You matter; Your vote doesn’t

You matter.

You show love to other people, validating and comforting them.

You work and create value for yourself and others, making you both better off.

You learn new things and teach others new things, growing in skills and knowledge.

This is one of the reasons I appreciate social media. It’s wonderful to see people showing love, working, learning and teaching new things. When people are passionate about how they are improving themselves or helping others improve it’s a wonderful thing to see and I’m glad they’ve shared that moment with me.

I may not know you personally, but I’m nearly certain that if you weren’t around that other people’s lives would be diminished. Less love shared, less value created in society, less knowledge available.
You matter, and I’m glad you share some part of your existence with me.

However, the fact that you exist and that you likely make the world a better place doesn’t mean that others are improved by or interested in sharing all of your experiences, actions, or opinions.

There are innumerable actions you’ve taken – and will take – which aren’t useful for others to know about. What you choose for breakfast tomorrow almost certainly won’t impact my life, and the knowledge of your choice won’t either. You know this already, and for the most part you don’t bother mentioning the most mundane parts of your life to other people.

Except for one area. In this one area, even though our actions have no impact on anyone else, we all feel empowered to shout our actions from the rooftops to anyone who will listen.

vote

Your vote doesn’t matter. It doesn’t matter, and you need to stop pretending like it does.

If you believe that your vote matters, I encourage you to do a brief mental exercise with me. Imagine that you lived the same life you do now, except you (and only you) were unable to ever cast a vote in any major election. Now consider how different the world would be without your participation in those elections, without your vote being cast.

It wouldn’t be different at all. Your participation in the voting process has no effect on the world, at all. Ever. It never will.

This is just simple math. Elections are too large to be decided by a single vote. Whether or not you vote is completely irrelevant.

[An aside: This doesn’t mean voting in aggregate doesn’t matter. This is about any individual voter.]

Your vote impacts me just as much as what you ate for breakfast on election day. You likely know that I’m not interested in your breakfast, but why do you think I care about your equally unimportant vote?

I don’t know the answer. It’s possible that you believe your vote does matter. Maybe not mathematically, maybe it won’t change the outcome, but there’s still something important about being involved in the political process, right?

Not through voting there isn’t. The current 2016 US election is a prime example of that. The two major candidates are widely considered to be unpopular choices. Why take pride in participating in a system which produces such poor results? If you were offered to be punched in the gut or have your kneecaps shattered the simple fact that you made a decision between them isn’t valuable to me.

Maybe you voted third party and want to signal your ideological beliefs to your friends. That’s fine, but if spreading your ideology matters to you then I hope you don’t wait every two or four years to make others aware of this by telling them you engaged in the utterly futile practice of making a third party candidate gain 3.700001% of the vote instead of 3.700000%.

Perhaps you know that your vote doesn’t matter to me, but you choose to share it anyway.

If that’s true, then you need to re-examine what voting means to you. Are you doing this as a way to signal something to your peers? Maybe you felt peer-pressure or wanted acceptance into a group that is likely to have voted for X candidate?

You matter, but your vote doesn’t. Go make the world a better place by actually doing something that makes the world a better place. I want to hear about that, not your meaningless vote.

Line by Line Response to WaPo “R.I.P. Bitcoin” Article

Vivek Wadhwa published a piece at the Washington Post today about Bitcoin. Here’s the takeaway, in his own words:

Bitcoin did have great potential, but it is damaged beyond repair. A replacement is badly needed.

Vivek is wrong. His article shows he has little knowledge of Bitcoin himself but relies on the word of others to form his opinion. This post will respond line by line to counter his claims.

Potential

Not long ago, venture capitalists were talking about how Bitcoin was going to transform the global currency system and render governments powerless to police monetary transactions.

Some venture capitalists may have said this. I’m guessing most VCs didn’t actually publicly endorse the idea that Bitcoin would “render governments powerless” since that’s not the type of things investors like hearing. Regardless, his point is that VCs used to be excited about Bitcoin – implying that they are no longer excited. Is there evidence that the same VCs that were excited about Bitcoin previously are no longer excited? He provides no evidence of this.

Now the cryptocurrency is fighting for survival.

Fighting for survival means that Bitcoin is nearing collapse. It may not survive if people don’t keep fighting for it. This is a strong claim; let’s see if he follows this up with any evidence.

The reality came to light on Jan. 14, when its influential developer, Mike Hearn, declared Bitcoin a failure and disclosed that he had sold all of his Bitcoins. The price of Bitcoin fell 10 percent in a single day on the news, a sad result for those who are losing money on it.

It is true that a prominent member of the Bitcoin community quit, leading to a 10% drop in Bitcoin price. Of course, anyone that has followed Bitcoin for any length of time knows that a 10% change in price is not unusual at all. Lamenting about this “sad result” is ridiculous; Bitcoin’s value increased 35% in 2015, but lost 52% of it’s value in 2014 – only after gaining an incredible 5,429% in value in 2013! Bitcoin has always been volatile.

[As an aside, has the author not been watching the US stock market? The S&P 500 is 10% off it’s all time high set less than a year ago.]

Bitcoin did have great potential, but it is damaged beyond repair. A replacement is badly needed.

This is the core argument of the piece, so the author needs to establish that Bitcoin is “damaged beyond repair.” We’ll be looking at all his claims to see if they are truly irreparable, or if they are even true.

Our current system is flawed

Most currency and transaction systems today are opaque, inefficient, and expensive. Take the North American Stock Exchange, the NASDAQ, as an example. It is amongst the most technologically advanced in the world. Yet if I buy or sell a share of Facebook on the NASDAQ, I have to wait several days for the trade to finalize and clear. This is unacceptable; it should take milliseconds.

Bitcoin does take milliseconds to transfer value.

In Venezuela, citizens wishing to buy anything of value on supermarket shelves wait all day in lines to do so, because hyperinflation causes the paper currencies in their pockets to lose significant value every day.

