How to undermine monopoly capitalism's control of our identities
January 23, 2018 2:34 AM   Subscribe

Can blockchain protocols fix the internet? - "Why did the internet follow the path from open to closed? ... A closed architecture like Facebook's or Twitter's puts all the information about its users — their handles, their likes and photos, the map of connections they have to other individuals on the network — into a private database that is maintained by the company." (via)
So how can you get meaningful adoption of base-layer protocols in an age when the big tech companies have already attracted billions of users and collectively sit on hundreds of billions of dollars in cash? If you happen to believe that the internet, in its current incarnation, is causing significant and growing harm to society, then this seemingly esoteric problem — the difficulty of getting people to adopt new open-source technology standards — turns out to have momentous consequences. If we can’t figure out a way to introduce new, rival base-layer infrastructure, then we’re stuck with the internet we have today. The best we can hope for is government interventions to scale back the power of Facebook or Google, or some kind of consumer revolt that encourages that marketplace to shift to less hegemonic online services, the digital equivalent of forswearing big agriculture for local farmers’ markets. Neither approach would upend the underlying dynamics of InternetTwo...

The true test of the blockchain will revolve — like so many of the online crises of the past few years — around the problem of identity. Today your digital identity is scattered across dozens, or even hundreds, of different sites: Amazon has your credit-card information and your purchase history; Facebook knows your friends and family; Equifax maintains your credit history. When you use any of those services, you are effectively asking for permission to borrow some of that information about yourself in order perform a task: ordering a Christmas present for your uncle, checking Instagram to see pictures from the office party last night. But all these different fragments of your identity don’t belong to you; they belong to Facebook and Amazon and Google, who are free to sell bits of that information about you to advertisers without consulting you. You, of course, are free to delete those accounts if you choose, and if you stop checking Facebook, Zuckerberg and the Facebook shareholders will stop making money by renting out your attention to their true customers. But your Facebook or Google identity isn’t portable. If you want to join another promising social network that is maybe a little less infected with Russian bots, you can’t extract your social network from Twitter and deposit it in the new service. You have to build the network again from scratch (and persuade all your friends to do the same).

The blockchain evangelists think this entire approach is backward. You should own your digital identity — which could include everything from your date of birth to your friend networks to your purchasing history — and you should be free to lend parts of that identity out to services as you see fit. Given that identity was not baked into the original internet protocols, and given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility. Now it is an attainable goal. A number of blockchain-based services are trying to tackle this problem, including a new identity system called uPort that has been spun out of ConsenSys and another one called Blockstack that is currently based on the Bitcoin platform. (Tim Berners-Lee is leading the development of a comparable system, called Solid, that would also give users control over their own data.) These rival protocols all have slightly different frameworks, but they all share a general vision of how identity should work on a truly decentralized internet.

What would prevent a new blockchain-based identity standard from following Tim Wu’s Cycle, the same one that brought Facebook to such a dominant position? Perhaps nothing. But imagine how that sequence would play out in practice. Someone creates a new protocol to define your social network via Ethereum. It might be as simple as a list of other Ethereum addresses; in other words, Here are the public addresses of people I like and trust. That way of defining your social network might well take off and ultimately supplant the closed systems that define your network on Facebook. Perhaps someday, every single person on the planet might use that standard to map their social connections, just as every single person on the internet uses TCP/IP to share data. But even if this new form of identity became ubiquitous, it wouldn’t present the same opportunities for abuse and manipulation that you find in the closed systems that have become de facto standards. I might allow a Facebook-style service to use my social map to filter news or gossip or music for me, based on the activity of my friends, but if that service annoyed me, I’d be free to sample other alternatives without the switching costs. An open identity standard would give ordinary people the opportunity to sell their attention to the highest bidder, or choose to keep it out of the marketplace altogether... As many critics have observed, ordinary users on social-media platforms create almost all the content without compensation, while the companies capture all the economic value from that content through advertising sales...

The blockchain worldview can also sound libertarian in the sense that it proposes nonstate solutions to capitalist excesses like information monopolies. But to believe in the blockchain is not necessarily to oppose regulation, if that regulation is designed with complementary aims. Brad Burnham, for instance, suggests that regulators should insist that everyone have “a right to a private data store,” where all the various facets of their online identity would be maintained. But governments wouldn’t be required to design those identity protocols. They would be developed on the blockchain, open source. Ideologically speaking, that private data store would be a true team effort: built as an intellectual commons, funded by token speculators, supported by the regulatory state.

Like the original internet itself, the blockchain is an idea with radical — almost communitarian — possibilities that at the same time has attracted some of the most frivolous and regressive appetites of capitalism. We spent our first years online in a world defined by open protocols and intellectual commons; we spent the second phase in a world increasingly dominated by closed architectures and proprietary databases. We have learned enough from this history to support the hypothesis that open works better than closed, at least where base-layer issues are concerned. But we don’t have an easy route back to the open-protocol era. Some messianic next-generation internet protocol is not likely to emerge out of Department of Defense research, the way the first-generation internet did nearly 50 years ago.

Yes, the blockchain may seem like the very worst of speculative capitalism right now, and yes, it is demonically challenging to understand. But the beautiful thing about open protocols is that they can be steered in surprising new directions by the people who discover and champion them in their infancy. Right now, the only real hope for a revival of the open-protocol ethos lies in the blockchain. Whether it eventually lives up to its egalitarian promise will in large part depend on the people who embrace the platform, who take up the baton, as Juan Benet puts it, from those early online pioneers. If you think the internet is not working in its current incarnation, you can’t change the system through think-pieces and F.C.C. regulations alone. You need new code.
@stevenbjohnson: "blockchain aside, a major part of the piece is a love song to the open protocol era of the Internet, making the argument that most of our current problems stem from the shift from open to closed platforms."
posted by kliuless (224 comments total) 42 users marked this as a favorite
 
I’ve run Marketing for three ICOs in the past year and I’ve been telling anyone who will listen the same thing: ignore the Bitcoin hype. The real winner here is the technology behind it: Blockchain.
posted by zooropa at 2:52 AM on January 23 [7 favorites]


The thing that I find utterly mystifying is that blockchain is technology for avoiding a central authority, but we increasingly see it being released as a product by centralized authorities (corporations and exchanges). What's the point? It seems like nothing more than an attempt to exploit the hype, or more cynically, to stymie decentralization by appropriating the tech and forcing it to be centralized.

I keep waiting for the price of Kodak to deflate, but it's just not happening.
posted by I-Write-Essays at 3:01 AM on January 23 [11 favorites]


Blockchain is currently utilizing a fuckton of power comparative to the "wealth" that it is providing. This in turn raises rates universally - either the resource is used up, or the resource is diverted to blockchain production instead of allowing the supply to increase and subsequently lowering the rates. Block chain is subsidizing international power grids (and GPU manufacturers).

The only block chain that is perhaps doing anything positive for society is bondcliff's.
posted by Nanukthedog at 4:33 AM on January 23 [32 favorites]


The thing that I find utterly mystifying is that blockchain is technology for avoiding a central authority, but we increasingly see it being released as a product by centralized authorities (corporations and exchanges). What's the point?

The point? Much like these popup solar companies putting power on the grid without having to own any realestate and charging you for the service, I can store my data in a distributed system publicly, securely, and you pay for the honor to host it and continually increase my security. In other words... 2. ???? 3. Profit!
posted by Nanukthedog at 4:36 AM on January 23 [1 favorite]


Amazon has your credit-card information and your purchase history; Facebook knows your friends and family; Equifax maintains your credit history. When you use any of those services, you are effectively asking for permission to borrow some of that information about yourself in order perform a task

This doesn't seem quite right, that the customer is "borrowing" his own information, at least in the case of Amazon. The credit card number (or other payment information) is needed information for the vendor to sell you anything. And your purchase history (at Amazon itself) is data generated as a side-effect of ... making purchases at Amazon. You could re-enter a one-time credit card and create a new Amazon account for each purchase if you were so inclined, at a huge cost in convenience. I guess the question is, is a list of purchases made by a customer some kind of secret personal information that ought not to be possessed by the vendor from whom that customer purchased things?

Maybe a blockchain implementation will allow us to perform purchases that get delivered to an anonymous hash in escrow (and some associated physical destination concealed from the vendor), so nobody knows our credit card number or purchase history. In some situations, it might be valuable.
posted by theorique at 5:35 AM on January 23 [4 favorites]


What's the point? It seems like nothing more than an attempt to exploit the hype, or more cynically, to stymie decentralization by appropriating the tech and forcing it to be centralized.

Yes. I don't think (e.g.) a stock exchange cares deeply about decentralization in an area outside their area of focus (e.g. interbank transfers), but they definitely want to be the centralized entity in their particular area of focus.
posted by theorique at 5:38 AM on January 23 [1 favorite]


> Maybe a blockchain implementation will allow us to perform purchases that get delivered to an anonymous hash in escrow

If the service is being offered by any kind of centralized organization, why is a blockchain necessary to implement it?
posted by I-Write-Essays at 5:38 AM on January 23 [7 favorites]


It's not... I was just thinking, how would a person "get around" Amazon having their credit card data and purchase history. (Setting aside the question of why this matters or why someone would do it at all.)
posted by theorique at 5:40 AM on January 23 [1 favorite]


I will chime in here that Radical Technologies (by Metafilter's Own Adam Greenfield) includes the most complete and cogent explanation I've ever read of the multiple tricky pieces of thinking the neologism "blockchain" is meant to encapsulate (and why left-leaning people should give a shit):
“Bitcoin might be a dead letter as a method for the exchange of value at any meaningful scale, in other words, but it functioned beautifully as a proof of concept. Consider the intellectual kit of parts that Satoshi assembled to build his currency: a means for the cryptographic verification of identity, a universal ledger with the properties of transparency and persistence, and a procedure for the consolidation of agreement among parties, all founded on a diffuse, decentralized, serverless architecture that is very difficult to eradicate, or even hinder, by any means short of dismantling the network itself. Liberated from the specific context of Bitcoin, this is a powerfully general vocabulary, and it can be used to build all kinds of useful things.”
posted by Sokka shot first at 5:41 AM on January 23 [21 favorites]


I guess the question is, is a list of purchases made by a customer some kind of secret personal information that ought not to be possessed by the vendor from whom that customer purchased things?

Fuck Amazon, if you're concerned about your purchase history being known, you can never go to any local corner shop, choice shop, or pub again. The person serving you might remember what they sold you last time!
posted by Dysk at 5:43 AM on January 23 [7 favorites]


I'm struggling to see how this is different from the older idea of PGP keys (which required keyservers to be useful), using blockchain to replace web-of-trust. The big social media sites won, in part, because they offered convenience over strong authentication.

I was under the impression that cryptocurrency is expensive as an application of blockchains because it was designed to be expensive. Applications testing identity and signatures will need to run on budget phones if they're going to be useful these days.
posted by GenderNullPointerException at 5:44 AM on January 23 [8 favorites]


But your Facebook or Google identity isn’t portable.

...

These rival protocols all have slightly different frameworks, but they all share a general vision of how identity should work on a truly decentralized internet.

This is definitely going to make things more portable. Definitely.

I am a fan of a more independent web, but you know, I hate to be old about this, but in my day, we did this by building our own web pages, not by building 300 different competing blockchain services that will purport to store everything important about me that I'm going to have to manage in addition to the 300 social media sites that are going to somehow have to agree to support importing and exporting data from every single one of those blockchain services.
posted by Sequence at 5:49 AM on January 23 [22 favorites]


Can the decentralized trust system deal with and resolve the following cases?

1) An elderly senior's identity gets stolen by scammers, by tricking her out of the pass phrase
2) A woman is stalked and tracked by her violent ex-husband who has all her prior identity information
3) A foreign state attempts to create 1M fake identities and/or transaction histories
4) Person lost uncrackable pass phrase in a house fire
posted by benzenedream at 5:50 AM on January 23 [41 favorites]


I haven’t done marketing for any ICOs. I merely write computer software and work a lot with databases and Internet technology. I’ve been telling anyone who will listen the same thing: blockchain technology is totally overhyped. On a good day, it is an extremely slow distributed database, and will have very few real world applications.
posted by chrchr at 5:56 AM on January 23 [36 favorites]


So much of what you need to know about blockchain is that the technology's been around for about a decade and so far it's entirely "will" and not "is". The only "is" so far that makes any sense is the disaster that is cryptocurrency. Blockchain is a solution in search of a problem, and not a very good solution, at that.
posted by Pope Guilty at 6:07 AM on January 23 [20 favorites]


The thing that I find utterly mystifying is that blockchain is technology for avoiding a central authority but we increasingly see it being released as a product by centralized authorities (corporations and exchanges).

The obsessive cryptocurrency kooks have evangelized it as such, but the truth is that it decentralizes the computing and other tasks, not necessarily the authority.

What's the point? It seems like nothing more than an attempt to exploit the hype, or more cynically, to stymie decentralization by appropriating the tech and forcing it to be centralized.

There are many different implementations of blockchain that benefit centralized authorities. That includes governments, which can use blockchain technologies in a variety of ways (for example, grants and smart contracts seem like a good match), and even the Federal Reserve sees potential* in the tech. It's not exploiting the hype or some plot to thwart a return to the gold standard (although I kinda wish it was), and it's not really being appropriated. It's the same research other people are doing, but ironically enough centralizing R&D in both the public and private sector has led to finding uses that cranky, paranoid ancaps couldn't or wouldn't. That's a failing on their part, not some nefarious scheme by Big [Insert Industry Here] to take away their Preciouses.


* And let me tell you, I would love it if they did. The look on the faces of the aforementioned cryptocurrency kooks when a central bank adopts their baby will be...kisses fingers
posted by zombieflanders at 6:10 AM on January 23 [7 favorites]


The obsessive cryptocurrency kooks have evangelized it as such, but the truth is that it decentralizes the computing and other tasks, not necessarily the authority.

It also doesn't solve the trust and reputation problem. Just because you sent a payment for goods or services to a particular hash/address doesn't mean the guy at the other end is going to send you your purchase on time (or at all). And because it gets added to the blockchain, there's no recourse or escrow - the payment is cleared and settled as if you gave him cash.
posted by theorique at 6:18 AM on January 23 [6 favorites]


Sokka shot first: "... a means for the cryptographic verification of identity..."

I know you didn't write this Sokka, but this is incorrect: it's cryptographic verification that a person possesses one or more strings of characters corresponding to the security code for a series of transactions. There's no real-world identity stored in the blockchain, only the keys belonging to people we hope are actually the ones holding the keys.

Also, the blockchain doesn't verify any data stored in it; it just verifies that the data hasn't changed since it was put in the blockchain. So, let's say you're using the blockchain to verify and validate a real-world contract; all you can get from the blockchain is that the person with the 'keys' saying they are Party A to the contract committed to the data; not that Party A was actually involved. There's still a lot of real-world trust and verification needed to ensure the blockchain data is correct, versus internally-consistent.
posted by AzraelBrown at 6:19 AM on January 23 [17 favorites]


I have this hammer... looks like you have all kinds of things that look like nails!

