and passing down stories to the next generation.
Bitcoin offers us the same ability to encode many types of financial transactions (experiments already exist to use the block chain to automate Notaries, DNS, and Stock Exchanges) and could easily be used for other types of trustable information storage.
At it's core, bitcoin allows you to automate much of the infrastructure around financial transactions and cut out billions of dollars worth of unnecessary fees and middlemen. Automation is going to remove lots of humans from our global financial systems.
The financial services layer that gets built up around Bitcoin will be really interesting; to quote Naval Ravikant "any competent programmer has an API to cash, payments, escrow, wills, notaries, lotteries, dividends, micropayments, subscriptions, crowdfunding, and more."
Jason noted that we are in the infancy of these services, but that over time new services will grow up to make dealing in bitcoin easier to understand and safer for the average citizen. A good early example of this is the Bitcoin Investment Trust which is basically SecondMarket trading expertise in procurement and safekeeping in return for a fee.
Aside from just automating human to human financial services, Bitcoin also enables us to create narrow-AI autonomous agents -- basically, programs that offer some type of service that they are paid for in BTC, which the program uses to pay for it's own costs. These programs could operate as autonomous businesses with no human oversight.
As an example of a type of business that could run this way, take a piece of ransomware called Cryptolocker, which encrypts critical files on your computer and requires that you to send them bitcoin to get the key to decrypt your files. This business could amass hundreds of millions of dollars worth of BTC without any additional human intervention (and in the near future, the program could actually be taught to clone itself and test new types of mutations in how it runs the business to optimize for profitability). Another example of this is the thought-experiment StorJ.
If you're interested in this and like fiction, read Accelerando, which features sentient corporations as a key sub-plot, or Daemon which has a computer program that takes over hundreds of corporations and terrorizes the world.
The rest of these points didn't fit into the themes above, but I thought were worth sharing:
Here was the reading list I sent around prior to the event (with a few new additions):
Why mega-eruptions like the ones that covered North America in ash are the least of your worries.
- The supervolcano under Yellowstone produced three massive eruptions over the past few million years.
- Each eruption covered much of what is now the western United States in an ash layer several feet deep.
- The last eruption was 640,000 years ago, but that doesn't mean the next eruption is overdue.
The end of the world as we know it
Panoramic view of Yellowstone National Park
Image: Heinrich Berann for the National Park Service – public domain
Of the many freak ways to shuffle off this mortal coil – lightning strikes, shark bites, falling pianos – here's one you can safely scratch off your worry list: an outbreak of the Yellowstone supervolcano.
As the map below shows, previous eruptions at Yellowstone were so massive that the ash fall covered most of what is now the western United States. A similar event today would not only claim countless lives directly, but also create enough subsidiary disruption to kill off global civilisation as we know it. A relatively recent eruption of the Toba supervolcano in Indonesia may have come close to killing off the human species (see further below).
However, just because a scenario is grim does not mean that it is likely (insert topical political joke here). In this case, the doom mongers claiming an eruption is 'overdue' are wrong. Yellowstone is not a library book or an oil change. Just because the previous mega-eruption happened long ago doesn't mean the next one is imminent.
Ash beds of North America
Ash beds deposited by major volcanic eruptions in North America.
Image: USGS – public domain
This map shows the location of the Yellowstone plateau and the ash beds deposited by its three most recent major outbreaks, plus two other eruptions – one similarly massive, the other the most recent one in North America.
The Huckleberry Ridge eruption occurred 2.1 million years ago. It ejected 2,450 km3 (588 cubic miles) of material, making it the largest known eruption in Yellowstone's history and in fact the largest eruption in North America in the past few million years.
This is the oldest of the three most recent caldera-forming eruptions of the Yellowstone hotspot. It created the Island Park Caldera, which lies partially in Yellowstone National Park, Wyoming and westward into Idaho. Ash from this eruption covered an area from southern California to North Dakota, and southern Idaho to northern Texas.
About 1.3 million years ago, the Mesa Falls eruption ejected 280 km3 (67 cubic miles) of material and created the Henry's Fork Caldera, located in Idaho, west of Yellowstone.