He’s right that central banking fails many people, and Bitcoin isn’t controlled by any central banks.

When migrant workers there send money back to their families in places such as Mexico, India, and Africa, they are gouged by money-transfer companies—paying as much as 5–12 percent in fees.

Bitcoin is much cheaper to send.

And even in the United States, payment processors and credit-card companies collect merchant fees of 1–2.5 percent of the value of every transaction. This is a burden on the economy.

The author is making a clear case for Bitcoin. Not only is it cheaper but it eliminates the ever-present threat of hackers getting into the databases full of credit card numbers which are the keys into the bank accounts of millions of people around the world.

Instead of explaining why Bitcoin isn’t compelling given all the flaws with the current system he’s just listed, he shifts over to the problems with Bitcoin.

Flaws

Bitcoin was born with serious flaws.

It was unregulated and provided anonymity, so it rapidly became a haven for drug dealers and anarchists.

This is one of many lines that reveals the author’s ignorance of Bitcoin. Bitcoin is not anonymous, but pseudonymous. This means that a user has an identity, but it isn’t necessarily attached to their real world identity. But Bitcoin also makes all transactions public to everyone. This makes using Bitcoin for illegal activity difficult since there’s a permanent record out there of your transaction.

Yes, drug dealers did use Bitcoin. Of course this isn’t a compelling reason to say that it has serious flaws: drug dealers primarily use cash, and the author isn’t calling cash “seriously flawed.” It is worth noting that the most prominent place that used Bitcoin for drugs (the Silk Road) was actually shut down by law enforcement years ago.

Lastly, pointing out that “anarchists” use Bitcoin is just a hand-wavy scare tactic. Who are these anarchists and what are they doing? Not all anarchists are violent bomb throwers. Maybe these anarchists just want to use their own money between themselves, peacefully? How does that reveal a flaw?

Its price fluctuated wildly, allowing for crazy speculation. And, with the majority of Bitcoin being owned by the small group that started promoting it, it has been compared to a Ponzi scheme.

Bitcoin isn’t a ponzi scheme by any stretch of the imagination. Ponzi schemes are fraud; there is no real investment taking place. Bitcoin is a real thing, used around the world constantly. Check out this chart of daily transactions if you don’t believe me.

Exchanges built on top of it also had severe security vulnerabilities.

This has nothing to do with the security of Bitcoin itself, but with the security of some companies and websites that dealt with Bitcoin. I typically don’t rely on these third-party services to hold my coins for me (I think that mostly defeats the purpose of Bitcoin) and I’ve never lost any of my Bitcoin as a result.

And then there were the venture capitalists who got carried away. Several of them purchased considerable coinage and then began to hype it as a powerful disruption that could underpin all manner of financial innovation, from mobile banking to borderless, instant money transfers. They also poured millions of dollars into Bitcoin start-ups hoping to reap even greater fortunes.

Saying that VCs got carried away is an opinion. Some believe that the entire tech sector has VCs going too far; I have no idea. So far the author hasn’t shown any reason to explain why these VCs shouldn’t be doing what VCs do, which is pouring money into new technology and hoping to reap greater fortunes.

I co-founded a company with VC money. It takes a long time to build new software. Many companies are still building their products with VC funds. Claiming that all these VCs will see no return is premature. No one knows yet.

Nightmarish reality

But Bitcoin was not ready for primetime. Hearn’s criticism has laid bare the nightmarish reality—a list of negatives that is both long and frightening.

Finally we’re going to get into the meat of the argument.

Chinese Bitcoin miners control more than 50 percent of the currency-creation capacity and are connected to the rest of the Bitcoin ecosystem through the Great Firewall of China. This slows down the entire system because, as Hearn explained, it is the equivalent of a bad hotel WiFi connection. It also gives the People’s Army a strategic vantage point over a global currency.

Only two claims in this part matter: 1) Chinese miners slow down the system, and 2) The People’s Army can control Bitcoin (gasp!).

It’s true that a large part of Bitcoin mining happens in China, but it’s unclear why that’s a bad thing apart from the scaremongering reference to the People’s Army. The Bitcoin system is functioning fine right now; Chinese Bitcoin miners are doing the same things as miners across the world. The network isn’t noticeably slower due to Chinese miners. And there’s zero evidence that the People’s Army is controlling these miners or doing anything nefarious at all.

Also, it’s important the remember that the author claimed at the beginning that the problems with Bitcoin are irreparable. Let’s assume for the sake of argument that China having the majority of Bitcoin miners is a problem: Is this irreparable?

Not at all. For one thing, the Bitcoin network isn’t static. If these Chinese miners did attempt to do something malicious then it would be noticed immediately and the rest of the network would take whatever action needed to prevent the attack. From that point on those miners would likely have a much smaller role in the network, or be banned outright. Also, there’s no reason to think that China will always have more miners then everyone else. Anyone can join the network anywhere in the world.

The Bitcoin distributed network can process only a handful of transactions per second. That causes unpredictable transaction-resolution times and other behaviors that one really does not want as part of a monetary system.

Transaction resolution times aren’t unpredictable unless you opt to pay no transaction fees. They are typically instant for transactions with fees included; only in rare cases do they take longer. Yes, the capacity of the network is fairly low at this point, but this is an artificial constraint which can be lifted (and is a heavy subject of debate). This is not irreparable. There are various different methods which people have proposed to increase transaction capacity on the network. Since we haven’t quite hit the upper limit at the moment, none of them have needed to be adopted yet, but they will be soon.

Bitcoin fees can, at peak times, exceed credit-card fees, for example.

I would really love to see his evidence for this claim. I’ve used Bitcoin for more than 3 years now, and I’ve never paid more than a few cents for a Bitcoin fee. Ever. This claim is likely a complete fabrication or cherry picking of the worst kind.