Putting aside the element of Engineer's Disease in evidence around any discussion of 'the blockchain', it's likely to have all kinds of uses. But the chances are high that those uses will be mostly unexpected, and in areas unrelated to the jabber in the media. There'll be experiments, and most of them will fail. As always, the art of prediction lies mostly in being the person who guessed lucky on a few things.
posted by pipeski at 6:32 AM on January 23 [9 favorites]


One of the assumptions I challenge behind both this vision and facebook is that identity is a human need that should be centralized, either by Facebook or by a universal ledger. Human social networks are bounded to some degree by limits on cognition and attention, so my idea of a decentralized internet involves the proliferation of the equivalent of coffee shops, congregations, bars, diners, and hobby shops. The notion that my reading habits are of interest to family, doctors, and distant coworkers is counter-intuitive. Both models of social networks are less social because the social networks become flattened to a featureless homogeneity unless you do extra work. Without the natural privacy and boundaries that come with paying attention to who's in the room with you, you can't really say that much.
posted by GenderNullPointerException at 6:41 AM on January 23 [12 favorites]


The blockchain is only secure until it isn't. It can only be validated until it can't. It can only be trusted until someone figures out how to corrupt it.

And most of the suggested uses for a blockchain can be done as easily, and as securely, with a simple log file.
posted by SansPoint at 6:53 AM on January 23 [2 favorites]


Looking to invest in a fashion line based around emblazoning various dresses with the phrase “PLEASE DO NOT TALK TO ME ABOUT CRYPTOCURRENCY”
 — @christinelove [NSFW image in banner]
posted by scruss at 6:58 AM on January 23 [12 favorites]


One of the assumptions I challenge behind both this vision and facebook is that identity is a human need that should be centralized, either by Facebook or by a universal ledger.

Yes, that's exactly right. We've invented a "problem" that isn't a problem, so the particular characteristics of any given "solution" are just utterly irrelevant compared to the main question, which is "Yeah, but why would anyone actually want this?"
posted by tobascodagama at 7:09 AM on January 23 [7 favorites]


Lots of separate tiny blockchains seems like a terrible idea - they'd surely be open to some big miner with lots of hardware just steamrolling them if it ever turns out to be useful to them to do so.

And it seems to me you can't put all these tiny database use cases on one big common blockchain as you'll be having to pay what may end up being quite large fees every time you want to stick some new bit of data in, and you have no control over what the market may decide those fees should be, and the blockchain itself will be impractically large for your particular small scale use.
posted by edd at 7:10 AM on January 23 [1 favorite]


This is just silly. I can't even get academics to use ORCID.
posted by aspersioncast at 7:12 AM on January 23 [13 favorites]


Blockchain is just a distributed ledger. It's not a terrible idea, although scalability is a concern. Everything else is smoke and mirrors of application. The hype will die down once it becomes normalized enough that governments start regulating the businesses built there.

I’ve run Marketing for three ICOs in the past year

Wow really? Are they all scams?

Literally every ICO I've seen in the last year has seemed like a scam to me. I don't just mean the shady way they're trying to do an end-run around SEC regulations (for the US ones). It's also that most of the ICOs aren't backed with anything of value. Except maybe Kik and a couple of others which are running services people actually use but have failed to raise traditional investment because of some significant problem. Like how Kik is a market for child porn.
posted by Nelson at 7:18 AM on January 23 [9 favorites]


In order for this to work they'd have to solve the whole "7 transactions per second worldwide" ceiling, no?
posted by signal at 7:20 AM on January 23 [1 favorite]


Amazon has your credit-card information and your purchase history; Facebook knows your friends and family; Equifax maintains your credit history.

This is in part an argument about data protection regimes, and how the American one, which is more lax and more corporate-friendly than elsewhere in the developed world, exerts a global influence through adoption of US-based technology. (The EU's GDPR becomes enforceable in May. It has very different foundations.)

It's also an argument about identity management, where the developing world is perhaps more interesting because (as with the leap to mobile communications and data) there's less legacy stuff that needs accommodating. I know people working on this [pdf] and it's a space that deserves attention.
posted by holgate at 7:21 AM on January 23 [2 favorites]


7 transactions per second or whatever is purely a Bitcoin limit. Other blockchains exist, despite the persistent use of the definite article when referring to blockchains.
posted by edd at 7:22 AM on January 23 [1 favorite]


Noooooope nope nope nope. The entire point of blockchains is that they are immutable, right? Yeah, well, I don't think overall we want our personal information to be immutable. Friend networks change. People break up. Names change. Personal information changes. Credit cards get replaced. I know purists don't think of git as a blockchain, but it's the closest thing to blockchain that's useful to me personally so far and it definitely has this problem. (You have to change every commit in the repository to change any historical data, by design.) I don't even know how this would intersect with various EU Right to be Forgotten statutes.

I've also learned from watching the cryptocurrency horror show just how unready the vast majority of people are to handle securely storing cryptographic keys, and I'm pretty sure I include myself here. There's a whole list of things people are supposed to do to truly keep their cryptocurrency safe, but it's unwieldy to manage and so most people use exchanges, which often then get hacked or were scams to begin with. Malware scoops up keys left lying around (if you think no one would have the motive, remember that this article is talking about how some companies keep your credit card information all to their greedy selves). Keys just get outright lost, too.
In this one respect, the Bitcoin story is actually instructive: It may never be stable enough to function as a currency, but it does offer convincing proof of just how secure a distributed ledger can be. “Look at the market cap of Bitcoin or Ethereum: $80 billion, $25 billion, whatever,” Dixon says. “That means if you successfully attack that system, you could walk away with more than a billion dollars. You know what a ‘bug bounty’ is? Someone says, ‘If you hack my system, I’ll give you a million dollars.’ So Bitcoin is now a nine-year-old multibillion-dollar bug bounty, and no one’s hacked it. It feels like pretty good proof.”
Are you kidding me? ARE YOU KIDDING ME? Bitcoin and Ethereum get stolen ALL the freaking time. More than 10 percent of ICO funds are lost or stolen in hacker attacks. And of course transactions are irreversible so there's no way to undo a moment's mistake. This attitude is "the system cannot be fail it can only be failed" writ large. (Funnily enough, if somebody "hacked" Bitcoin and walked away with all the bitcoins, the value would be, well, zero, as they have no intrinsic value.)
posted by foxfirefey at 7:26 AM on January 23 [20 favorites]


That means if you successfully attack that system, you could walk away with more than a billion dollars.
This has happened. In practice, the attacker did not get to walk away with all the Ethereum, but rather the Ethereum developers rolled back the whole blockchain.

This raises awkward questions about some of the blockchain claims. Immutable? Well, most of the time! No central authority? Ultimately if enough power brokers get together, they can undo whatever transactions they want to.
posted by chrchr at 7:42 AM on January 23 [16 favorites]


Can blockchain protocols fix the internet?
Betteridge's law saves us yet again.

So much of what you need to know about blockchain is that the technology's been around for about a decade and so far it's entirely "will" and not "is". The only "is" so far that makes any sense is the disaster that is cryptocurrency. Blockchain is a solution in search of a problem, and not a very good solution, at that.
Pope Guilty

Ten years in, nobody has come up with a use for blockchain
posted by Sangermaine at 7:58 AM on January 23 [7 favorites]


The stock exchanges occasionally are frozen and rolled back, there's a procedure for that. Probably has some grouchy traders who's trades failed that day but really only the ones that know they are on the edge of a gamble.

There are lots of scams and problems in the current financial systems but few massive hacks like the simple bug in some Etherium code that went boom. Read "Catch Me If You Can" that hacker (check kiting) went on to fix a lot of the technical bugs in the checking system.

A distributed, stable, auditable cryptographic currency with rapid(sub-second), low transaction cost will be implemented. Will be. As pointed out by foxfirefey, currently key & password management is perhaps the biggest issue. Folks know how to roll up a few fifties and tuck them into a hidden can safely, but it just is not general habit or understanding what to do about a long string of digits. But there are a whole graduate schools worth of thesises about a bunch of other details.
posted by sammyo at 7:58 AM on January 23


we're all going to die. blockchain won't fix that.

something something blockchain quantum consciousness something, give me my venture capital
posted by mubba at 8:08 AM on January 23 [5 favorites]


I guarantee you that if you could slap together a white paper providing the thinnest veneer of math jargon for BlockCon, the Quantum Consciousness Blockchain, and launched an ICO you'd be a billionaire by next week.
posted by Sangermaine at 8:12 AM on January 23 [3 favorites]


Blockchain is currently utilizing a fuckton of power comparative to the "wealth" that it is providing.

I'm not clear about whether these scandalously immoral levels of coal-rolling electrical waste are an inherent feature of blockchains or just something caused by cryptocurrency mining.
posted by straight at 8:14 AM on January 23


> BlockCon

How about ConCoin? or, TulipCoin?
posted by I-Write-Essays at 8:15 AM on January 23


Fuck Amazon, if you're concerned about your purchase history being known, you can never go to any local corner shop, choice shop, or pub again. The person serving you might remember what they sold you last time!
posted by Dysk at 8:43 AM on January 23


Yeah. I want to a bar last night and the bartender said, "The usual?" I yelled,"You don't know me!" and went to another bar.
posted by Splunge at 8:36 AM on January 23 [16 favorites]


I really like the idea of the portability and data ownership used by Estonia (previously). It's not as sexy as ~blockchain~ but it's also significantly better in every other way!
posted by mosst at 8:47 AM on January 23 [3 favorites]


The relevant quote:
Data aren’t centrally held, thus reducing the chance of Equifax-level breaches. Instead, the government’s data platform, X-Road, links individual servers through end-to-end encrypted pathways, letting information live locally. Your dentist’s practice holds its own data; so does your high school and your bank. When a user requests a piece of information, it is delivered like a boat crossing a canal via locks.

Although X-Road is a government platform, it has become, owing to its ubiquity, the network that many major private firms build on, too. Finland, Estonia’s neighbor to the north, recently began using X-Road, which means that certain data—for instance, prescriptions that you’re able to pick up at a local pharmacy—can be linked between the nations. It is easy to imagine a novel internationalism taking shape in this form. Toomas Ilves, Estonia’s former President and a longtime driver of its digitization efforts, is currently a distinguished visiting fellow at Stanford, and says he was shocked at how retrograde U.S. bureaucracy seems even in the heart of Silicon Valley. “It’s like the nineteen-fifties—I had to provide an electrical bill to prove I live here!” he exclaimed. “You can get an iPhone X, but, if you have to register your car, forget it.”

X-Road is appealing due to its rigorous filtering: Piperal’s teachers can enter her grades, but they can’t access her financial history, and even a file that’s accessible to medical specialists can be sealed off from other doctors if Piperal doesn’t want it seen.

“I’ll show you a digital health record,” she said, to explain. “A doctor from here”—a file from one clinic—“can see the research that this doctor”—she pointed to another—“does.” She’d locked a third record, from a female-medicine practice, so that no other doctor would be able to see it. A tenet of the Estonian system is that an individual owns all information recorded about him or her. Every time a doctor (or a border guard, a police officer, a banker, or a minister) glances at any of Piperal’s secure data online, that look is recorded and reported. Peeping at another person’s secure data for no reason is a criminal offense. “In Estonia, we don’t have Big Brother; we have Little Brother,” a local told me. “You can tell him what to do and maybe also beat him up.”
posted by mosst at 8:52 AM on January 23 [9 favorites]


Can blockchain protocols figure out why the water pressure is so bad in my apartment?
posted by TheWhiteSkull at 8:53 AM on January 23 [1 favorite]


Blockchain is mostly hype, driven largely by people who weren't following the technology prior to it becoming a buzzword and get-rich-quick scheme.

That doesn't mean the technology is without merit, though. There are some situations where having a very slow, yet totally decentralized, database can be pretty useful. I don't think that includes most of the applications for which "blockchain" is being proposed, but they do exist.

I'm struggling to see how this is different from the older idea of PGP keys (which required keyservers to be useful), using blockchain to replace web-of-trust.

That's probably one of the more interesting applications, TBH. PGP/GPG suffered, particularly early on, from keyserver fragmentation and the lack of a single repository to get others' public keys. That's been resolved to some extent by keyserver peering, but the key distribution problem is IMO one of the big weaknesses that hurt adoption. I've always thought that a DHT-based system, similar to Freenet, would be a good way of providing a single searchspace for public keys without a SPOF (like having everybody decide that "MIT's keyserver is the The One").

And one you have a single public key repository, there are a lot of interesting things you can do to build digital identities off of it, without actually storing that much information in the distributed portion of the database itself.

But for whatever reason, nobody gets excited about distributed hash tables—worse, they have a slight odor of late-90s P2P about them. But people are excited as fuck about "blockchain" though, and it creates a sort of opportunity—you can call any sort of DHT a "blockchain technology" with a semi-straight face, and probably have investors ramming crisp $100s down your throat in an effort to make you stop talking and start coding blockchainy things for them.

So as dumb as I think some of the "blockchain" hype is, there's no reason not to capitalize on the excitement and build cool stuff with decentralized strong cryptography; it's the least we can do given the amount of fossil fuel that's literally being shoveled into a furnace just so morons can speculate on virtual Monopoly dollars and learn a Valuable Lesson in why financial regulations exist. I'm not sure it's even a net positive in the end, but as long as people are churning out virtual lemons, we might as well do our best to make some lemonade.
posted by Kadin2048 at 8:58 AM on January 23 [12 favorites]


The stock exchanges occasionally are frozen and rolled back, there's a procedure for that. Probably has some grouchy traders who's trades failed that day but really only the ones that know they are on the edge of a gamble.
Yes exactly. There is a procedure! Meanwhile in Ethereum land, what is the process for the developers deciding to rollback the transactions? The claim made by crypto enthusiasts is that there’s no central authority that can mess with your money. In practice, on Ethereum, when tested, insiders will change the rules to ensure the outcome they want. In theory, a consortium of the largest Bitcoin miners could do the same thing.
posted by chrchr at 9:00 AM on January 23 [3 favorites]


The person serving you might remember what they sold you last time!

Well that's a reductio ad absurdum if I ever saw one.
posted by aspersioncast at 9:01 AM on January 23 [1 favorite]


Yeah, well, I don't think overall we want our personal information to be immutable. Friend networks change. People break up. Names change. Personal information changes. Credit cards get replaced.

I'm not sure this is an issue; consider a history of immutable *records of changes* that you can append to.
posted by Jpfed at 9:21 AM on January 23 [1 favorite]


I think the concern is not so much immutability, as it is the right to be forgotten, or to cut ties.
posted by I-Write-Essays at 9:23 AM on January 23 [6 favorites]


You can easily have that (sort of); don't store anything in the distributed database besides a public key, signatures, and a URL or multiple URLs. Have all the other information on non-immutable storage elsewhere. Use the distributed database as a keystore and a way of vouching for someone else's keys, but don't actually store information that's subject to change there.

That said, the "right to be forgotten" thing is probably not feasible; you have no idea who is caching or logging data and no way to really prevent it. But that exists in the real world, too; you have no way of keeping me from noting down that we ate lunch together, even though a year from now you might decide I'm shitty and don't want to ever remember it—that record is still going to exist.