It was the smallest of the three major Yellowstone eruptions, both in terms of material ejected and area covered: 'only' most of present-day Wyoming, Colorado, Kansas and Nebraska, and about half of South Dakota.
The Lava Creek eruption was the most recent major eruption of Yellowstone: about 640,000 years ago. It was the second-largest eruption in North America in the past few million years, creating the Yellowstone Caldera.
It ejected only about 1,000 km3 (240 cubic miles) of material, i.e. less than half of the Huckleberry Ridge eruption. However, its debris is spread out over a significantly wider area: basically, Huckleberry Ridge plus larger slices of both Canada and Mexico, plus most of Texas, Louisiana, Arkansas, and Missouri.
This eruption occurred about 760,000 years ago. It was centered on southern California, where it created the Long Valley Caldera, and spewed out 580 km3 (139 cubic miles) of material. This makes it North America's third-largest eruption of the past few million years.
The material ejected by this eruption is known as the Bishop ash bed, and covers the central and western parts of the Lava Creek ash bed.
Mount St Helens
The eruption of Mount St Helens in 1980 was the deadliest and most destructive volcanic event in U.S. history: it created a mile-wide crater, killed 57 people and created economic damage in the neighborhood of $1 billion.
Yet by Yellowstone standards, it was tiny: Mount St Helens only ejected 0.25 km3 (0.06 cubic miles) of material, most of the ash settling in a relatively narrow band across Washington State and Idaho. By comparison, the Lava Creek eruption left a large swathe of North America in up to two metres of debris.
The difference between quakes and faults
The volume of dense rock equivalent (DRE) ejected by the Huckleberry Ridge event dwarfs all other North American eruptions. It is itself overshadowed by the DRE ejected at the most recent eruption at Toba (present-day Indonesia). This was one of the largest known eruptions ever and a relatively recent one: only 75,000 years ago. It is thought to have caused a global volcanic winter which lasted up to a decade and may be responsible for the bottleneck in human evolution: around that time, the total human population suddenly and drastically plummeted to between 1,000 and 10,000 breeding pairs.
Image: USGS – public domain
So, what are the chances of something that massive happening anytime soon? The aforementioned mongers of doom often claim that major eruptions occur at intervals of 600,000 years and point out that the last one was 640,000 years ago. Except that (a) the first interval was about 200,000 years longer, (b) two intervals is not a lot to base a prediction on, and (c) those intervals don't really mean anything anyway. Not in the case of volcanic eruptions, at least.
Earthquakes can be 'overdue' because the stress on fault lines is built up consistently over long periods, which means quakes can be predicted with a relative degree of accuracy. But this is not how volcanoes behave. They do not accumulate magma at constant rates. And the subterranean pressure that causes the magma to erupt does not follow a schedule.
What's more, previous super-eruptions do not necessarily imply future ones. Scientists are not convinced that there ever will be another big eruption at Yellowstone. Smaller eruptions, however, are much likelier. Since the Lava Creek eruption, there have been about 30 smaller outbreaks at Yellowstone, the last lava flow being about 70,000 years ago.
As for the immediate future (give or take a century): the magma chamber beneath Yellowstone is only 5 percent to 15 percent molten. Most scientists agree that is as un-alarming as it sounds. And that its statistically more relevant to worry about death by lightning, shark, or piano.
Strange Maps #1041
Got a strange map? Let me know at email@example.com.
The pandemic has many people questioning whether they ever want to go back to the office.
If one thing is clear about remote work, it's this: Many people prefer it and don't want their bosses to take it away.
When the pandemic forced office employees into lockdown and cut them off from spending in-person time with their colleagues, they almost immediately realized that they favor remote work over their traditional office routines and norms.
As remote workers of all ages contemplate their futures – and as some offices and schools start to reopen – many Americans are asking hard questions about whether they wish to return to their old lives, and what they're willing to sacrifice or endure in the years to come.
Even before the pandemic, there were people asking whether office life jibed with their aspirations.
We spent years studying “digital nomads" – workers who had left behind their homes, cities and most of their possessions to embark on what they call “location independent" lives. Our research taught us several important lessons about the conditions that push workers away from offices and major metropolitan areas, pulling them toward new lifestyles.