As if all this weren’t bad enough, the Bitcoin community appears to be engaged in open civil war. Its members have been censoring debates and attacking each other’s servers.

Again, we need to ask if this is irreparable. This isn’t a failing with the technology at all. It’s a human failing. Pointing out that people in the technology community aren’t playing nice together doesn’t mean the technology is a failure. I do hate the censorship of debates and DDoS attacks we’ve seen, but this is a result of people being so committed to Bitcoin that they want their own vision of it to win the day. In the long run technology projects don’t die because they have strong, vocal communities. That’s a positive sign.

A tiny committee of five core developers that controls the Bitcoin codebase has become the Star Chamber that guides the future of Bitcoin.

There’s a lot wrong with this statement.

I have a political science education so the Star Chamber reference intrigued me. I suppose he means that the core development team can act arbitrarily and in secret. So is it true that only five people can make arbitrary and secret decisions which guide the future of Bitcoin?

No, and this statement again proves that the author doesn’t understand what’s going on. Bitcoin is open source. This means that all the code is public and can be reviewed by anyone. All proposed changed are public and can be reviewed. There are no secrets.

And it’s not only five people who propose changes. There are hundreds of people who have contributed to Bitcoin core. Also, Bitcoin core isn’t the only game in town. Right now there’s an alternative Bitcoin client being developed called Bitcoin Classic which wouldn’t be maintained by the current core development team.

Again we need to ask is Bitcoin has been “damaged beyond repair.” The very fact that Bitcoin is open source means it is malleable enough to change when the community wants that to happen, and the Bitcoin Classic client shows that the community is willing to exercise this right.

This has been a severe blow to the reputation—and wallets—of VCs. Yet some of them are still staunchly defending Bitcoin.

There’s no evidence here that VCs have had their reputation or wallets harmed by this. This is simply an assertion by the author. Some still “staunchly defend” Bitcoin because – unlike the author – they understand that nothing about the fundamentals has changed.

It’s time to admit that the current Bitcoin needs to be scrapped and to take advantage of the innovations behind the technology that underlies Bitcoin, the blockchain. The blockchain is a transparent ledger of transactions—concurrently hosted on numerous computers around the world—allowing the creation of digital currencies and virtual banks. Implemented correctly, it will, I believe, prove to be a better transactional and verification model that we presently use for the global financial system and for many other types of activities such as voting, public registries, provenance of works of art, and real-estate transfers.

Here the author stops trying to be subtle about his technical ignorance around cryptocurrency and decides to display it proudly. This “blockchain without Bitcoin” idea is hardly new, but it only appeals to those who don’t understand how either works. You need Bitcoin – or an equivalent – for a blockchain to work. Since the Bitcoin blockchain is by far the most widely adopted and secure blockchain in existence, there’s a huge disadvantage to creating a new blockchain which uses NotBitcoins instead of using Bitcoin itself. If you like the blockchain then you like Bitcoin.

From Bitcoin’s failures, we have learnt how digital communities shouldn’t operate.

How? Don’t argue with each other? That’s hardly a useful admonition. Maybe in a hierarchical system where there is centralized control over a product this is possible, but we’re talking about an open source project with no barriers to entry other than an internet connection. You’re going to have discord and disagreement; it’s the wild wild west of the internet out there. That’s the price to pay for not having central control over your money. Completely worth it in my opinion.

We have seen how ledger systems can be hijacked.

Have we? When did this happen exactly? Who hijacked it? Is Bitcoin not working right now?

Nope, I just checked and the system is working fine. Exactly the same as a few days ago, before Mike Hearn left. Hijacked is a strong word to use without explaining what happened.

And we have seen the wastage in a mining system that consumed gigawatt–hours of electricity and spawned giant server farms in China solely to crunch numbers to “mine” Bitcoins.

This sounds like an old man lamenting the growth of social media online. “Those giant server farms up in Washington State using all that electricity just to let people share pictures of their lunch with each other.”

Bitcoin miners are validating transactions on the network and securing it against attack. I believe that having permissionless money that is nearly free to use and not controlled by any company or government is incredibly valuable and worth the energy expenditure.

We need to learn from successful open-source technology projects such as the Linux Foundation, which is thriving largely because it has proven its worth as a neutral body to govern all manner of open-source projects that grew too big for small groups to manage in a casual manner.

Again, this implies that Bitcoin cannot move to this model, but the author gives no reason to think it cannot.

We also need to rethink aspects of the blockchain, along the lines that Hearn and Bitcoin loyalists have suggested.

“Rethink aspects of the blockchain” is code for “I’m pretending I know how the blockchain works and how it can be improved” because he gives zero specifics here. What suggestions is he referring to?

Let’s also bear in mind what it is that makes some venture capitalists Bitcoin zealots: pure greed. That is the reason clearest to me for Bitcoin’s failure.

I hope I’ve established here that the author has made no case at all for Bitcoin’s failure. The defection of a single member in a huge global community is practically a non-event. The technical aspects of Bitcoin – which the author (thankfully) only touches on briefly in the entire article – are completely unchanged. More people are using Bitcoin now than they were last year, and more than the year before, etc. These growing pains are where the divisions in the community are coming from. It’s hardly compelling to be claiming that “Bitcoin is a failure because it’s grown large enough that decisions aren’t made easily anymore.”

It’s also wrong to claim that most people in Bitcoin are in it for the money. I’ve been involved in this community for more than three years now. Most people I know that are most passionate about Bitcoin are excited because it is a technology that empowers individuals to take control of their own money. We don’t have to be reliant on central banks or traditional banks anymore; that’s something worth fighting for.

Intended as a level playing field and a more efficient transaction system, the Bitcoin system has deteriorated into a fight between interested parties over a pool of money.

Over what pool of money? Bitcoin itself? Everyone in the space knows that fighting isn’t the way to make Bitcoin more valuable. They fight because they believe in different core visions of what Bitcoin should be, not because they are fighting over how to make it more valuable.