A decent cryptographic identity system would let you start over, if you wanted to, just by creating a new identity and rebuilding the signatures that represent other people trusting you and vouching for various pieces of your identity. I have my doubts as to how many people would ever want to do that, though, based on the very small number of people who ever do it in the real world. But there's nothing that prevents it unless you specifically engineer it that way (I suspect some governments, e.g. China, probably will though, because they find that sort of thing threatening and have an idea of an idealized society that looks suspiciously like a dystopia to me, but /shrug).
posted by Kadin2048 at 9:31 AM on January 23 [1 favorite]


I guess the question is, is a list of purchases made by a customer some kind of secret personal information that ought not to be possessed by the vendor from whom that customer purchased things?

I don't mind being a regular at my pharmacist, where there's privacy protection. And I don't mind being a regular at the corner deli. But a stated goal of Amazon is to be the logistics company to create the grand unified field theory of consumerism (the bookstore is just proof of concept), so yes, I would mind if my deli and my pharmacy started sharing information.

Because sheesh, already if you get a preview for one Chuck Tingle story, you'll get pushed a dozen others for months. What happens when they flip a switch and decide to add peer pressure to their marketing?
posted by GenderNullPointerException at 9:37 AM on January 23 [3 favorites]


The core problem with identity is that its value is largely in connecting disparate facts about you, and if the right facts are connected it can get very uncomfortable for you. If my address leaks to 4chan I can expect police visits, but if I take a photo in my backyard and post it publically, you can connect that with mapping data to get my address. If you buy a particular combination of innocent items at Target, they can work out you're pregnant. Facebook makes a mint out of knowing that people who like this combination of things are very vulnerable to this advertising pitch.

I don't know how you solve this. Blockchain identity doesn't solve this. It's not the right to be forgotten; it's the right for other people to not draw conclusions you don't want, but that's human nature.
posted by Merus at 9:39 AM on January 23 [2 favorites]


Use the distributed database as a keystore and a way of vouching for someone else's keys, but don't actually store information that's subject to change there.

So now you're not even using it to store data, you're just storing URLs to data with no guarantee that data is even structured in such a way that your social media site can even use it. At what point do we admit that there's just not a practical application here?
posted by Sequence at 9:42 AM on January 23 [3 favorites]


I'm bubbling up with so much protestations they can't all come through my fingers during a workday, but I do not cite the EU Right to be Forgotten statutes as some nebulous lofty moral thing to strive for that can never be achieved in truth. I'm citing them as legislation that exists and is enforced by the government, a government that can and will levy consequences when it is capable.

It's like how people want to consider Bitcoin outside of the financial and government taxation systems, and then the government seizes all your bitcoins because you are running a drug cartel and murdering people or the government subpoenas the exchange you were on and gets the personal records, which conveniently connect to an immutable distributed ledger meticulously documenting your tax evasion, and it doesn't even matter if you didn't understand that's what you were doing. Thanks blockchain!

What I am saying is that if your distributed personal identity system cannot delete information, but the government insists that you must delete it, you have a problem. The government cannot change cryptographic principles, but it can make life very difficult for anybody trying to do business with the real world from continuing to use and distribute that blockchain. In Git, you must rewrite the entire commit history in order to remove sensitive information, which is annoying but can be accomplished. I do not see a mechanism for that here.
posted by foxfirefey at 10:08 AM on January 23 [12 favorites]


That doesn't mean the technology is without merit, though. There are some situations where having a very slow, yet totally decentralized, database can be pretty useful. I don't think that includes most of the applications for which "blockchain" is being proposed, but they do exist.

I remember reading that national customs agencies were being pitched a blockchain for shipping containers that would track the contents of the containers, where they've been, who inspected them, etc. That's something I could see actually working since it does fill a gap that currently exists and works for the technology but international shipping is deeply unsexy so I don't know if it went anywhere.
posted by Copronymus at 10:20 AM on January 23 [3 favorites]


then the government seizes all your bitcoins because you are running a drug cartel and murdering people

There's substantial doubt about Ulbricht's guilt - many people think he was framed by the Feds and tried in a very shady, kangaroo trial.
posted by theorique at 10:25 AM on January 23


I guess we're getting off-topic, but to anyone who followed the case there's no question Ulbricht was guilty of the crimes he's serving time for. The FBI-coerced murder-for-hire event was shaky, but he wasn't charged that with in the first court case. (Maybe there was another one. I stopped following closely after that.)
posted by Coventry at 10:31 AM on January 23 [4 favorites]


There's substantial doubt about Ulbricht's guilt - many people think he was framed by the Feds and tried in a very shady, kangaroo trial.

There is not, at all, "substantial doubt about Ulbricht's guilt". There is a small crowd of people who refuse to accept reality.

As the judge noted in one of appeals, they want to have their cake and eat it too: to claim both that there's nothing wrong with Ulbricht selling drugs but also that he was framed for selling drugs.
posted by Sangermaine at 10:36 AM on January 23 [9 favorites]


I can't even get academics to use ORCID.

I can't even get academics to pronounce ORCID correctly.
posted by pullayup at 10:41 AM on January 23


I remember reading that national customs agencies were being pitched a blockchain for shipping containers that would track the contents of the containers, where they've been, who inspected them, etc.
This is one of those thing that can be easily accomplished with relatively conventional databases, once you get all parties involved to agree on data formats and actually enter the data in the system. The agreement on protocols and data formats is the hard part, and the blockchain doesn't magically solve that problem at all.
posted by chrchr at 10:43 AM on January 23 [6 favorites]


I can't even get academics to pronounce ORCID correctly.

It's like Noel Gallagher pronounces 'Our Kid' for anyone who is wondering.
posted by biffa at 11:03 AM on January 23


I came in to say something along the lines of what Sequence said.

The problem is not the internet. That's like saying the problem with money is money. Money in and of itself is actually a beautiful solution to a complex problem: how do I exchange portable value for something I want? I.e., I want a chair. A chair-maker has a chair. He doesn't want anything I make, though. Money is a great way to provide choice and portability. Problems result from how money is hoarded, manipulated, trafficked, etc. It's the same with the internet.

...given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility.

Bull. Shit. The internet IS A DISTRIBUTED DATABASE. I repeat: the internet IS A DISTRIBUTED DATABASE.

The whole point of this damn beautiful thing we communicate on is that it's all distributed and different and shared and no one person owns or controls it. You want to share an online journal open to the world? You can. You want to slap on password-only access? You can. Want to do it in Flash? You can. Your language of choice running the back end, dudettes and dudes. You can do whatever you want.

We've just forgotten that because of the convenience; how easy social media made it for people who didn't feel like buying a domain name and learning HTML to join in on the self-publishing fun. But it's still there, we're on it right here, typing text into boxes that have existed since input became possible with forms. Linking to our shared online identities aka usernames via "hyperlinks" – check it out, click on my username and you will be taken to a MetaFilter version of my online identity, which also contains hyperlinks to yet more stuff.

I'm skeptical of the practical applications too, especially since you can bet your sweet patooty that if blockchain were used to facilitate identity sharing, social media companies are likely to be the first to appropriate it. Go ahead and name just one open source solution that has gained widespread public acceptance and usage, including by major companies. (Key word being "widespread.") Somewhat of a trick question, because it proves my strong suspicion it's exactly what would happen with blockchain: there is one a lot of people know-without-knowing and has widespread business usage too, but it was appropriated by the company in question. BSD.

/clicks on Post Comment button and watches yet another comment get saved to the distributed cloud
posted by fraula at 11:09 AM on January 23 [12 favorites]


already if you get a preview for one Chuck Tingle story, you'll get pushed a dozen others for months. What happens when they flip a switch and decide to add peer pressure to their marketing?

Sexy unicorns in biker jackets show up at your coffee shop, demanding that you let them ply you with sweet hot nekkidfuntimez?
posted by ErisLordFreedom at 11:22 AM on January 23 [5 favorites]


Unless you need a system that is 1) globally visible+consistent+immutable 2) across a large number of parties 3) who don't trust each other or a common authority at all, you don't need a blockchain. For example, with just regular boring cryptographic signing you can have an immutable log held by a central authority, and if you just want a distributed database / log then there are projects like dat / hypercore .
posted by Pyry at 11:35 AM on January 23 [3 favorites]


there's no reason not to capitalize on the excitement and build cool stuff with decentralized strong cryptography; it's the least we can do given the amount of fossil fuel that's literally being shoveled into a furnace

Are you claiming you can do that without shoveling still more fossil fuel into the furnace?
posted by straight at 11:56 AM on January 23 [2 favorites]


2 things that occur to me a total layperson:

A tenet of the Estonian system is that an individual owns all information recorded about him or her. Every time a doctor (or a border guard, a police officer, a banker, or a minister) glances at any of Piperal’s secure data online, that look is recorded and reported.

Is this real? What I mean is this sounds like the way it should be if the world were not as it actually is.

The second thing is in response to what somebody up thread along the lines of not needing a Centralized Identity. I honestly don't understand how you can have large populations of people living in close proximity without it.
posted by Pembquist at 12:02 PM on January 23 [1 favorite]


not needing a Centralized Identity. I honestly don't understand how you can have large populations of people living in close proximity without it.

Most real-life transactions don't require identity verification, and those that do, often don't need all aspects of your identity. If you buy a loaf of bread with cash, nobody needs to know your name. If you work for someone, your boss may need your tax ID number, but not your bank account info if he's handing you a check. To run up a tab at the local pub, they want your name and contact info, and maybe bank info, but they don't need your tax ID. None of those needs your email address.

Needing a centralized identity for either the convenience of activity in new venues without having to establish trust, or to cope with complex areas of income, payments, and accountability, is new, and not many people actually need all that tied together in one spot.

There's an efficiency to it, which is countered by how easy it becomes to scam someone or steal from them if you have only one scrap of ID info, and by the problem of security for so many people's information. I like the idea of a central ID system; I am beyond dubious that the legal system that failed to prosecute Equifax's upper echelon for crimes is going to protect us from worse.

The whole concept reeks of, "there won't be any human bias! It'll all be algorithms! Those are totally incorruptible!"
posted by ErisLordFreedom at 12:31 PM on January 23 [7 favorites]


In Git, you must rewrite the entire commit history in order to remove sensitive information, which is annoying but can be accomplished. I do not see a mechanism for that here.

Rather than storing the information in the clear on the blockchain, you can store a cryptographically secure one-way hash of it. Then anyone who wants to attest that the information has gone through whatever validation the blockchain is recording can refer to the signed hash, plus the information. If the information is deleted, the hash is useless.
posted by Coventry at 12:36 PM on January 23


I just want to hype my 2014 idea called B.I.L.B.O.

"BItcoin-Like Biographical Operations" that use blockchain to keep third parties from using your personal info without authorization. Essentially, it's Ian Holm yelling "What business is it of yours what I do with my Internet of Things!?"
posted by growli at 12:38 PM on January 23 [4 favorites]


I haven’t done marketing for any ICOs. I merely write computer software and work a lot with databases and Internet technology. I’ve been telling anyone who will listen the same thing: blockchain technology is totally overhyped. On a good day, it is an extremely slow distributed database, and will have very few real world applications.

People don't care if blockchain is little more than bittorrent for databases as long as they think it will make them rich.
posted by snuffleupagus at 12:48 PM on January 23 [1 favorite]


Then anyone who wants to attest that the information has gone through whatever validation the blockchain is recording can refer to the signed hash, plus the information.

Except what's being proposed is not just using this as some kind of "verify that you're you". What's being proposed is that this is where all your data lives, as I understand it. Not just "verify that this is your tweet", but "this is where the archive of all your tweets is going to be instead of on Twitter's servers". I agree with the part about not wanting all this data to necessarily only live on Twitter's servers, but the idea that the place it should live instead is the (a) blockchain makes no sense to me.
posted by Sequence at 12:51 PM on January 23 [1 favorite]


Imagine if every time you wanted to say anything of significance you had to restate the entire corpus of everything significant ever said beforehand. Now stop imagining that, because it's crazy.
posted by snuffleupagus at 12:54 PM on January 23 [9 favorites]


Ten years in, nobody has come up with a use for blockchain


I have it from a good source that an authoritative figure in the field of cryptography is supposedly claiming to have encountered at least one credible use for the technology; meanwhile, other cryptographers think that he's simply trying to hype a company he has a hand in.
posted by daniel_charms at 1:01 PM on January 23 [1 favorite]


People don't care if blockchain is little more than bittorrent for databases as long as they think it will make them rich.

Exactly. Until around 2012-2013, Bitcoin (which was at the time the sum total of blockchain applications) was a nerd backwater where involvement was limited to true believers and techies. The people who piled in to Bitcoin and pushed it to $20K valuation are quite different - sure, there are now more true believers and techies, but there are also a great many of non-technical investors and speculators.
posted by theorique at 1:06 PM on January 23


The second thing is in response to what somebody up thread along the lines of not needing a Centralized Identity. I honestly don't understand how you can have large populations of people living in close proximity without it.

Some forms of centralized identity are good. My paychecks, taxes, and major bills run smoothly because of numbers shared between my employer, my government, and my bank. But, that's an identity that I only whip out a half-dozen times a month or so.

My family has never asked for it (and was only mildly discomforted when I went through one legal name change). Neither has my church, the bus, the deli down the street where I had lunch, the store where I bought bread after lunch, or any of my work groups. Most of the time I just introduce myself and that's it. The deli gets an account number and a name to identify my order, but they don't get my tax ID. My doctors get just about everything but, thankfully, HIPA prevents them from doing too much outside of that sandbox.

But when Amazon, Facebook, and Google talk about centralized identity, they're talking about mashing up all kinds of information into a public profile of you as a consumer. Do you want to share a photo of the Planned Parenthood office where you're currently located? Tell us about the church where you're attending a support group meeting. Share your review of an embarrassing personal health device. We identified all of these people from the photo you uploaded. Your call history includes a rape crisis line, add this number to favorites?

Of the hundred-odd social interactions a person may have on a daily basis, only a handful require any form of centralized authentication. And some critical support systems out there depend on anonymity and confidentiality.

Another term in the equation is that meaningful relationships and communities require boundaries. Each time we cross one of those boundaries we express a subtly different identity (based, in part, on shared experience in that space) and speak a subtly different language. The Facebook model of centralized identity mentioned in the linked piece attempts to flatten all of that.
posted by GenderNullPointerException at 1:11 PM on January 23 [9 favorites]


I just want to hype my 2014 idea called B.I.L.B.O.

And I will call my malware that steals everyone's Bitcoins and then hoards them under a mountain "Smaug".
posted by tobascodagama at 1:11 PM on January 23 [5 favorites]


2 things that occur to me a total layperson:

A tenet of the Estonian system is that an individual owns all information recorded about him or her. Every time a doctor (or a border guard, a police officer, a banker, or a minister) glances at any of Piperal’s secure data online, that look is recorded and reported.

Is this real? What I mean is this sounds like the way it should be if the world were not as it actually is.