Legions of people now have the chance to reinvent their relationship to their work in much the same way.
Big-city bait and switch
Most digital nomads started out excited to work in career-track jobs for prestigious employers. Moving to cities like New York and London, they wanted to spend their free time meeting new people, going to museums and trying out new restaurants.
But then came the burnout.
Although these cities certainly host institutions that can inspire creativity and cultivate new relationships, digital nomads rarely had time to take advantage of them. Instead, high cost of living, time constraints and work demands contributed to an oppressive culture of materialism and workaholism.
Pauline, 28, who worked in advertising helping large corporate clients to develop brand identities through music, likened city life for professionals in her peer group to a “hamster wheel." (The names used in this article are pseudonyms, as required by research protocol.)
“The thing about New York is it's kind of like the battle of the busiest," she said. “It's like, 'Oh, you're so busy? No, I'm so busy.'"
Most of the digital nomads we studied had been lured into what urbanist Richard Florida termed “creative class" jobs – positions in design, tech, marketing and entertainment. They assumed this work would prove fulfilling enough to offset what they sacrificed in terms of time spent on social and creative pursuits.
Yet these digital nomads told us that their jobs were far less interesting and creative than they had been led to expect. Worse, their employers continued to demand that they be “all in" for work – and accept the controlling aspects of office life without providing the development, mentorship or meaningful work they felt they had been promised. As they looked to the future, they saw only more of the same.
Ellie, 33, a former business journalist who is now a freelance writer and entrepreneur, told us: “A lot of people don't have positive role models at work, so then it's sort of like 'Why am I climbing the ladder to try and get this job? This doesn't seem like a good way to spend the next twenty years.'"
By their late 20s to early 30s, digital nomads were actively researching ways to leave their career-track jobs in top-tier global cities.
Looking for a fresh start
Although they left some of the world's most glamorous cities, the digital nomads we studied were not homesteaders working from the wilderness; they needed access to the conveniences of contemporary life in order to be productive. Looking abroad, they quickly learned that places like Bali in Indonesia, and Chiang Mai in Thailand had the necessary infrastructure to support them at a fraction of the cost of their former lives.
With more and more companies now offering employees the choice to work remotely, there's no reason to think digital nomads have to travel to southeast Asia – or even leave the United States – to transform their work lives.
During the pandemic, some people have already migrated away from the nation's most expensive real estate markets to smaller cities and towns to be closer to nature or family. Many of these places still possess vibrant local cultures. As commutes to work disappear from daily life, such moves could leave remote workers with more available income and more free time.
The digital nomads we studied often used savings in time and money to try new things, like exploring side hustles. One recent study even found, somewhat paradoxically, that the sense of empowerment that came from embarking on a side hustle actually improved performance in workers' primary jobs.
The future of work, while not entirely remote, will undoubtedly offer more remote options to many more workers. Although some business leaders are still reluctant to accept their employees' desire to leave the office behind, local governments are embracing the trend, with several U.S. cities and states – along with countries around the world – developing plans to attract remote workers.
This migration, whether domestic or international, has the potential to enrich communities and cultivate more satisfying work lives.
The potential of CRISPR technology is incredible, but the threats are too serious to ignore.
- CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) is a revolutionary technology that gives scientists the ability to alter DNA. On the one hand, this tool could mean the elimination of certain diseases. On the other, there are concerns (both ethical and practical) about its misuse and the yet-unknown consequences of such experimentation.
- "The technique could be misused in horrible ways," says counter-terrorism expert Richard A. Clarke. Clarke lists biological weapons as one of the potential threats, "Threats for which we don't have any known antidote." CRISPR co-inventor, biochemist Jennifer Doudna, echos the concern, recounting a nightmare involving the technology, eugenics, and a meeting with Adolf Hitler.
- Should this kind of tool even exist? Do the positives outweigh the potential dangers? How could something like this ever be regulated, and should it be? These questions and more are considered by Doudna, Clarke, evolutionary biologist Richard Dawkins, psychologist Steven Pinker, and physician Siddhartha Mukherjee.
Measuring a person's movements and poses, smart clothes could be used for athletic training, rehabilitation, or health-monitoring.