In the beginning, Bitcoin was a noble experiment. Now, it is a distraction. It’s time to build more rational, transparent, robust, accountable systems of governance to pave the way to a more prosperous future for everyone.

Since the author hasn’t proposed any alternative to Bitcoin other than an impressive string of adjectives, it’s not clear what Bitcoin is distracting us from. This is practically the definition of the Nirvana Fallacy; A better digital money could be built therefore Bitcoin is bad.

That’s not how this works. Building new technologies is hard to do under the best of circumstances, but building them in a transparent way with a global community is much harder. It doesn’t mean it’s not worth doing.

You know what isn’t hard? Writing an article which dismisses a technology you know very little about. Anyone can do that. It doesn’t mean it is worth doing.

CISA Passage Proves Need for Combination of Encryption and Peer to Peer Networks

The US federal government passed a massive $1.15 Trillion piece of legislation today. Inside was the controversial Cybersecurity Information Sharing Act (CISA), which has failed to pass on its own merits previously. For those who care about privacy or their constitutional rights, it was a major defeat.

After CISA passage, Bitcoin advocate Andreas Antonopoulos took to Twitter to give his advice:

Andreas is right; the political process cannot be trusted and we should focus on how to protect ourselves with technology. But he doesn’t go quite far enough in his recommendations. The response to CISA – and the entire surveillance apparatus – should be two-fold. Encrypting our personal, financial, and commercial communications and moving them onto peer to peer platforms.

The benefits of encryption are obvious. If done properly, then anyone viewing the traffic over the network will be unable to decrypt it and read the contents. This should be default for all traffic online, and is slowly becoming so.

But encryption doesn’t hide metadata, which gives those watching nearly as much information as the plain text of the communication would anyway. It also does little to prevent companies from sharing your data with government agencies. If the information over the wire is encrypted, but then freely given to a company who gives it to the government, then encryption has done you no good at all.

One of CISA’s worst aspects was how they give immunity to companies who hand over their data to the government. As Ars Technica reports:

The CISA part of the spending package gives corporate America legal immunity when sharing consumers’ private data about hacks and digital breaches with the Department of Homeland Security. The DHS can then funnel that information to other agencies, including the NSA and FBI, which can use that information for surveillance purposes.

This poses such a threat to privacy because companies have a huge amount of personal information in their databases that intelligence agencies would love them to share. Now those companies can share it without fear of any legal repercussions.

Encrypting traffic doesn’t solve this problem. However, there is something we can do: Encrypt our personal, financial, and commercial communications and move them onto peer to peer platforms.

Moving our activities onto peer to peer platforms means there is no central organization collecting data about users, and there is no central organization to hand any data over to government agencies. It means that metadata is often more difficult to ascertain. Most peer to peer networks allow for pseudonymity, making connecting activity to identity more time and resource consuming.

I don’t mean to suggest that peer to peer platforms are a panacea. They can still be monitored. More importantly, they are still young and in development. It would be difficult for the average person to move the majority of their activity onto such platforms. But for those among us who value privacy and understand technology, using them – and hopefully helping to build them – is a valuable investment of time. Let me give two examples.

Bitcoin

Bitcoin is a peer to peer network for exchanging value. It’s not perfectly private; all transactions are visible on a public ledger. However, it gives users much more privacy and control over their own money than using the traditional banking system. The information around a credit card purchase is directly tied to your identity, to the identity of the place you made the purchase, the item you bought, etc. The information around a Bitcoin transaction doesn’t include either users’ identity or location, or details around the transaction itself. While it’s sometimes possible to discover those details out by analyzing the public ledger of past transactions, it’s not a simple process if the user is careful about their privacy.

OpenBazaar

OpenBazaar is a peer to peer network for trade, using Bitcoin. I’ve been working on the project with an international community of supporters since mid-2014, and it’s nearing release now.

OpenBazaar isn’t a darknet market, so its main appeal for privacy isn’t based on using IP obfuscation techniques. Instead, it eliminates the middlemen from trade online, along with their massive databases of personal information. Because trade is peer to peer, you only share your information with people you engage in trade with, and only the information you want. No central organization is collecting the data of all users on the platform. The transactions between users is done directly between them, and it’s encrypted. Chat messaging is peer to peer and end to end encrypted as well. Users wanting more privacy can access the network behind a VPN.

There are other examples; Bitmessage or Tox for communications, Bittorrent for data sharing, various other cryptocurrencies and a handful of peer to peer marketplaces.

Conclusion

CISA’s legal immunity for businesses has no power over Bitcoin, OpenBazaar, or other peer to peer platforms; there’s no one to give them data. The more we encrypt our data and move our activities onto peer to peer platforms, the less information is centralized and collected by the surveillance state. Encryption and decentralization go hand in hand.

Breakdown of Hardware Costs for New 21 Inc Bitcoin Computer

21 Inc announced today their new Bitcoin Computer, which was met with some skepticism by the Bitcoin community. The computer is essentially a Raspberry Pi 2 with a miniature Bitcoin miner, and comes with the blockchain and their own custom operating system. The current price is $399.

In this post I’m breaking down the hardware costs of what is included in 21’s Bitcoin computer.

According to the Amazon listing the Bitcoin Computer comes with everything needed to use it right out of the box. I’ll list each component, and then list a similar component I found along with it’s price. Please note that I didn’t search extensively for the lowest price, nor did I take quality of components into account. The Bitcoin Computer may have better or worse components than what I’ve included.

Here is a photo of what comes with the Bitcoin computer.