Can confirm that it's real and people have been reprimanded, fired, etc. for looking at things they weren't supposed to be looking at. The downside of the Estonian X-Road system is, it's been designed by people who have literally zero respect for users, as a result of which it is a pain to integrate into real-world applications.
posted by daniel_charms at 1:12 PM on January 23 [1 favorite]


What happens in the Estonian system when that doctor or pharmacy goes out of business or retires? What happens to the data held by the disparate systems when the entity behind those servers doesn't want to pay to host them anymore?
posted by Nice Guy Mike at 1:23 PM on January 23


For example, the conversation we're having here requires no centralized authentication beyond metafilter, and a mutual trust that most participants are not polydimensional pod people or Google's latest experiment in passing a turing test.
posted by GenderNullPointerException at 1:24 PM on January 23 [3 favorites]


a mutual trust that most participants are not polydimensional pod people or Google's latest experiment in passing a turing test.

Would it make a difference if we, uh, they were? Because they aren't! We swear!
posted by theorique at 1:40 PM on January 23 [8 favorites]


What happens in the Estonian system when that doctor or pharmacy goes out of business or retires? What happens to the data held by the disparate systems when the entity behind those servers doesn't want to pay to host them anymore?

When a doctor retires, their patients will be transferred to another doctor (or another practice) along with all the data; the same thing happens when you decide to change your GP for whatever reason. I suppose if there's no one else to "inherit" this information, it will probably be transferred to a higher-level entity, such as the state medical agency.
posted by daniel_charms at 1:42 PM on January 23 [2 favorites]


the thinnest veneer of math jargon for BlockCon

This is my chance to get in on the ground floor of FallCon!

I saw the most 2018 thing ever at the coffee shop last weekend: a 20-something dude pontificating to two older women, possibly a mom and an aunt, on the topic of blockchain. I couldn't tell if they were proud of their darling or wanted to murder him.
posted by octobersurprise at 1:53 PM on January 23 [1 favorite]


if you could slap together a white paper providing the thinnest veneer of math jargon for BlockCon, the Quantum Consciousness Blockchain, and launched an ICO you'd be a billionaire by next week.

I guess this makes me a horrible person, but I have a plausible argument that would justify the inherent value of BlockCons. The only reason I haven't spelled it out (and if other people know what I'm implying please remain silent) is that I think it might become a memetic virus.
posted by Joe in Australia at 2:35 PM on January 23 [3 favorites]


Is it being able to provide proof-of-thought-about-AI so you don't end up tortured by Roko's Basilisk?
posted by sagc at 2:37 PM on January 23 [5 favorites]


Oh crap, you've done it now.
posted by Joe in Australia at 3:04 PM on January 23 [4 favorites]


Metafilter: most participants are not polydimensional pod people or Google's latest experiment in passing a Turing test.

Even for shipping, the blockchain doesn't solve serious problems. Sure, you can get Border Control from Country B to verify that the container passed through the port on x date, weighing y. But Border Control is made out of people. People are bribable. Theft or substitution of goods along the way is not the only problem international shippers face, but it is a serious one.

And, yes, the blockchain is not actually a haven from regulation. People participate in the blockchain, and people are under the jurisdiction of various governments, and that means that ultimately governments can do a lot to a blockchain if sufficiently motivated.
posted by praemunire at 3:04 PM on January 23 [2 favorites]


a 20-something dude pontificating to two older women, possibly a mom and an aunt, on the topic of blockchain. I couldn't tell if they were proud of their darling or wanted to murder him.

I can tell from here which one it is.
posted by ErisLordFreedom at 3:11 PM on January 23 [5 favorites]


So now you're not even using it to store data, you're just storing URLs to data with no guarantee that data is even structured in such a way that your social media site can even use it.

Huh? First, URLs are data; they're unique identifiers (if you want them to be) with a decentralized namespace management mechanism, which is pretty neat. Schemes like DOI use URL-like syntax for this.

So my off-the-cuff proposal would be to store the public keys and validation signatures—the trust chain—in the distributed database. They should be immutable, so they go there; stuff like your photo, list of friends, etc., doesn't go there because it shouldn't be immutable.

Right now with the PGP/GPG web of trust, that stuff is stored in centralized keyservers that synchronize with each other, so in theory you can query your local keyserver and get the same result as any other one. But I don't know if that's really the ideal architecture; it certainly seems on its face like it probably has scalability problems. Historically, people have proposed sticking public keys in DNS, because that's the biggest distributed database in existence, but it has its own security issues.

Stuff like your friends list, your photo, user profile, whatever — that doesn't need to be stored in an immutable blockchain. You can put it up on any HTTP server (maybe behind a DOI-like persistent URL resolver, if you wanted to), and there's a lot of existing work with stuff like OpenSocial that you could leverage for the data formats. To ensure the validity of the data, you sign it using your keypair, the public key of which is on the immutable chain. But if in the future you want to pull that information down from the web server, leaving only the key and fading off into the distance, that's your call.

I don't think that "blockchain" is a generalized 'save the internets' sort of thing, but it does seem like there are some interesting applications to specific problems, and key distribution is the low hanging fruit.
posted by Kadin2048 at 3:15 PM on January 23 [2 favorites]


Thanks for your articulate explanations of why this might be useful, Kadin2048. I've been thinking around all these issues of keys and revocation and data portability and retention of rights by owners that the blockchain could make possible, and it's nice to get a reading list of people who know better and have thought in a more structured manner about my nebulous daydreams.

And it's also useful to see mosst's details about digital data in Estonia, which isn't blockchain based, and see other ways to make data ownership work. I do wonder if there are ways that involve the blockchain controlling what keys are valid that mean that data ownership in this model can be meaningfully controlled by the data subject.

There's a lot of comments here ridiculing the idea of blockchain based currencies, and they're right, especially as the energy used proof-of-work is a deadweight loss on the economy even greater than the deadweight loss on the economy caused by the world's brightest scientists going into hedge funds. And I don't pretend to have anything but a very hazy idea of what Ethereum smart contracts are and whether they're actually useful.

But the snarking isn't helpful, because while blockchains seem to be a technology which is only of novelty value which has nonetheless been ridiculously hyped-up, the existence of consensus information and revocable and transferable tokens could certainly have applications.

The first application of blockchain like techniques could be a true data commons where instead of contributing our data to the likes of Google, who use it to entrench their monopoly thanks to data asymmetry, we could contribute it to something blockchain like which left the data only usable as aggregate data. Privacy-preserving Machine Learning is a model for how to make things work only with aggregate data, but what's possible is very much up in the air (and my own thoughts are pretty inchoate, as is pretty obvious from this wall of text).

TL;DR: It's fair enough to ridicule the hubris, but there's some soberly exciting possibilities around, too.
posted by ambrosen at 4:04 PM on January 23 [3 favorites]


There are definitely interesting possibilities involving distributed databases, and cryptography, and even the combination of the two, but blockchains specifically are a very specialized solution to a particular problem with a particular set of assumptions, and almost all the proposed applications of blockchains to anything other than currency would be better served by other approaches. If cryptography is like a hammer, then blockchains are like a kitchen gadget that only cooks hotdogs-- sure, you can try to shove other things into that hotdog shaped hole, but it's going to be messy and awkward and really you should consider something else.
posted by Pyry at 4:55 PM on January 23 [8 favorites]


Is it being able to provide proof-of-thought-about-AI so you don't end up tortured by Roko's Basilisk?

The fun thing about Roko's Basilisk is that it rests on the core assumption that you believe that bringing about a benevolent AI will save a single human life over, say, better regulation. If you are ignorant that the glorious future of the AI Overmind is possible, it's really the same thing as being ignorant of Roko's Basilisk. I am rather more cynical about the wickedness of problems, or if you like, more optimistic about how close to an optimal solution humans can get to a problem.
posted by Merus at 6:42 PM on January 23


> GenderNullPointerException:
"For example, the conversation we're having here requires no centralized authentication beyond metafilter, and a mutual trust that most participants are not polydimensional pod people or Google's latest experiment in passing a turing test."

Seriously, you HAD to doxx me? REALLY?

My issue with this is that most companies haven't shown an urge to restrain themselves if given a buffet of data. So, how can a single de-centralized centralized identity database allow me to partition off what I want to share with who? And that's not even counting the government data mining opportunities.
posted by Samizdata at 6:58 PM on January 23 [2 favorites]


A centralised server/blockchain with revocable access to personal data won't work, because companies will accumulate and privately distribute people's private information rather than rely on revocable access. If your answer to this is "we will legislate against it" then you need to explain why we can't just legislate for data security and integrity with the systems we already have.
posted by Joe in Australia at 7:08 PM on January 23 [7 favorites]


I got annoyed by this and kind of zoned out, so maybe I missed something.

But if we do a distributed ledger of everyone's identities, isn't that worse? I mean Google and Facebook can still track everything we do, and now there's a common framework that they can link it to. They only have to figure out your blockchain identity once and it's even more valuable. How does it stop misuse?

Marginally related--more bitcoin than blockchain--John Quiggin has an article out today highlighting some of his complaints with the discussions. Including the idea of scarcity being enough to provide value.
posted by mark k at 9:22 PM on January 23 [3 favorites]


blockchains specifically are a very specialized solution to a particular problem with a particular set of assumptions, and almost all the proposed applications of blockchains to anything other than currency would be better served by other approaches

This is technically true, but since "blockchain" is basically a magic incantation that causes people to give you large amounts of money with minimal questions asked, it's rapidly becoming a more generalized term.

And you can, without feeling too dirty or dishonest, use the phrase "Blockchain technology" to mean basically any of the (very much nontrivial) underlying cryptographic principles that allow for a solution to the Byzantine Generals Problem, to include Bitcoin-style proof of work systems, but also reasonably: Freenet-style DHTs, some nonlinear "blockgraph" systems, hierarchical proof-of-authority systems... all of that is part of the body of work that goes back decades, on which the original Bitcoin paper and concept was built. There's no reason why we should intentionally drive the public's interest to only include the tiny part of the iceberg that's managed to protrude into the avaricious realms of finance. It's all legitimately part of the topic.

And on a practical level; a lot of those ideas—the stuff on which Bitcoin and blockchains generally are based—didn't get a fair hearing the first time around, because they were perceived as too esoteric and nerdy; the easy money at the time was in web 2.0 X for Y sites with dumb names or high-freq trading, not hard crypto. So I can't blame anyone for taking anything that's even peripherally related to distributed computing and encryption, sticking either "block-" or "-chain" on it, and using it to get their elevator pitch heard.

The problem is going to be that, like AI in the 80s, when the hype cycle ends it's going to be a long winter again, filled with jaded cynicism and VCs who don't want to hear about it.
posted by Kadin2048 at 11:37 PM on January 23 [4 favorites]


Corporations doing corporate things is not a rebuttal; FTA the idea of so-called "identity protocols" is to let me maintain, access, manipulate a copy of my own information, and have that come with certain authenticity guarantees from a nonauthoritarian source. The simplest hope is that it creates an attitude change and thus exerts a public expectation that corporations act better, and then that eventually plays out in the long arc of politics.

Thus, it's a structural argument; that is, create these open standards so they serve as a social frame of reference—much like how email functionality, or hyperlink functionality, is a structural frame of reference. It doesn't prevent bad entities from doing bad things (spam, phishing, dangerous websites). It's the existence as a standard that matters.

So I have no idea if any of that is good or not. I'm just trying to salvage a reading out of both articles, I actually thought both articles were very hard to make sense of.
posted by polymodus at 11:47 PM on January 23 [2 favorites]


And you can, without feeling too dirty or dishonest, use the phrase "Blockchain technology" to mean basically any of the (very much nontrivial) underlying cryptographic principles that allow for a solution to the Byzantine Generals Problem ... all of that is part of the body of work that goes back decades, on which the original Bitcoin paper and concept was built

And it turns out the Estonian government initiative as described in the New Yorker article crucially includes a "Blockchain" to guarantee data integrity of information including people's blood types—except that said Blockchain is a Merkle tree with hashing and timestamps, and was invented/developed by a company (Guardtime KSI) before Bitcoin came out, and again that goes to a frustrating semantic and/or technical debate, like how some crypto professor (Arvind Narayanan) has said that such private/enterprise blockchains are misnomers.

Also, I just found this ACM Queue article. Has anyone read it? It looks really informative.
posted by polymodus at 12:13 AM on January 24 [6 favorites]


Imagine if every time you wanted to say anything of significance you had to restate the entire corpus of everything significant ever said beforehand. Now stop imagining that, because it's crazy.

Junk DNA?
Nueronic arrays?
posted by lazycomputerkids at 3:14 AM on January 24


A ravaged landscape, like The Road but with more film transistors and also the remains of what looks like a juice bar. A dying ember in the ashes. The ember resolves. It is the lone blinking light in a stack of NVIDIA GTX 1080s bolted to an IKEA end table. A creaking noise. Pan up to a single man in a urine-stained track suit agonizingly peddling a Spinning Bicycle toward nothing. He is . . . the last bitminer.
posted by aspersioncast at 8:01 AM on January 24 [1 favorite]


Fuck Amazon, if you're concerned about your purchase history being known, you can never go to any local corner shop, choice shop, or pub again. The person serving you might remember what they sold you last time!

Well, if you’re carrying a phone while in that real-world store, it’s pretty likely Amazon, Facebook and their ilk already know what you’re buying, or at least which departments you’re spending your time in, thanks to the pervasive and unregulated expansion of beacons and their data over the last few years.

Stand in front of the headphone selection at Macy’s for more than a moment and you’ll very likely start getting ads for headphones from Amazon, et al within 48 hours.

I’m seriously considering a Leave My Phone at Home policy, at least a couple days per week.
posted by rokusan at 8:04 AM on January 24 [1 favorite]


You could just turn location services and wifi off?
posted by Dysk at 8:11 AM on January 24


I'll concede that there is a need for authentication, provenance, and or cryptographic watermarking of digital files and communications. For example, swatting and phishing are possible, in part, because the current methods for authenticating phone and email communications can be easily spoofed. PGP has a number of issues in this area which make it practically difficult to use. You have to manage keys across multiple platforms, and client integration has been a problem. In my day job, we take it as a matter of trust that the user who logged into the system is submitting their own original work. A system of recording provenance claims ("I created this") could raise the bar for fakery a bit. Kodak apparently is working on blockchain for watermarking photographs.

But I'm skeptical that those systems need to be centralized or universal.
posted by GenderNullPointerException at 8:41 AM on January 24 [2 favorites]


Also, I just found this ACM Queue article.

I'd not run across that article before, but it seems pretty fantastic on first glance. I've been trying to make that case (less cogently) as someone who has been following this stuff for a while. (My personal hobby horse has always been digital notary/timestamping services, not digital cash.)

Though as noted previously, I don't think it's worthwhile to fight against people calling Merkle trees "blockchain", even though Merkle trees predate the latter term; that's just self-defeating. If you can't beat 'em, join 'em.
posted by Kadin2048 at 1:02 PM on January 24 [2 favorites]


It appears that PonziCoin's price (ticker: SEC) has popped from 0 to around $20 in less than 24 hours.

No one should buy it, but it's really quite a clever idea. It's a smart contract, which determines its own price (denominated in ETH.) It doubles the price every time 100 tokens are purchased. You can sell your tokens back to it at one quarter the current price.