1. Raspberry Pi 2: $35
2. 128 GB memory card: $75.95
3. Raspberry Pi B+ Power Supply: $6.99
4. Raspberry Pi WIFI Adapter: $8.56
5. Raspberry Pi Cooling Fan: $7.99
6. USB to TTL Serial Cable: $9.95
7. Heat sink: $10
8. 125 gh/s USB miner: $93

Also note that according to the 21 Inc technical specs, the miner can process between 50-125Gh/s so I took the higher end. (I also did little shopping around for the best deal on comparative cost of mining equipment so if anyone knows better deals let me know and I’ll update.)

The total cost of these components is $247.44, meaning you could save $151.56 if you built the Bitcoin Computer yourself (again, your own build might be a substantially inferior product).

However, this ignores the value of the OS, which comes with tools that are supposed to make using Bitcoin easier, including tools that allow developers to sell digital content directly for Bitcoin. It’s yet to be seen if developers will find those tools valuable enough to pay for them.

Interesting Facts About my Father

DadHead

My father, George Wesley Patterson, died on May 23th. He was 55; it was a heart attack and a complete shock.

This post contains no pearls of wisdom after reflecting on his life, nor deep introspection on my part. It’s not about life lessons or how you can be a better person. It’s just about my dad.

He was born in Washington D.C. while my Grandmother was in the area with family. My dad loved to tell people that he was born in the United States, but not in one of the states, and make them guess where. Surprisingly few guessed correctly.

He grew up in North Carolina, and briefly lived in Virginia as well. His first job was helping in the tobacco fields – which made him violently ill for the first few days – but he quickly moved into positions of responsibility.

Interesting fact #1: My father drove a school bus at 16 years old.

Apparently in the mid 1970s in North Carolina, they had no problem with 16 year olds driving a school bus, because my father did it for a whole school year. It was a very poor choice on their part, since he admits to driving a school bus just as you’d expect a 16 year old to do so. My favorite story demonstrated this. After getting accustomed to his route, he took notice of one particularly long stretch of road. A question formed in his mind every time he drove past: How long could the bus go straight down that road without him touching the steering wheel? He began experimenting, a little longer each day (don’t worry, he assured me this was on the way back after dropping off the children), until he felt confident to take his experiment to the next level. One day, he let go of the wheel, ran down the aisle, touched the back of the bus, and ran back just in time to save the bus from a ditch. He wasn’t proud of that story – well, no, actually he was. He definitely was.

His father worked in the textile industry around Danville, VA. He didn’t want my father to go into his own profession – for various reasons including turmoil over unionization and an industry moving overseas – so my father instead chose the military.

Interesting fact #2: My father loved flying, and wanted to go into the Air Force.

Unfortunately for him, at 6’2″ and with glasses, he wouldn’t have been able to be a pilot. He chose the Navy instead. They barely took him; he had to eat bananas and drink lots of water in order to make the minimum weight requirement. For his height, he hit the minimum weight requirement exactly at 143 lbs. He later tried pursuing his pilot’s license, and got a decent number of hours, but the expense and time commitment prevented him from finishing it. He did give me the gift of a flying lesson (as a surprise!) on my 19th birthday, and I think he enjoyed seeing me crammed into a small two-seater more than I enjoyed piloting it.

My father was only in the Navy for about two years, and met my mother while stationed in Florida.

Interesting fact #3: My father was kicked out of the Navy.

It was an honorable discharge, because he was one of the top students in his nuclear training facility and also didn’t do anything too disorderly. His crime was not wanting to be deployed so that he could marry my mother. The Navy refused to change his deployment, and he didn’t take that well. The Navy had a specialist evaluate him, declared he had “immature personality disorder,” and discharged him. He worked lots of jobs before finding a career in the nuclear power industry, and moving up the ranks over several decades. He also taught a business philosophy / psychology program (called Pacific Institute) to thousands of people around the country.

Interesting fact #4: My father was uneducated and self-conscious about his lack of education.

This might be surprising to people that worked with my father, not because he was an academic – he wasn’t – but he did became a very important and influential person in his industry, and nearly all his colleagues at least had college degrees. In fact, he even taught classrooms full of college professors the Pacific Institute material – something that he frequently found humor in. “The dumb ole’ country boy” (as his mother-in-law called him endearingly) was teaching professors and managers who operated nuclear power plants. Behind his self-effacing humor though, he wasn’t comfortable with not having a degree. He often said that if he had a degree, he’d be running a nuclear plant, but he literally couldn’t even apply to those positions, since they would then find out he didn’t have an education. My brother Steven and I, who were some of the first Patterson men to obtain college degrees, tried to express how generally useless we felt our own educations were, but he firmly rejected that argument. He was very proud of us; envious even.

He wasn’t in the nuclear industry for his entire post-Navy career though. In the mid 1980’s, when I was a baby, he left his job at the Shearon Harris nuclear power plant in North Carolina in order to purchase and operate a soda vending machine company called Triangle Fountain.

Interesting fact #5: My father loved being an entrepreneur and nearly left his family to pursue his business.

He poured himself into Triangle Fountain. He had plans to take on the major distributors in the region, and began to do so single-handedly. It was the single-handed nature of his endeavor that soon led my mother – who had three young children at the time – to deliver him an ultimatum. Either he leave his new business and start raising his family properly, or he keep the business and divorce her. My siblings and I are eternally grateful to my father for selling the company and choosing to be more involved in our lives, but it wasn’t a simple decision for him. He later told me that he was ashamed how long it took him to make the right decision. His desire to build his own business was incredibly strong; in fact it nearly killed him.

Interesting fact #6: My father drove into a telephone pole driving back from a confectioner’s convention.

Always looking for a way to own his own business again, my father took an interest in candy in the late 90s. He was a devout Christian and wanted to create a line of hard candy (chocolate was too difficult because of refrigeration) that contained biblical messages. In order to learn more about the business, he drove himself to visit a confectioner’s convention, and drove back home himself the same night. He fell asleep at the wheel, and drive into a telephone pole, nearly tearing the entire passenger side off of his beloved Suburban. He often told me how much that scared him – not because of the accident, but because he hit a couple mailboxes before the pole. “What if someone had been checking their mail?” He never got into the candy business. But he always did have big plans.