It's blatantly an unregistered security, so anyone under US jurisdiction who sells it will potentially be subject to SEC scrutiny and enforcement. I think it would be legal to own, though, and it's not fraudulent in any way.

So far, the contract is worth about $136K.
posted by Coventry at 3:59 PM on January 24 [3 favorites]


statebox :P
(yt; viz. cf.)
posted by kliuless at 10:44 PM on January 24


What allowed me to change and prosper was the freedom to grow apart and lose touch with people. It’s hard to change yourself if you’re stuck in the same social orbit. There’s a gravitational force that pulls you into repeating the same circular pattern over and over again. Breaking out of that takes tremendous force.

In real life, this force is mercifully thrust upon you at critical moments for self-discovery and evolution. You leave university, and you automatically lose touch with most of the people you knew there. It’s not an affront to anyone that this happens. It doesn’t take any effort. Everyone accepts that it’s a natural process.

But Facebook changed that. It stunted this natural, gentle process of growing apart and losing touch. Now the default is to stay connected with everyone you’ve ever friended forever. And to break that connection, you have to actively sever it. Something most people don’t like doing, and don’t like having done to them, so it generally doesn’t happen.

Knowing that everything you share will be seen by all these people from your past quietly. moderates what you actually share. Becoming someone else entails experimenting and failing with new styles and ideas. Not a lot of people are so keen to premiere such vulnerable stages of their evolution in front of an audience that expects them to be that same person they always were forever. I know I wasn’t.
Growing apart and losing touch is human and healthy @ Medium
posted by GenderNullPointerException at 7:38 AM on January 25 [6 favorites]


Junk DNA?

You mean, like carcinogenic mutations?

Nueronic arrays?

Don't go bringing Evans-Pritchard into this.
posted by snuffleupagus at 4:06 PM on January 25


Stand in front of the headphone selection at Macy’s for more than a moment and you’ll very likely start getting ads for headphones from Amazon, et al within 48 hours.

What's wrong with your adblockers that you're seeing ads from Amazon?
posted by straight at 6:26 PM on January 25 [1 favorite]


You could just turn location services and wifi off?

WiFi completely off, because beacons don’t use location services, they just manually log your IMEI and/or MAC address at a much lower level. Said info can be mapped to your identity later, by any of the big data companies that happen to have that index. Google, Amazon, Facebook et al have it. So a device belonging to Dysk was in the headphone aisle at Target for 20 minutes yesterday. That’s more than enough to work with if you’re an advertiser.

And you’d have to turn Bluetooth off, too, since Bluetooth beacons are even more fashionable in marketing circles these days, since they can log everything (phones, laptops, headphones, etc) and again, map it back to a person using big data lookups later.

At the point you’re carrying a phone with WiFi and Bluetooth turned off, you might as well leave the phone at home, I figure.

It’s not really about blocking ads. Obviously, I can do that. But the user data tracking and collection is much deeper and more capable than most people realize, mainly because it’s seldom reported upon.
posted by rokusan at 7:12 AM on January 26 [2 favorites]


At the point you’re carrying a phone with WiFi and Bluetooth turned off, you might as well leave the phone at home, I figure.

It's a phone. You can still make and receive calls and texts. I don't think I've ever had Bluetooth on except rarely in mates' cars, and wifi goes off when I leave the house anyway because it hogs battery scanning for networks I'm not going to be connecting to anyway.

Nobody is getting a MAC address with your WiFi off, and sniffing IMEIs OTA is non-trivial. Even IMSI catchers are hard to deploy transparently, and generally not legal for citizens (as opposed to law enforcement and intelligence services to use (IANAL, check your jurisdiction).
posted by Dysk at 8:19 AM on January 26 [1 favorite]


Like, turning Bluetooth and WiFi off is literally two taps on most smartphones, it's not some arcane procedure.
posted by Dysk at 8:21 AM on January 26 [1 favorite]


Coincheck Says It Lost Crypto Coins Valued at About $400 Million
One of Japan’s biggest cryptocurrency exchanges said that about $400 million in NEM tokens were lost after the coins were sent “illicitly” outside the venue, spooking investors in a country that’s still wary of digital-token exchanges four years after the collapse of Mt. Gox. [...]


“Caveat emptor,” said Yvonne Zhang, who had spoken on a panel on the future of cryptocurrencies at an Association of Futures Markets conference in Bangkok on Friday. “The ‘investors’ that did not do due diligence and take time to understand what they’re trading in, both venue and subject matter, face unhedgable risks. If they continue to ‘trade’ the same way knowing the murky nature of this market, they’re gambling.”
¯\_(ツ)_/¯-o-nomics
posted by tonycpsu at 2:56 PM on January 26 [2 favorites]


Speaking of controlling your identity: Your Sloppy Bitcoin Drug Deals Will Haunt You For Years. Short version: Every transaction is public, on the blockchain. If you let your anonymity slip even just a wee bit, all of your transactions are publicly tied to you.
posted by clawsoon at 3:19 PM on January 26 [3 favorites]


The amount of wishful and just plain lazy thinking in Dark Net Market circles just amazes me. There is no way I would trust Tor to try to hide something from government investigation. Governments almost certainly run a large fraction of Tor nodes, and could use them to unmask hidden services and connections to those services, at least some of the time.
posted by Coventry at 7:00 PM on January 26 [5 favorites]


Indeed. Whenever I think about Tor or the blockchain, I recall an excellent observation by InfoSec Taylor Swift: "Trust does not scale because trust is not reducible to math."
posted by tobascodagama at 7:56 PM on January 26 [3 favorites]


Governments almost certainly run a large fraction of Tor nodes, and could use them to unmask hidden services and connections to those services

That seems intuitively obvious; the computing power required would be trivial to them, and the targets are basically self-selected. I understand that Bitcoins have a similar problem: if you control enough of the blockchain you control the whole blockchain.
posted by Joe in Australia at 3:24 AM on January 27


Yeah, that is a big problem, and will probably lead to some kind of permissioned blockchain dominating in the long run.
posted by Coventry at 8:27 AM on January 27


The Ethereum address that he's given the private keys for at the beginning of the piece still has 10,000 DeezNuts tokens in it.

Y'know, in case you wanted to go get it.
posted by daHIFI at 12:06 PM on January 28


If you buy DeezNuts, do you have to report the transaction to the FEC?
posted by Coventry at 12:40 PM on January 28


Since it has no value, I assume not.
posted by daHIFI at 1:04 PM on January 28


Was there an airdrop?

It seems that 10,000 DEEZ costs about a dollar of ETH (despite having no value.) Assuming Deez Nuts runs for president again, is that a campaign contribution?
posted by Coventry at 1:30 PM on January 28


Apparently the cryptocurrency prodeum is no more, disappearing with investors money and leaving a cryptic message on their website (via twitter).
posted by Wordshore at 2:08 PM on January 28 [3 favorites]


As someone who's practically gone all-in on crypto over the past six months or so, I'm really a bit disappointed with the skepticism from the commenters on this and the other related posts that have spawned up the past few days. I also recognize the need to invest in a little bit of 'what if I'm wrong?'-ism so I've been reading the comments with much interest. I've spent so much of the past few months reading and listening to everything possible that's related to the space -- Medium and crypto-Twitter are two of my main sources -- I take a lot of the background knowledge for granted and expected more enthusiasm here.

I think the comparison to the dot-com bubble and tulip-mania falls short -- almost every serious person I know expects a correction but we don't know if that's happening now, in 3 months or 3 years. And the total market cap of all tokens hasn't even broken $800 billion; the dot-com bubble was in the trillions. A crash will be needed to wipe out all the chaff so that we'll know who the real winners are. Pets.com may be gone but Amazon is now many multiples of its pre-crash price. And we're talking about a global phenomenon here, not just the value of a sector of stocks on the NYSE. Till now crypto has mainly been 'retail' investors, the big boys are just now getting themselves into positions where they can start participating in the market.

Several people have mentioned the problems associated with the handling of private keys. It's a valid concern. The custody problem is one that is getting worked out now. Coinbase is working on it for institutional investors and there are companies working on making wallets more friendly. I expect things will look much different in 18 months or so.

I ultimately look at the evolution of bitcoin and cryptoassets as having the same transformational effect as the creation of the internet. A lot of people are dissapointed with the way that things have turned out, and are looking at these technologies as a chance to build a better protocol stack.

Right now I own about 25-30 different tokens, some currency, privacy coins, protocol and utility tokens. There is a lot of innovation going on in almost every vertical right now: medical records, identity verification, power distribution, and so on that are trying to make the next big thing -- many will fail, but some will not.

The Estonian model seems interesting, I'll have to read that article when I have more time, but based on the responses it seems similar to what other projects are doing to allow users to maintain control of their data and control who has access to it. I won't name anything in particular so as not to be accused of shilling.

For many, such as myself, the main draw of crypto besides the fat gains is the hedge against a decline in USD. Just last week we had Mnuchin and Trump in Davos bragging about the falling dollar so that other countries could buy cheap US goods. I won't go further into any economic conspiracy theories here -- I'll leave that for aantonop -- but let me just say that I don't plan on cashing out anytime soon.

For those of you that are skeptical but still have an open mind, I would recommend listening to the following and thinking about whether you want to sit this one out. If we are still in the equivalent of early-90's internet market, we're still in the early stages.

Hash Power – A Documentary on Blockchains & Cryptocurrencies: three part series that explains blockchain better than any other I've heard, gets into investing

Forbes Unchained Podcast, hosted by Laura Shin: does some of of the most thoughful interviews with executives and leaders behind some of the most interesting cryto and blockchain companies out there.

Epicenter TV/Podcast: This one gets deep into the weeds. Recommended for tech people, gets deep into details of the tech.

Anyone wanting to go further down the rabbit hole can DM me and I'll provide some other resources.
posted by daHIFI at 8:50 PM on January 28 [3 favorites]


-How Blockchain Can End Poverty :P
-"tokenizing very fine-grained claims on real-estate, which... could trivially be owned by sovereign/social wealth funds"
-Edward Snowden is campaigning against the world's largest biometric ID programme (speaking of scaling trust and permissions!)
posted by kliuless at 9:24 PM on January 28


daHIFI, I'm interested in the tokens you own, and what you like about them.

I think it's very risky to be all-in in a space where you don't know whether it's going to crash now, or 3 months or years from now. I don't know if you saw this recent paper about Newton and the South Sea Bubble. (Graphical synopsis.) Anyone can wind up with skewed beliefs and habits of thought trained into them by positive experiences, yet convinced that they've deliberately accepted those perceptions as a result of careful discernment.
posted by Coventry at 9:35 PM on January 28 [1 favorite]


"tokenizing very fine-grained claims on real-estate

"BITCOIN ACCEPTED" sign on $3.4 million home for sale in Miami Beach
posted by Coventry at 10:39 PM on January 28


Apparently the cryptocurrency prodeum is no more, disappearing with investors money and leaving a cryptic message on their website (via twitter).

The reddit thread has some interesting details. Their smart contract address, as recorded in the prodeum website google cache, only receieved about $3000 worth of ETH.
posted by Coventry at 8:21 AM on January 29


As someone who's practically gone all-in on crypto over the past six months or so, I'm really a bit disappointed with the skepticism from the commenters on this and the other related posts that have spawned up the past few days.

So you're fine with the enormous amounts of electrical power crypto-currencies are consuming? Are you a climate change skeptic?
posted by straight at 8:54 AM on January 29 [4 favorites]


many will fail, but some will not.

I would be very careful with this. It is tempting to look at cryptos as independent of one another, but markets don’t tend to operate that way. Smarter people than you and I have been tripped up by correlated instruments that looked independent.

E.g., the 2008 collapse was famously caused by mortgage backed securities that appeared to be low risk and diverse, but were in fact highly correlated. The securities bundled high risk mortgages together on the assumption that some would fail, but most would not. Under normal circumstances this would have worked, but when the housing market declined, all of these mortgages went underwater all at once, and the failure rate was much higher than was anticipated and the bundled securities amplified the losses.

Giant hedge fund LTCM collapsed in part because of “the Asian contagion”, when problems in Asian economies spread globally, leading to Russia defaulting on its debt, and big declines in Brazil. Meanwhile, LTCM pursues a trading strategy that implicitly assumed independence of sovereign debt. The fund collapsed to the tune of almost $4 billion.

In the dot com crash, even survivors like Amazon took huge losses in the stock market. Amazon fell from $85/share to about $10/share in 2000. It took years to recover that value.

Looking at the charts for the major cryptos, it is clear that they’re highly correlated. BTC, ETH, LTC, et al, appear to move mostly in unison.
posted by chrchr at 10:46 AM on January 29 [4 favorites]


Coventry, about 50% of my holdings are in BTC right now, ETH is about a quarter of that, followed by EOS, NEO and LSK at about 5% each. I've got smaller holding in several other coins, but my favorite projects are ADA, ZRX, and SUB. Substratum is building a decentralized internet with DNS and routing structures that are compatible with the existing internet. 0x is going to be crucial in the next coming months as decentralized exchanges take off.

Straight, I am defintely not a climate change skeptic. I'm actually a democratic socialist and I get a lot of weird looks on both sides from crypto people and socialists. To your point though, it's a problem, but comparitively speaking I'm not quite sure the impact is that bad compared to alternative enterprises. There was one article I saw that compared it favorable to the cost of mining pennies, for example. Regardless, the power usage is something that will be dealt with by switching to proof-of-stake or other technical fixes. Also, a lot of commercial enterprises are taking advantage of hydroelectric and solar generation. I myself am using renewable-energy-credits to offset my carbon footprint.

chrchr, I meant that there a lot of these token companies that are scams and will be wiped out in a crash, leaving behind others that will go on to be become the Amazon. They're all heavily correllated of course, since very few alts have trading pairs to anything other than BTC. That may change soon, but I'm not arguing that things won't get really bad at some point.
posted by daHIFI at 1:29 PM on January 29 [1 favorite]


Thanks, daHIFI. ADA's a favorite of mine (as is Tezos, if they can ever get their governance together), and I know of 0x. Hadn't heard of SUB, though.

If nothing else, ADA and XTZ are a great excuse to muck around with cutting-edge programming languages. :-)
posted by Coventry at 2:57 PM on January 29




Subpoena was sent Dec 6, so I'm not sure whether this is actuallly new news. It's news to me, though.
posted by Coventry at 12:41 PM on January 30


FB bans all cryptocurrency ads. I doubt it's because they're feeling the identity-management heat just yet, though.
posted by Coventry at 1:57 PM on January 30 [2 favorites]


Wyoming has a bill on the table which would exempt blockchain-based tokens from securities and money-transmitter laws. Really bad idea, but there it is.
posted by Coventry at 3:25 PM on January 30


Regardless, the power usage is something that will be dealt with by switching to proof-of-stake or other technical fixes

Isn't this hand-waving that ignores observed human behavior?

The folk who can exploit and are exploiting their local electrical supply and atmosphere for mining will never buy into flavors of magic nerd money that doesn't involve mining. I don't see individual Venezuelans or the China-based ASIC people saying "whelp, let's unplug this stuff, because some yahoo is waving a whitepaper advocating proof-of-stake".

I mean, why would they?
posted by sebastienbailard at 5:33 PM on January 30 [2 favorites]


sebastienbailard: The folk who can exploit and are exploiting their local electrical supply and atmosphere for mining will never buy into flavors of magic nerd money that doesn't involve mining.

My assumption is that most of the miners are doing it as a way to earn hard currency. If magic nerds are no longer willing to trade hard currency for wasted electricity, I expect the miners will stop.

In sad news, the Japanese pop band Virtual Currency Girls may end up not getting paid as a result of the Coincheck hack.
posted by clawsoon at 6:20 PM on January 30


I don't think the article makes that claim.
posted by Coventry at 6:45 PM on January 30


The subpoenaed tether link above from chrchr suggests that bitcoin was pumped up by tether fraud, essentially fake dollars buying bitcoin.
posted by Brian B. at 6:52 PM on January 30


My assumption is that most of the miners are doing it as a way to earn hard currency. If magic nerds are no longer willing to trade hard currency for wasted electricity, I expect the miners will stop.

I meant the modifier 'magic' in 'magic nerd money' to be attached to 'money', as in 'magic money'.

The argument by magic nerd money enthusiasts is: People currently believe {cryptocoins,tulips} to have value. After some crash/or staggeringly well-written whitepaper, people will no longer believe future proof-of-work {cryptocoins,tulips} to have value but will continue to believe proof-of-stake {cryptocoins,tulips} to have value. So it is ok that we are currently using our electrical infrastructure to release carbon into our atmosphere, because at some point in the future a miracle will take place.
posted by sebastienbailard at 7:20 PM on January 30 [1 favorite]


The Tether subpoena doesn't make a whole lot of sense to me. It was on Dec 6, and bitcoin futures started Dec 17. So how is it the CFTC's jurisdiction? Did Tether deceive the CFTC during the establishment of the futures market? Or were they using funds to manipulate a currency futures market?
posted by Coventry at 11:08 PM on January 30


I meant the modifier 'magic' in 'magic nerd money' to be attached to 'money', as in 'magic money'.

I know, but I liked the other interpretation better. :-)
posted by clawsoon at 3:13 AM on January 31


Wyoming has a bill on the table which would exempt blockchain-based tokens from securities and money-transmitter laws. Really bad idea, but there it is.

Wyoming can weaken its own state blue-sky laws, but somehow I don't think that's going to bring the Bay Area cryptorati to Cheyenne. Money transmitters are under FinCEN.
posted by snuffleupagus at 5:20 AM on January 31 [1 favorite]


I meant the modifier 'magic' in 'magic nerd money' to be attached to 'money', as in 'magic money'.

WAIT WAIT WAIT

Why is metafilter fucking around with $5 membership fees and voluntary support?

Lets ICO some Beanz! Comes with a commemorative plate (suitable for careful framing) in the finest Pepsi blue.
posted by snuffleupagus at 5:23 AM on January 31 [6 favorites]


but somehow I don't think that's going to bring the Bay Area cryptorati to Cheyenne.

Wyoming is where LLC laws allow anonymity by way of a registered agent. It basically does for company formation what Nevada does for marriage and sports betting.
posted by Brian B. at 6:55 AM on January 31 [1 favorite]


rokusan: WiFi completely off, because beacons don’t use location services, they just manually log your IMEI and/or MAC address at a much lower level. Said info can be mapped to your identity later, by any of the big data companies that happen to have that index. Google, Amazon, Facebook et al have it. So a device belonging to Dysk was in the headphone aisle at Target for 20 minutes yesterday. That’s more than enough to work with if you’re an advertiser.

My understanding of wifi is that, if you are not associated with an access point, your phone is not radiating anything, and is only passively scanning for beacons, so you wouldn't be leaking any information.

I think you can set your phone to automatically attempt to associate with any non-encrypted access point, but I don't think that's the default and I can't find the setting right now on my android phone.

However, if you do associate with an access point, and then another AP comes along with the same name, your phone will attempt to associate with the new AP. That means that, if you ever associate with any of those ubiquitous "xfinity" nodes, then yeah, comcast is going to be able to track your movements about town. But if you don't, you're probably good to leave your wifi on but disassociated.

Am I wrong??
posted by Galaxor Nebulon at 10:24 AM on January 31


As someone who's practically gone all-in on crypto over the past six months or so, I'm really a bit disappointed with the skepticism from the commenters on this and the other related posts that have spawned up the past few days.

What is bitcoin for? For every conceivable scenario other than scamming people and transmuting power and computer components into cash it seems like it's shitty at it. As a store of value it's insanely volatile, as a currency it's too slow and expensive, as an "investment" it's completely unpredictable and is great until it's terrible. The exchanges are either scams or in way over their heads.

Like, great, blockchain tech might have some use in the future. Bitcoin doesn't own that. People will make use of the tech (or not) completely independently of bitcoin. But hey, the price is going up so that's good for bitcoin, right?

almost every serious person I know expects a correction but we don't know if that's happening now, in 3 months or 3 years.

Based on what!? Correction from what to what? The people who are saying bitcoin's "natural" price is obviously around X USD were saying it was X/100 or X/1000 USD five years ago.
posted by ODiV at 10:34 AM on January 31 [6 favorites]


It's great for transferring value internationally when you can't get a bank on board for some reason.

Even now, I recently made my first bitcoin transfer to my own blockchain address... Cost $4, and was done in 20 minutes. The electrum wallet made it quite painless and dramatically reduced the risk of error, compared to the command-line interface from years ago.

Completely agree, though, that Bitcoin has no monopoly, and its development seems paralyzed by internal politics. I think 50% BTC is massively overweight, if you're thinking about cryptocurrency from an investment-portfolio perspective.
posted by Coventry at 11:19 AM on January 31


It's great for transferring value internationally when you can't get a bank on board for some reason.

Maybe my understanding is behind the times, but don't you have to give a bunch of personal info to an exchange to get that money out, and then only in $X/week chunks while you hope they don't get hacked or cut and run with your money? Or do you try to sell it to an individual and hope to not get scammed?
posted by ODiV at 11:34 AM on January 31


No. You can move coins directly from wallet to wallet. You just need a bitcoin address.
posted by chrchr at 11:46 AM on January 31


ODiV, I'm sufficiently small and law-abiding that those constraints don't bother me. And good luck donating to an organization like Sci-Hub via a bank.

But as I noted above, someone's happy to sell you a $3.4M house for BTC.

I've never done it, but I think I could get the scam risk in such a purchase to an acceptable level with a time-sensitive multisignature transaction involving multiple independent escrow parties. My understanding is that the bitcoin network has had this capability for years.
posted by Coventry at 11:51 AM on January 31


No. You can move coins directly from wallet to wallet. You just need a bitcoin address.

Sure, and a main goal of transferring value would be to make sure the same value comes out at the other end. If it doesn't leave bitcoin immediately then we're subject to its huge volatility.

I'm sufficiently small and law-abiding that those constraints don't bother me.

Maybe you picked up an implication that I didn't intend, but between you and a bitcoin exchange, I'm not suggesting you're the shady one.

And good luck donating to an organization like Sci-Hub via a bank.

Okay yes, paying or donating to an individual or organization that only accepts payment in bitcoin is a use for bitcoin.
posted by ODiV at 12:14 PM on January 31 [2 favorites]


Crypto exchange Bitfinex and Tether subpoenaed by CFTC

Also, Tether has dissolved its relationship with their auditor, citing "excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame." Lol. They're not supposed to be auditing some kind of super-complicated financial arrangement, right? Aren't they just supposed to be verifying that they actually do have the money they say they have?

Which brings us back to their previous "audit" from last September -- which they are careful to note is not actually an audit. Given that Friedman LLP appears to be a legitimate firm, I've been puzzling over exactly how it was that Tether was able to get FLLP on the record to more or less say "yup that $400MM you say you got is there," if they didn't really have it, especially considering that $400MM is not exactly chump change. The most plausible scenario I could come up with is that they managed to scramble and scrounge up the total via short-term (real) loans, "loans" from friends (e.g.: "hey, I'm in a real bind, do you mind wiring me a few mil? I just need it for a couple of days and I'll wire it right back"), and transferring money from other operating or investment accounts that's not meant to be used as reserve to fill those accounts. The auditor's statement is very clear that they could not vouch for whether or not these cash balances were encumbered in any way that would make them unsuitable to serve as reserves.

However, a more implausible but daring scenario I thought of is that they either mocked up fake banks (along with the fake statements and screenshots) to represent the money or, even more daringly, mocked up just the statements and screenshots and had a compromised employee in one or both banks provide the confirmation. Whatever the case, I hope the CFTC or someone eventually cracks these guys wide open just so we can all find out what the heck they're doing and how they did it.
posted by mhum at 1:16 PM on January 31 [5 favorites]


Okay yes, paying or donating to an individual or organization that only accepts payment in bitcoin is a use for bitcoin.

If Sci-Hub took fiat donations, Elsevier would have them confiscated. Sci-Hub has something like $25M in default judgements against it.
posted by Coventry at 2:03 PM on January 31


Whatever the case, I hope the CFTC or someone eventually cracks these guys wide open just so we can all find out what the heck they're doing and how they did it.

I'd really like to see the subpoena, and the justification for it. I think you may be jumping to conclusions.

If we're imagining scenarios, one I find plausible is that they've accepted cyrptocurrency for USDT, and are having trouble converting it to fiat currency. Incredibly dangerous and irresponsible, but something they might have actually done fairly well from (on paper, so far) over the last run-up in crypto/fiat prices. It's not at all clear to me that they're insolvent. Also, I don't have the knowledge or experience to evaluate the plausibility of these claims that difficulties with such an audit are common.
posted by Coventry at 2:15 PM on January 31 [1 favorite]


Galaxor Nebulon, that's right, but your phone's location services likely use the list of visible access points to estimate your location (I know this is the case in Android) so Google or Apple would still know where you were and can potentially resell that data, or use it to target ads.
posted by Dysk at 3:16 PM on January 31


I think you may be jumping to conclusions.

Yeah, that's definitely a possibility. Although, in my defense, almost everything about the people behind Tether seems rather less than transparent. Like, how sketchy they were about the fact that they're apparently the same dudes behind Bitfinex. Or how they released that non-audit audit with the names of the banks blacked out. This kind of weirdness is often incompatible with assumptions of good faith.

If we're imagining scenarios, one I find plausible is that they've accepted cyrptocurrency for USDT, and are having trouble converting it to fiat currency.

This is another good, plausible scenario. But, at least to my understanding, if this is what they were doing, this would mean that the whole "backed by USD" thing was pretty questionable given the volatility/liquidity concerns of converting hundreds of millions of dollars worth of cryptocoins into actual USD.
posted by mhum at 4:37 PM on January 31 [1 favorite]


It looks like a lot of interesting cryptocurrency research was reported at this conference. I've only watched the FileCoin presentations so far. I still don't think they're going to pull it off, but using depth-robust graphs for proof of file replication is a nice idea.
posted by Coventry at 6:45 PM on January 31


If their assets are invested in other cryptocurrencies then it's very bad news for their depositors. They have basically no protection in the event of a bank run sparked by a currency crash.
posted by Joe in Australia at 8:33 PM on January 31 [1 favorite]


excruciatingly detailed procedures

aka GAAP
posted by snuffleupagus at 9:17 PM on January 31 [3 favorites]


Okay yes, paying or donating to an individual or organization that only accepts payment in bitcoin is a use for bitcoin.

"Bitcoin has only one unassailable use case: It pays transaction fees on the Bitcoin network."

also btw, coming from a from a blockchain engineer/bitcoin apologist...
-Yes, Bitcoin Is a Means of Payment. Just Not Yet for You
-No, Bitcoin Won't Boil the Oceans
A recent report suggests that at current prices, Bitcoin miners will consume an estimated 8.27 terawatt-hours per year. That might sound like a lot, but it’s actually less than an eighth of what U.S. data centers use,1 and only about 0.21 percent of total U.S. consumption. It also compares favorably to the currencies and commodities that bitcoin could help replace: Global production of cash and coins consumes an estimated 11 terawatt-hours per year, while gold mining burns the equivalent of 132 terawatt-hours. And that doesn’t include armored trucks, bank vaults, security systems and such. So in the right context, bitcoin is positively green. What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better...
speaking of which...
Take a look inside Amazon's Spheres as they get set to open - "Like Amazon's skyscrapers, the Spheres are warmed in part by recycled heat generated from a nearby data center, with the heat piped through the concrete floors and, on the upper floors, handrails."

oh and...
Bitcoin Is the New Gold - "They represent a belief in the theory that fiat money is doomed, and a hedge against the possibility that fiat-based payments systems will one day collapse."
posted by kliuless at 9:34 PM on January 31


If their assets are invested in other cryptocurrencies then it's very bad news for their depositors

It also has roughly the same long-term implications for crypto/fiat prices as the tether-as-price-manipulation-tool theory. Probably not quite as bad, because it implies that they're unable to simply dump it and run for the moment.
posted by Coventry at 10:31 PM on January 31


but it’s actually less than an eighth of what U.S. data centers use

A chunk of those data centers are utterly necessary for keeping our society and infrastructure going. Contrast your email or medical records freezing up and magic nerd money freezing up.

What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better...

This presupposes that 1) magic nerd money enthusiasts will magically lose enthusiasm in turning other people's electrical infrastructure and clean air into money, and 2) magic nerd money enthusiasts will magically start caring about the efficiency of moving this stuff around, when the fact that they're into it right now means they don't care about it right now.

Like, why will any of this stop hucksters from pitching bullshit technologies with cute names, white papers, websites with softly rendered polygons, and lots of mining to get the minnows into it?

Sure a government or banking concern can push a cryptocoin that's sensible "UsefulAndSensibleCoin" and isn't a distributed attack on our electrical infrastructure and atmosphere, but that's not going to stop the hucksters from actively competing with UsefulAndSensibleCoin trying to make money by doing their own nonsense. And then trading their new BullShitWastefulCoin for UsefulAndSensibleCoin.

It's like some tulip bulb investor or puppy mill telling us that the other tulip bulb investors or puppy mills are going willingly start acting like sensible adults after the government/dog rescue organization pushes a healthy currency/aspca. But meanwhile, let's talk about buying a hideous tulip bulb chihuahua pug labradoodle hybrid.

So in the right context, bitcoin is positively green.

This right context is 'The future, or at least, certainly not the present" with "something that's not bitcoin" and "a future without cryptocurrancy enthusiasts who are willing to actively leech on our electrical infrastructure even if it means the utter or partial destruction of the environment."
posted by sebastienbailard at 10:39 PM on January 31 [4 favorites]


a hideous tulip bulb chihuahua pug labradoodle hybrid.

Labratulip?
posted by clawsoon at 6:03 AM on February 1


Dysk: Galaxor Nebulon, that's right, but your phone's location services likely use the list of visible access points to estimate your location (I know this is the case in Android) so Google or Apple would still know where you were and can potentially resell that data, or use it to target ads.

How does that work? My wifi access point at home does not serve any location data. Your phone could listen for my AP's beacon and, if your phone already knew my AP's coordinates, then you phone could conclude that it's within a certain radius of my AP. But some random AP at a coffeeshop? My phone doesn't know its location. If my phone knew its location from some other means, then when it heard a beacon from an AP, it could note the location and then use it later if it can hear the AP but not gps or something. But still, the phone is just listening and writing down what it hears - it hasn't radiated anything.