Interesting fact #7: My father, had he lived long enough, would have introduced teff grain to mainstream America.

Teff is a grain from Africa. If you’ve ever had Ethiopian food, you’ve eaten teff. It’s the most nutritious grain in the world, but also the smallest, which makes harvesting it difficult. Because of that difficulty, it never became popular in America with farmers, nor the general public. My father was going to change all that.

On my father’s mother’s side of the family is a farm which has been in the family since the 1850s. It was originally a tobacco farm, as nearly all farms in that area of Southern Virginia were. Before she passed away in 2013 from cancer, my mother had wanted to live on that farm with my father, and they began the process of purchasing it from his mother and her siblings. My mother died before it was purchased. Dad struggled for months about whether or not he should go through with buying the farm now; it was always their joint vision to live there. In the end, he did buy it, for two reasons. One, he felt like it would become the Patterson family hub, and he wanted a place for everyone to visit. Two, he wanted to get the farm back into production in order to make an income from the land enough to feel comfortable in retirement.

After much research, he settled on teff as the crop he would grow on the farm. This wasn’t just a fleeting idea either; he grew teff on a test plot in the fall of 2014, and it grew very well. He began working with university professors from several Virginia schools to do test programs using his land. The last photograph I took of my father was him in one of his fields along with one of the university professors. They had spent the past hour talking about teff, and how excited they both were to introduce this grain to everyday Americans.

IMAG0150

These facts are only a handful that I chose to highlight, but there are many more. Some are funny, like the fact that my father hated dimes and refused to carry them, feeling that all change should increase in size as it increases in value. Some aren’t funny, like the fact that my father thought he had a brain aneurysm but hid this from us all for more than a year. Many revolve around his future plans, which were never in short supply; he planned on buying a used bus and converting it into travelling ministry, complete with extendable screen to make a mobile drive in theater to spread the word more effectively.

My father was an interesting man, and I’ll miss him terribly.

Line by Line Response to MasterCard’s Matthew Driver

Mr. Driver,

In only a few hours you’ve seen an overwhelmingly negative response to your December 3rd video entitled Perspectives: Matthew Driver “Trust Is A Critical Component” on YouTube.

I trust that as President, South East Asia, for MasterCard Worldwide, you’re curious to know why this video has been so poorly received. It would be simple to dismiss the response to this video as a reaction from a passionate – often called rabid – group of Bitcoin defenders, who will loudly object to anyone who opposes their precious digital currency. To do so would be a mistake. The negative reaction is due, in large part, to you making inaccurate statements about Bitcoin, and also for making claims that are remarkably out of tune with the younger generation of internet users that you presumably want as customers.

I’m going to explain this line by line, on the off-chance that you genuinely are interested in hearing feedback from someone who is knowledgeable about Bitcoin and its community of users.

Video transcript and comments

Today we are seeing a huge change in payment technology, whether it’s digital convergence or cryptocurrencies.

Agreed.

There’s a huge opportunity in Asia, so it’s very important for us to look and understand what are the real benefits that are being put into the system by these new technologies.

Your interest is understandably in Asia. I would note here that cryptocurrencies are not restricted to any geographic area.

If you are a consumer or a merchant, a government, even a financial services provider, what’s really critical is that what you’re putting into the marketplace is solving a need for a customer and is trusted.

Here is where your first fundamental misunderstanding of Bitcoin is revealed. Your criteria for a successful product are something that solves the needs of customers (no disagreement there) and something that is trusted. The financial system prior to Bitcoin did indeed run primarily on trust, but this was a bug, not a feature. In fact, the entire reason that Bitcoin was created was in order to use a trustless system. As Satoshi Nakamoto, the creator of Bitcoin, said in the first sentence of the introduction to his original paper:

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.

In case this isn’t clear enough, the first sentence of the conclusion states, “We have proposed a system for electronic transactions without relying on trust.” Bitcoin is entirely about having an alternative to the model of trusting third parties, such as MasterCard, and instead trusting in cryptography.

You continue:

Trust and security, a stable form of value are incredibly critical if you’re going to be able to get acceptance for the services that you’re looking to provide.

Trust we’ve already discussed. Security is another thing entirely. As you’re well aware, services such as MasterCard are “pull transactions,” meaning that consumers give access to vendors to pull funds from their account. This system is inherently insecure; it leads to massive databases of credit card numbers which incentivizes criminals to break into those systems and steal that information. Home Depot and Target alone were many tens of millions of cards stolen. I’m sure several million were MasterCard.

There’s a far more secure system available. It uses “push transactions” meaning that the consumer does not give access to the vendor to pull funds from their account, but instead they push the amount to the vendor. This means there are no massive databases of numbers to steal, and no one has access to the funds except the user themselves. Bitcoin isn’t an insecure pull transaction system like MasterCard, it is a secure push transaction system.

The challenge with cryptocurrencies like bitcoin is that they’re unstable in terms of their intrinsic value, they don’t offer perhaps the recourse that consumers are naturally expecting that comes from using cash in the day-to-day, and they’re also there to serve a purpose that’s not necessarily completely clear.

You lay out three challenges with cryptocurrencies:

 

  • They’re unstable in terms of their intrinsic value.
  • They don’t offer the recourse that consumers are naturally expecting from using cash.
  • They serve a purpose that’s not completely clear.

 

 

1. This is disappointing coming from a man who was educated at Columbia and the London Business School. Intrinsic value doesn’t exist. A piece of paper, plastic, or even gold only have value due to the belief that other people will agree they have value. Entries in a digital ledger are no different. It is true that bitcoins have a volatile price, but it is set by market forces, meaning that regardless of your dislike of Bitcoin, others find it valuable and give it a price.