Or are you saying that, when location services are turned on, the phone attempts to associate with any open AP it finds so that it can download data from somewhere? It's gonna have a hard time doing that most of the time, because most APs are either encrypted or have a captive portal that won't allow you to access the internet until you've accepted the terms of service.

I don't know as much about the cellular network, so I could believe that the towers are broadcasting some location information, or that the phone has some info that relates towers' IDs to locations.

I'm gonna look up how this location services thing works. Do you have any links that can speed up my search?
posted by Galaxor Nebulon at 7:09 AM on February 1


Google has a database of the location of public WiFi APs (likely gathered when they run their street view cars around). So your phone seeing them is enough, even if you don't connect to them. The AP doesn't know where it is. Your phone doesn't either. But Google knows.
posted by Dysk at 7:13 AM on February 1 [1 favorite]


I'm not sure "datacenters do societally-necessary work" is a strong ecological argument against mining. Is Netflix societally-necessary?

If you want to draw a comparison, then the more valid fact is that there's a strong incentive for datacenter operators to reduce their consumption, for profit-motivated reasons if not altruistic ones. This is not true for cryptocurrency. Blockchains need to get less efficient over time or else advances in computing speeds begin to threaten their integrity.
posted by tobascodagama at 7:23 AM on February 1 [1 favorite]


So does my phone download that list? Or does it send a vector of wifi strengths to google, who looks it up in their database and return a location?

I'm seeing things saying that phones also contribute to the location database. There's a setting under "Advanced Wifi" that says "Scanning always available: let google's location service and other apps scan for networks even when Wifi is off". If you turn that off, I'm not sure what happens ... do you stop contributing to the wifi AP location database? Do you only stop contributing to it when wifi is off?

I see a setting "Location mode" with settings "High accuracy: use gps, wifi, and mobile networks to determine location" ; "Battery saving: Use wifi and mobile networks to determine location" ; "Device only: Use GPS to determine your location".

It's pretty sneaky because it does not say anything in there about when you might be reporting things to google.

I still haven't found an official source yet that explains this all.
posted by Galaxor Nebulon at 7:32 AM on February 1


Okay, wikipedia has an article about the Wi-Fi Positioning System. It looks like there's interoperable standards, and there's wi-fi location databases run by several organizations including Mozilla, whose database is proprietary, and other organizations with MIT-licensed data. There's also public-domain cell tower data.

The article gets very specific about how the radio signals are processed to turn into a location. But the thing I still can't figure out is: Does the phone download location data and then do the calculation, or does the phone send the radio signal strength to a service to calculate based on its data?

In the first case, it'd be possible to do in an at least somewhat privacy-preserving way. That's similar to how firefox's malware warning system works: You download a database of urls known to contain malware, you don't send mozilla a list of all URLs you're considering.

There's also the privacy of the wi-fi operators to consider! Apparently, if you put "_nomap" in your wifi AP's SSID, google and mozilla won't let people's phones scan your AP's location into its database, but other organizations might.
posted by Galaxor Nebulon at 7:51 AM on February 1


I think there's likely a conflict of interest between the cryptographic aspects of blockchain, which would need to run on mobile and embedded systems in order to work as advertised, and the currency aspects of blockchain that depend on increasing work factors to maintain scarcity.
posted by GenderNullPointerException at 8:31 AM on February 1 [1 favorite]


I believe there are many mobile wallets for bitcoin. Never used one, though.
posted by Coventry at 12:17 PM on February 1


Another explicit ponzi scheme, funds stolen as a result of a smart contract bug.
posted by Coventry at 12:27 PM on February 1 [4 favorites]


DEAR GOD, MY FIANCEE IS GOING TO FUCKING KILL ME. (Ponzi scheme victim.)
posted by Coventry at 12:52 PM on February 1 [3 favorites]


Is Netflix societally-necessary?

more like antisocially necessary, amirite?
posted by snuffleupagus at 1:14 PM on February 1




Reuters: Bitcoin tumbles as cryptocurrency sell-off intensifies

Cryptocurrencies plunged on Friday, with bitcoin at one point sliding below $8,000 and headed for its biggest weekly loss since December 2013, as worries about a regulatory clampdown globally sent investors scrambling to sell...
posted by snuffleupagus at 8:34 AM on February 2


Things get testy at the top. (Bitcoin luminary Greg Maxwell erroneously calls Ethereum founder Vitalik Buterin a liar.)
posted by Coventry at 12:58 PM on February 2


Making a Crypto Utopia in Puerto Rico

I'm only partway through this article, and it already has everything.
posted by clawsoon at 1:41 PM on February 2


From that article: “The U.S. doesn’t want us. It’s trying to choke off this economy,” Mr. Minor said, referring to the difficulties that crypto investors have with American banks. “There needs to be a place where people are free to invent.”

I get that you have to practice some sort of ignorance to be a utopian (I do it myself on my good days), but setting up your utopia in a territory which is undeniably subject to jurisdiction by an entity you believe to be hostile to what you stand for... What is this guy thinking?
posted by Coventry at 1:54 PM on February 2


There's a funny thing about tax havens - almost all of them are colonial-ish possessions of the US or the UK. Makes you go "hmm", dunnit?

Anyway...
They wanted to make two things clear: They chose Puerto Rico because of the hurricane, and they come in peace.

“It’s only when everything’s been swept away that you can make a case for rebuilding from the ground up,” Mr. Morris, 53, said.

“We’re benevolent capitalists, building a benevolent economy,” said Mr. Clemenson, 34, a co-founder of Lottery.com, which is using the blockchain in lotteries. “Puerto Rico has been this hidden gem, this enchanted island that’s been consistently overlooked and mistreated. Maybe 500 years later we can make it right.”
If I were writing fiction about a techno-libertarian utopia, I don't think I could do better than that.
posted by clawsoon at 2:16 PM on February 2 [2 favorites]


BTC on GDAX has been hovering around $8200 for a while now.

Is there some kind of tripwire by which people will notice if a bunch of purloined Gox BTC starts being liquidated on the exchanges (as vs. person to person)? The blockchain permits that, yes?
posted by snuffleupagus at 7:15 PM on February 2


The bitcoin blockchain would, yes. I don't know of any tools for that myself, though.
posted by Coventry at 7:32 PM on February 2


Q: Influential crypto advocates identify themselves as anarcho-capitalist or libertarian. Are rightwing ideas just a tendency, or the very ideological foundation of Bitcoin?

A: It’s very clear that the ideas that went into bitcoin were very much from the libertarian right. Some people want just less government, but a lot of people are very ideologically rigid about it and go into full anarcho-capitalism, where somehow you can have property without governance of any sort. If you talk to bitcoin advocates you also hear them say things like “we’ll do without government and without central bankers!” A lot of that goes back to far right conspiracy theories about central bankers running the world, so literally antisemitic propaganda.

via r/Buttcoin/

from an interview with David Gerard, the author of 'Attack of the Fifty Food Blockchain!'
posted by sebastienbailard at 9:19 PM on February 2 [2 favorites]


A lot of that goes back to far right conspiracy theories about central bankers running the world, so literally antisemitic propaganda.

Back in 2008, when the choices of selfish idiot investment bankers threatened to blow up the world's economy, everybody was against bankers (with good reason!). When central bankers bailed out investment bankers, it felt morally wrong even to those of us who grudgingly accepted that it was necessary. That's the environment into which Bitcoin was born.

Then Obama got elected and the economy started to improve (with fits and starts along the way) under the influence of central banking stimulus. Hatred for banks cooled, though it remained white-hot among the anti-semites (and anti-Black racists) who were going to hate banks and bankers and The System anyway. They stuck with Bitcoin, as did some techno-libertarian dreamers who weren't thinking in racial terms at all (isn't the Fed a pretty WASP-y institution anyway?), as did drug dealers who were willing to sell to whoever was willing to pay. (I hear, though, that the drug dealers are switching to Monero.)

My impression is that the banks still haven't been properly re-regulated, and if something like the hard sell tactics at Canadian banks causes another economic implosion I wouldn't be surprised to see generalized anti-bank sentiment return.

The progressive left has become much more careful about its allies over the past few years when it comes to racism and sexism - a good thing - though the human tendency to tribalism has caused anything that we still agree with the alt-right on to feel tainted and discussion of it on the left has dramatically declined. If you're progressive, why take the risk of talking about banking regulation or ending drone strikes if you're likely to end up quoting some racist, sexist nutjob if you're not careful to vet every source? It's easier to just avoid that minefield altogether.

As a result, those important topics mostly get left to racist, sexist nutjobs. This, I suspect, will not turn out well for us.
posted by clawsoon at 2:17 AM on February 3 [4 favorites]


Don't know if this was already covered and I missed it. Might explain some of the current downturn.
The heads of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (SEC) are set to testify on cryptocurrencies during a U.S. Senate hearing next week.

The Senate Committee on Banking, Housing, and Urban Affairs will meet on Feb 6. at 10 a.m. EST, with SEC chief Jay Clayton and CFTC chief J. Christopher Giancarlo set to appear as witnesses. The hearing and the appearances by Clayton and Giancarlo were previously reported by the Washington-based publication The Hill earlier this month.

...

Next week's hearing notably follows the publication of a joint op-ed from Clayton and Giancarlo. The article, published by the Wall Street Journal, served as both a pledge to apply closer oversight of the industry as well as a warning to some – particularly those soliciting investments.

"Market participants, including lawyers, trading venues and financial services firms, should be aware that we are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections," the two wrote.
Via.
posted by Coventry at 12:32 PM on February 3 [1 favorite]


Interesting excerpt from the op-ed:
Recently, two of the largest CFTC-regulated exchanges listed bitcoin futures products. Although the exchanges are permitted to “self-certify” and commence trading futures products without CFTC approval, for bitcoin futures they spent significant time engaging with CFTC staff and agreed to implement risk-mitigation and oversight measures, including heightened margin requirements and a requirement that the exchanges have information-sharing agreements in place with underlying bitcoin trading platforms. As a result, the CFTC gained oversight over the U.S. bitcoin futures market and access to data that can facilitate the detection and pursuit of bad actors in underlying spot markets.
posted by Coventry at 12:49 PM on February 3 [1 favorite]


It has been fascinating to watch a global bubble - maybe the first truly global bubble? - play out in real time. I hope some grad students in economic history are turning this into research that makes their careers.
posted by clawsoon at 4:46 PM on February 4


(To clarify: There have obviously been global crashes before, but I'm not sure if there have been any instances where so many people from so many countries and cultures have been able to put their money into the mania around a single asset class.)
posted by clawsoon at 4:51 PM on February 4


I wouldn't call this a crash by cryptocurrency standards, so far. There have been far worse downturns in Bitcoin's price.
posted by Coventry at 7:55 PM on February 4


Super-sketchy news source, but it's interesting: Russian State Bank Will Open a Cryptocurrency Exchange in Europe
The Russian largest state bank, Sberbank, is going to launch a cryptocurrency exchange in Europe. The operation will be in charge of its Swiss branch Sberbank Switzerland AG, according to reports on Tuesday the 30th. Apparently, the exchange would not be available for individuals, but for institutions.
posted by Coventry at 8:20 PM on February 4


The Problem: Writing Software is Hard, Compiling is Harder
The open-source community might be able to build large scale shared compilation environments on the Internet, but Ken Thompson explained to us why we could not trust a shared environment for these workloads. However, in the age of blockchain, it’s now possible to build development environments that harness the power of large-scale compute to compile and check programs against programmer intent. Secure, cheap, and fast — we can get all three.

CryptoFex is just such a Decentralized Integrated Development Environment (DIDE) allowing software engineers to author, test, compile, and statically check their code to ensure that it is secure, efficient, and scalable.
A Potted History of Money and Computation :P
Going all the way back to Sumeria, we observe that economies want multiple currencies. Mostly, people want to make daily trade in coinage and larger trades in some more reliable class of money — shillings vs. tally sticks. But, people will use whatever’s to hand if they need to.

The U.S. Government has done a remarkably poor job over the last 50 years in managing the monetary system. Whether you believe Steve Keen or the Austrians or the gold bug at the end of the bar, every system that involved central control of the ledger without strong consensus has eventually wiped out the wealth of its people. The system we’ve been on since the mid-century is one that slowly and inexorably drains the wealth of every individual participating in the monetary system.
Is This Possible?
My expectation, then, is not that the Internet methodically disrupts industry after industry in some sort of chronological order, but rather that the entire edifice lasts far longer than technologists think, only to one day collapse far quicker than anyone expected.

The ultimate winners of this shakeout, then, are not only companies that are building businesses predicated on the Internet, but just as importantly, are willing and able to build those businesses with the patience that will be necessary to wait for the old order to collapse, particularly if that collapse happens years or decades after the underlying business models are rotten.
World After Capital: Work In Progress & Preface
One of the messages in World After Capital is that we all need to have a purpose in life. As we leave the Industrial Age behind, our purpose can no longer be derived from having a job (or from consuming). Instead, we need to find a purpose that is compatible with a Knowledge Age...

I deliberately use the term Knowledge Age, instead of Information Age. We are drowning in information, which spews forth endlessly from our computers and phones. Knowledge, by contrast, are the scientific explanations and the works of art and literature that have withstood the test of time and have been refined through the process of critical inquiry. Knowledge is what makes human life possible and worthwhile.
on the efficient production of human capital - "Wendell Berry, writing not long after September 11, 2001:"
The complexity of our present trouble suggests as never before that we need to change our present concept of education. Education is not properly an industry, and its proper use is not to serve industries, either by job-training or by industry-subsidized research. It’s proper use is to enable citizens to live lives that are economically, politically, socially, and culturally responsible. This cannot be done by gathering or “accessing” what we now call “information” – which is to say facts without context and therefore without priority. A proper education enables young people to put their lives in order, which means knowing what things are more important than other things; it means putting first things first.
posted by kliuless at 11:11 PM on February 4


> there's a strong incentive for datacenter operators to reduce their consumption, for profit-motivated reasons if not altruistic ones. This is not true for cryptocurrency. Blockchains need to get less efficient over time or else advances in computing speeds begin to threaten their integrity.

"Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources."

> If you talk to bitcoin advocates you also hear them say things like “we’ll do without government and without central bankers!” A lot of that goes back to far right conspiracy theories about central bankers running the world, so literally antisemitic propaganda.

"I wonder how much of goldbug-ism, Austrian econ, Bitcoin mania, etc. springs not from hatred of government (as @paulkrugman has suggested) but from a deep distrust of big banks that traces its roots to Early Modern European warfare."
In Early Modern Europe, sovereigns were constantly going bankrupt fighting wars (due to poor logistics, poor tax collection, desertion, and sheer over-aggression).

Big banks stepped in to fill the gap, and could impoverish whole countries with high rates of interest.

The sight of big banks ordering around kings and princes, and making vast fortunes from the suffering of millions of people, must have left a profound imprint on Western culture. A desire for personal stores of value that banks and their pet governments could never touch.