2. Strange argument; what recourse does a user have when they spend cash? Unlike Bitcoin, cash has no permanent record of a transaction having taken place, nor is there any way to prove ownership over cash in the past. Bitcoin has far more recourse than using cash, and the same systems that people use for settling disputes with cash (receipts, courts) are also available to Bitcoin users.

3. Bitcoin’s purpose is entirely clear. I’ll quote Satoshi Nakamoto a second time, filling in some details to make it easier to understand:

“We have proposed a system for electronic transactions without relying on [trusted third parties such as MasterCard, PayPal, Bank of America, JP Morgan or the Federal Reserve].”

Is that a clear enough purpose?

Let me give you an example: bitcoin and a lot of concerns related to bitcoin are because they are looking to guarantee anonymity, essentially electronic cash if you will.

Bitcoin doesn’t guarantee anonymity. Every Bitcoin transaction is recorded permanently in the public ledger called the blockchain. It’s simple to think about Bitcoin as electronic cash, but it’s not as anonymous as cash, or pre-paid MasterCards purchased with cash.

And what Mastercard is critically looking at is: how can we move to this world beyond cash, how do we actually use electronic payments to combat the inefficiencies of cash and really create a more transparent and inclusive financial system.

Bitcoin isn’t cash. Bitcoin is an electronic payment system. Simply calling Bitcoin electronic cash doesn’t mean you can then disregard is as sharing the same inefficiencies as cash. What’s more similar to cash: an electronic payment system that relies on a cryptographically secured public ledger that isn’t controlled by any organization and has no physical representation, or an electronic payment system that is reliant on a monetary system controlled by a single organization and is used by accessing a piece of plastic in your wallet (instead of a piece of paper)?

You mentioned transparency. The blockchain is perhaps the most transparent financial instrument in history. An organization that uses Bitcoin could literally have every single aspect of their finances transparent. Are you willing to submit MasterCard to that level of transparency?

Lastly, you mention an “inclusive financial system,” which is interesting coming from a credit card company. MasterCard’s rules for merchants are right here – please be warned Matthew, that’s a 274 page pdf, you might not want to download it. I was going to post the table of contents for illustrative purposes, but they were 13 pages long, so here’s a single chapter:

Chapter 3 Customer Obligations
This chapter contains Rules relating to Customer obligations.
3.1 Obligation to Issue MasterCard Cards Transactions
3.3 Transaction Requirements
3.4 Authorization Service
3.5 Non-discrimination—POS Transactions
3.6 Non-discrimination—ATM and PIN-based In-Branch Terminal Transactions
3.7 Integrity of Brand and Network
3.8 Fees, Assessments, and Other Payment Obligations
3.8.1 Taxes and Other Charges
3.8.2 Maestro and Cirrus Card Fees and Reporting Procedures
3.9 Obligation of Customer to Provide Information
3.10 Confidential Information of Customers
3.11 Use of Corporation Information by a Customer
3.12 Confidential Information of the Corporation and the Corporation’s Affiliates
3.13 Data Protection—Europe Region Only
3.14 Quarterly MasterCard Report (QMR)
3.14.1 Report Not Received
3.14.2 Erroneous or Incomplete Report
3.14.3 Overpayment Claim
3.15 Cooperation

I’m not sure that merchants in developing countries will consider this an inclusive system. Bitcoin only needs an internet connection. It’s free.

If you really want to do that, it’s quite hard to understand what the appeal is of a cryptocurrency, when that currency is really essentially electronifying cash.

It’s not about “electronifying” cash. It’s about having an electronic payment system that isn’t controlled by any organization.

It seems to be pretty inefficient.

It’s not. This is an inefficient system.

Innovation in payments and frankly any industry is critically important to maintaining a healthy competitive environment and driving improvements and experiences for consumers and businesses.

Bitcoin is a fundamental innovation in both the computer science field and in the monetary space. Does MasterCard claim to be innovative? You’ve been using the same “priceless” ad campaign since 1997. Perhaps your innovation is in suing people for making parodies?

Innovation is something critically important to what MasterCard does and MasterCard is particularly focused on ensuring that we’re delivering safe, simple, smart solutions to consumers.

I’ll have to take your word for it, I’m a Bitcoin and Visa user myself.

When we look at the markets across the world, 85% of the world’s retail transaction are cash, so what we’re trying to ensure is that we are building compelling, interesting, secure and convenient payment solutions that encourage merchants, consumers, governments and other participants in the financial system to move to adopt electronic payments.

Let’s ask Vib Prasad, head of MasterPass Global, for his opinion on electronic payments:

I’m going to kid myself and think I’m going to have millions of people download a MasterPass app,” Vib Prasad, head of MasterPass Global, told Mobile Payments Today in a recent interview. “Fundamentally what MasterCard has really been successful at is enabling partners to help embed the MasterCard brand into their own experiences, and we’re doing the same thing with digital.

“If it’s a mobile banking app, we want to be integrated into it. If it’s a merchant’s shopping app, we want to be integrated into it. It’s less about creating something new.”

Well, that doesn’t sound innovative at all.

Vib and Matthew, you know what electronic payment system has millions of users downloading apps and programs on their smartphones and laptops? Bitcoin.

With a big increase in Internet traffic, convergence with mobile and everything digital, there’s huge interest in cryptocurrencies and what perhaps they can create in the marketplace.

Yes, the numbers above highlight just how huge this interest is. Interestingly, even though you admit there is a huge interest in cryptocurrencies, you never give an answer to why this is. Since you are so quick to point out the faults, do you believe you are uniquely capable to see its faults and millions of people are all being hoodwinked?

Now we at Mastercard are not completely comfortable with the idea of cryptocurrencies, largely because they go against the whole principle that we’ve established our business on which is really moving to a world beyond cash and ensuring greater transparency and security and simplicity in the way people live their lives.