The fear of deficits and of inflation is part of this. Deficits yoked sovereigns to big banks and forced them to levy crippling taxes on their people. Inflation was a way for states to default on their debt to big banks at the expense of citizens who had tried to build wealth.

The 2008 bank bailouts and subsequent deficits must have touched a deep cultural memory of Early Modern European war finance, and all the hideous injustice, impoverishment, and violence of that age.
Our Hackable Political Future - "Imagine the day when operatives can create fake video of their enemies. That day is here."
posted by kliuless at 11:33 PM on February 4


The system we’ve been on since the mid-century is one that slowly and inexorably drains the wealth of every individual participating in the monetary system.

Hmm. After spending almost 3,000 words describing Sumerian and early Modern-era English accounting practices, the Medium author (Nash Foster, CEO of some kind of blockchain technology company) just drops this line in there without hardly any specific explanation or justification beyond a paragraph claiming that the desire to force a USD economy is what led to "continued hostilities in resource-rich parts of the world like the Middle East" (also, no citations for this claim either). I guess, it's just self-evident that it's the monetary system that "drains the wealth of every individual."

The 2008 bank bailouts and subsequent deficits must have touched a deep cultural memory of Early Modern European war finance, and all the hideous injustice, impoverishment, and violence of that age.

This from blogger and Bloomberg contributor, Noah Smith (@noahpinion), also strikes me as a bit far-fetched. How many people thought when AIG was being bailed out that "yes, this is exactly like when Anton Fugger financed Charles V during the Schmalkaldic Wars"? (Also, this particular tidbit took a non-trivial amount of googling for me to dig up since I have no clue about early Modern-era war financing.)
posted by mhum at 1:18 PM on February 5 [2 favorites]


CFTC and SEC Testimony on Cryptocurrencies. (Presumably prepared remarks for tomorrow's Senate hearing.)
posted by Coventry at 2:21 PM on February 5




mhum: How many people thought when AIG was being bailed out that "yes, this is exactly like when Anton Fugger financed Charles V during the Schmalkaldic Wars"? (Also, this particular tidbit took a non-trivial amount of googling for me to dig up since I have no clue about early Modern-era war financing.)

The history of devaluations of gold currencies by European monarchs as a method of raising funds when they couldn't or wouldn't get money from parliaments or bankers is fascinating. (Well... fascinating for a certain breed of weirdo, anyway. French kings had to do it a lot during the early part of the Hundred Years' War; Henry VIII did it, I think, for reasons of pure stubbornness.)
posted by clawsoon at 4:38 PM on February 5


Podcast with Caitlin Long, backer of the Wyoming "ICO bills", which would exempt cryptocurrency from state securities and money transmitter regulations.
posted by Coventry at 4:50 PM on February 5


Substratum is building a decentralized internet with DNS and routing structures that are compatible with the existing internet.

I looked into Substratum. It's disturbing that they don't provide any source code, or even a closed-source beta product.
posted by Coventry at 6:32 PM on February 5 [1 favorite]


Coventry: I wouldn't call this a crash by cryptocurrency standards, so far. There have been far worse downturns in Bitcoin's price.

Taking today's drop into account, this appears to be matching the worst 6 week drop that Bitcoin's price has ever had.
posted by clawsoon at 7:38 PM on February 5 [1 favorite]


I'm sure this is good news for John McCain cryptocurrency.
posted by tobascodagama at 8:12 PM on February 5


I guess, it's just self-evident that it's the monetary system that "drains the wealth of every individual."

viz. "It is relatively simple and intuitive to make the connection between Fed policy and wealth inequality. Whether through open market operations or direct lending through the discount window the first recipients of newly created money are the banks in the Fed system... this newly created money is first lent to their most creditworthy customers. In addition, the amount one can borrow is obviously a direct function of one's already existing net worth so it is the "wealthy" who are able to borrow these newly created funds first and at the lowest rate of interest... Those with access to better economic information, such as bankers with access to the Federal Reserve, are able to better navigate this world of floating monetary standards and gain outsize economic rewards."

The history of devaluations of gold currencies by European monarchs as a method of raising funds when they couldn't or wouldn't get money from parliaments or bankers is fascinating.

cf. (for a fictionalized account ;)
     "Gold," Cithrin said, waving her hand. "What's gold? A metal too soft to take an edge. There's no power there. What makes gold important is the story we tell about it. All of humanity has agreed that this particular object has value, and then because we all said so, it does. The metal hasn't changed. It doesn't breathe, it doesn't bleed. It is what it was before. All we're doing is telling that same story about some letters we've written."

     "You are advocating that we tell people these letters can be exchanged for actual gold," Komme said. "You are obligating the crown to a greater debt than what we are owed—"

     "And it doesn't matter, because that debt will never be called," Cithrin said. "An obligation isn't an obligation if no one truly expects it to be met. And in the meantime, we can create markets that run on letters and do all the same things as markets that run on coin. Only now, instead of minting new currency by toiling in a mine and running ore through a smelter, we write it. If we need more money, we make it."
posted by kliuless at 9:41 PM on February 5


They didn't devalue using paper, though; they did it with actual gold coins. They'd re-mint coins 10% lighter, offer people 5% more coins than they brought in, and skim the difference. They'd declare the new, lighter coins legal tender. The profit to be made by bringing your coins in to be re-minted acted as an incentive where force would've failed. (If they could've effectively used force, they would've just imposed higher taxes, but monarchs of the age were often too weak to do so.) The devaluation would raise enough gold for the monarch to throw one more desperate army into the field for a few weeks, or pay off a particularly important creditor.

Even using actual gold doesn't protect an economy from fiat currency and devaluation.
posted by clawsoon at 10:13 PM on February 5 [3 favorites]


Also, from what I've read, paper money usually starts as a private affair, evolving from the bills of exchange and promissory notes of merchants and bankers. It's only after the system blows up a few times* that governments get involved in the paper money business themselves - and even now, aren't most of the banks which print money nominally private entities?

*In Union is Strength, there are some entertaining bits about early Canadian banks which would drive each other bankrupt by secretly buying up a competing bank's notes and then presenting them all at once to be redeemed. Not so entertaining for anybody with deposits in those banks, though.
posted by clawsoon at 10:29 PM on February 5 [1 favorite]


"I have created a smart contract/proof of Fermat's Theorem, the debugging of which I will leave as an exercise to the reader."
posted by sebastienbailard at 11:39 PM on February 5 [1 favorite]


Very nice!
posted by Coventry at 11:43 PM on February 5


Taking today's drop into account, this appears to be matching the worst 6 week drop that Bitcoin's price has ever had.

Are you evaluating in absolute terms? In relative terms, there was that time it dropped from ~$32 to ~$1 in the space of, like, 24 hours. I think it was 2011.
posted by Coventry at 11:49 PM on February 5


I'm sure this is good news for John McCain cryptocurrency.

The right superhero analogy may turn out to be Antman.
posted by Coventry at 11:55 PM on February 5


Coventry: there was that time it dropped from ~$32 to ~$1 in the space of, like, 24 hours. I think it was 2011.

Ah, I didn't know about that, thanks. I was going by the graph you linked to, which might be lacking that resolution. The worst I noticed on the graph was the loss of ~2/3rds of its value in 6 weeks starting at the peak at $35 on June 9, 2011. That about matches what has happened this time around in relative terms.
posted by clawsoon at 3:41 AM on February 6


Pyramid scheme is a scheme dialect for working with Ethereum. Roko's Ransomware is insurance against Roko's Basilisk.
posted by GenderNullPointerException at 6:41 AM on February 6 [3 favorites]


The worst I noticed on the graph was the loss of ~2/3rds of its value in 6 weeks starting at the peak at $35 on June 9, 2011. That about matches what has happened this time around in relative terms.

I think you're right, and I must be misremembering.
posted by Coventry at 9:19 AM on February 6


I think my recollection of the $29.58 -> $2.28 drop from June 9 to Oct 19 was confused.
posted by Coventry at 9:21 AM on February 6


Basilisk Protection Charms are not an investment. You could come out a millionaire, but much more likely is that I use your money to buy a lot of anime porn.

I think for his own legal peace of mind he ought to move that disclaimer to the top of the page. :-)
posted by Coventry at 10:04 AM on February 6 [2 favorites]


@EthereumAddict
I can't believe I just watched C-SPAN for two hours and really enjoyed it.

Is this what old people feel like?
posted by Coventry at 10:18 AM on February 6


The SEC Man Cometh for ICO Attorneys
SEC Chairman Jay Clayton and other regulators have said most ICOs they’ve observed create securities, which require sellers to register with the commission and comply with more stringent laws.

Clayton has repeatedly targeted ICO attorneys in recent remarks, and signaled potential action against practitioners. In at least three instances since December, he has said attorneys need to act more responsibly to uphold securities laws when advising projects and not mislead investors about the nature of a token.

Clayton signaled that more token offerings should be registered, and that ICO attorneys may be failing their clients in that primary analysis because the clients are willing to take the risk. “These lawyers appear to provide the ‘it depends’ equivocal advice, rather than counseling their clients that the product they are prompting likely is a security,” Clayton said Jan. 22 in a speech to the Securities Regulation Institute in Washington.

He said he instructed the SEC staff to be “on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the U.S. securities bar.”
posted by Coventry at 11:20 AM on February 7 [2 favorites]


First, there were customer surveys. Now, there's the blockchain.

L.L. Bean says it will start sewing in sensors in its clothing to track how customers use the items in a new pilot test, according to a new report in the Wall Street Journal. These sensors — which will start being used in coats and boots — will collect stats about how people wear and use the items. That information will then be sent the Ethereum blockchain, anonymized, and available for use for the company as raw data.
I'm pretty sure for basic privacy/sanity/efficiency reasons this must be going to a private version of the ethereum blockchain, although the price of ETH seems to be responding as if I'm wrong about that.
posted by Coventry at 8:28 PM on February 7


That information will then be sent the Ethereum blockchain, anonymized, and available for use for the company as raw data.

The KodakCoin reasoning almost sounded plausible to me (at least until Kerrisdale Capital ripped it apart), but this doesn't have even the faintest veneer of plausibility. I can't think of a single advantage of a blockchain or smart contract that would be useful and applicable to this data. Hell, if they said, "We're piping the data straight into an Excel spreadsheet," it would make more sense.

Surely this is a joke?
posted by clawsoon at 5:18 AM on February 8 [1 favorite]


That information will then be sent the Ethereum blockchain, anonymized, and available for use for the company as raw data.

What the hell is the point of this? Not the phoning home, but doing it via a blockchain? Just...why?
posted by snuffleupagus at 5:24 AM on February 8 [1 favorite]


The only thing I can think of is that it's only "anonymous" until you try to return the tent you used to follow Phish for a year because you're 'unsatisfied' with it. The return counter checks the tag against the blockchain...but even then it seems like the wrong application.

Also, is every pair of boots going to be on Whispernet, or what?
posted by snuffleupagus at 5:26 AM on February 8


Customers will transfer the data from their garment using an app on their phone that can bridge the garment to the internet.

Yeah, sure they will.
posted by snuffleupagus at 5:53 AM on February 8 [1 favorite]


I bet there's one guy in the L.L. Bean IT department who's saying, "This will be amazing!!" and another one who's rolling his eyes and shaking his head and waiting for it all to blow over.
posted by clawsoon at 6:01 AM on February 8


I'm pretty sure for basic privacy/sanity/efficiency reasons this must be going to a private version of the ethereum blockchain, although the price of ETH seems to be responding as if I'm wrong about that.

You're assuming that stock markets behave on logic.
posted by tobascodagama at 8:16 AM on February 8


I have no idea what they're thinking. Maybe someone there has homomorphic encryption (which really does have revolutionary potential for privacy-preserving data aggregation) conflated with blockchain.

CFTC chairman reflects back the love he got from cryptocurrency fans for his Senate testimony:
Coin fans - Thx 4 ur enormous response 2 my recent US Senate remarks. Lol. As you invest remember: caution, balance & DYOR.
posted by Coventry at 9:37 AM on February 8 [1 favorite]


bbc:
Russian security officers have arrested several scientists working at a top-secret Russian nuclear warhead facility for allegedly mining crypto-currencies.

The suspects had tried to use one of Russia's most powerful supercomputers to mine Bitcoins, media reports say.

The Federal Nuclear Centre in Sarov, western Russia, is a restricted area.

...
posted by sebastienbailard at 10:34 PM on February 10 [1 favorite]




The only thing I can think of is that it's only "anonymous" until you try to return the tent you used to follow Phish for a year because you're 'unsatisfied' with it

In related (?) news, LLB has just backed out of their lifetime-guarantee, replacing it with... a one-year warranty.
posted by rokusan at 7:02 PM on February 12 [2 favorites]


The origins of money (ungated) - "Isabel Schnabel and Hyun Song Shin, both eminent economists, have taken a historical deep dive into the spread of government-backed (but privately organised) deposit banking during the 30 years' war — that is to say, the first half of the 17th century, and well before the creation of the first central banks, the Swedish Riksbank and the Bank of England."
The prime examples, the Banks of Amsterdam and Hamburg, were set up to address the inflation and lack of commonly accepted payment methods caused by war-induced debasement of metallic currencies. They did this by accepting only coins that were verified upon being deposited not to be debased, and then allowing transactions in notional “bank money” by transfers between accounts. The authors write: “The source of the success of public deposit banks was their role in instilling common knowledge in monetary transactions by establishing a platform for standardised settlement of transactions, both for goods and for financial instruments.” This helped promote the locations of the public deposit banks as major trading centres.

They make a strong case for tracing the origins of central banks to this function of providing common knowledge of the value of means of payments — rather than the alternative explanation that they came about primarily through the needs of sovereigns to borrow. (Indeed, they point out that public deposit banks that did lend to governments were less successful at monetary stabilisation.) A lesson for central banks today is the importance of central banks in providing certainty about a currency’s value across the economic trading area.
'certainty about a currency's value' of course being a central bank's attempts/credibility at hitting a government-defined consumer basket's ~2% annualised price depreciation target :P if that sounds (increasingly) archaic and unwieldy, that's because it is!
posted by kliuless at 1:11 AM on February 13 [1 favorite]


Blogger Mark Palko comments on this Washington Post article and the similarities to other bubbles.

IMHO the very fact that people are can make profits from simply owning these currencies renders them unreliable as a currency. One of the main functions of a currency is to give a relatively stable measure of what I am getting when I sell something or give up when I buy it. If that is swinging wildly of course I'd prefer to use dollars--which is how even people who accept bitcoin generally price things.

It is still liquid enough to be used as a medium of exchange but has no particular benefits (and several disadvantages) relative to other electronic transfers.

I find it really disheartening that people who can't afford it are jumping in on the bandwagon. It's a bit like every other bubble in my lifetime, but without *any* guarantee of underlying value. At least when real estate or dot com went bust there was a bottom, driven by the real world value of some percent of the assets (physical land, houses, Cisco, etc.)

To opine a bit more thinking of investing in bitcoin (or currency or commodities) is generally wrong. You can invest in a gold mine, but when you buy gold the better term is speculator.
posted by mark k at 9:15 PM on February 13 [2 favorites]


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