Your entire anti-bitcoin argument rests on the fact that Bitcoin is cash, and therefore MasterCard is better. As I’ve explained already, Bitcoin isn’t cash. Surely you can see how a digital currency is necessarily an electronic payment system?

Greater transparency is a ridiculous claim, as I’ve mentioned. Same with security.

If you think about it, cash is a problem for a number of countries.

Many people have thought about it, which is why they propose an electronic payment system. You can use centralized electronic payment systems that censor your transactions, charge fees, and need a 274 page manual to understand. Or you can use an electronic payment system that is censorship-resistant, nearly free to use, and requires no applications to file or manuals to read.

Cash really facilitates anonymity, it facilitates illegal activity, it facilitates tax avoidance and a range of other things that aren’t going to drive an efficiency in an economy.

We get it, you don’t like cash. Also, I’m not sure what you mean by “efficiency in an economy,” but having people use their medium of exchange however they see fit is more likely to lead to an efficient economy than locking them out of actions they want to take.

Trust is a critical component of any payment system, so if you think about the idea that all of a sudden you’re having cryptocurrencies being manufactured if you like on an anonymous computer, in an anonymous location, it’s completely legitimate to have some concerns about how that might be working.

Actually, these concerns are completely illegitimate, and here’s why: it doesn’t matter where the bitcoins are being “manufactured,” they end up in the system all the same. Just like printed cash or gold, the end-user doesn’t care where it came from. Also, you seem to believe that simply asserting that bitcoins are being mined anonymously is enough to “have some concerns.” Why would an anonymously created bitcoin be any different from a bitcoin created by an identifiable person? The system is regulated by math, and those bitcoins are identical to an algorithm.

What a regulator wants to do is ensure that there is a fully compliant root to the transaction.

I’m sure that you place a strong emphasis on making regulators happy. I don’t personally care if regulators are happy, and if they have a “fully compliant root” or not. Guess what? Neither do your customers, except when they face fines or punishment from you or the government.

That they understand who is making a transaction, who that payment is being made to and that they have a suitable record, so that they can ensure that there’s prudential control over the system.

The fact that you actually used the line “prudential control over the system” as something positive to strive towards is exactly why Bitcoin exists and is growing in popularity. People don’t want you and government bureaucrats to have this level of control over their own finances and trade. Prudential control be damned.

If it’s an anonymous transaction, that sounds like a suspicious transaction. Why does somebody need to be anonymous?

There are many ways to respond to this, but I’ll just quote a headline:

Mastercard under fire for tracking customer credit card purchases to sell to advertisers

I prefer anonymous transactions so that companies don’t track my purchases and sell my information to advertisers. Given your company’s track record, I’m not surprised you don’t understand this.

I certainly don’t want anybody mining technology or mining financial services away from my control, particularly if they’re gonna represent something for me.

We understand. You like control. Enjoy it while it lasts.

Cheers,

Sam Patterson

Three Reasons the BitLicense Regulations Wouldn’t Have Prevented the Mt. Gox Collapse

Ben Lawsky, Superintendent of Financial Services at the New York State Department of Financial Services, recently took to Reddit to reveal his new BitLicense regulatory scheme. He explains his justification below:

We recognize that not everyone in the virtual currency community will be pleased about the prospect of a new regulatory framework. Ultimately, though, we believe that setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets. (We think the situation at Mt. Gox, for example, made that very clear.)

The failure of Mt. Gox is the primary example that regulators, and proponents of regulation, point to in order to show why we need state restrictions on Bitcoin businesses.

This claim is misleading. The proposed BitLicense regulatory scheme wouldn’t have prevented the Mt. Gox collapse, for three reasons.

1. Mt. Gox isn’t in New York State, or the United States.

The intended goal of proposing regulations on Bitcoin businesses in New York State is to force companies who have customers in New York to comply with these regulations, and to put pressure on other legal jurisdictions to create their own regulations. However, there are many reasons why Mt. Gox (or other foreign Bitcoin companies) may have simply ignored the new regulations. New York State certainly does have a lot of sway in the finance and banking industries, but their word is not binding in all legal jurisdictions and they cannot claim that their regulations will protect consumers in foreign countries.

2. Regulated companies also fail.

Bernard L. Madoff Investment Securities LLC was a Wall Street firm. They defrauded customers of more than ten billion dollars, which is more than the entire market cap of Bitcoin at the moment. Maddoff’s firm was regulated, and even investigated by the regulatory agencies, and it still got away with massive fraud. There’s no guarantee that regulation inherently protects consumers. It can have the opposite effect, causing customers to not to their due diligence because they instead trust the regulatory agencies (the 2008 financial crisis shows this trust is often misplaced).

3. Mt. Gox wouldn’t have existed under a strict regulatory scheme.

If Mt. Gox did feel compelled to adhere to a BitLicense scheme from the beginning, it almost certainly wouldn’t have existed at all. The compliance costs for a startup are simply too great, particularly in an infant industry like Bitcoin.

In this sense, Lawsky might be technically correct in saying that the BitLicense might protect customers in some cases. In a similar fashion, I could eliminate credit card fraud overnight by shutting down all the credit card companies.

Yes, the Mt. Gox collapse was terrible, but we shouldn’t overlook the years that Mt. Gox provided a valuable service to the Bitcoin community. All of that early trading wouldn’t have occurred, and the path to wider Bitcoin acceptance is uncertain.

The BitLicense could completely strangle Bitcoin startups in the US, meaning customers won’t see new services at all. This will undoubtedly prevent some future failures, but only by assuring there are no future successes.

Ancient Game Now in a Blockchain: The Story of CryptGo

Cryptocurrency advocates are often quick to point out that the technological innovation of the blockchain isn’t only useful for handling a currency. Much discussion revolves around how blockchains will be used eventually, but so far only a few projects (such as Namecoin) use a blockchain with something other than currency as the primary purpose.

I happened to find such a project recently. It uses a blockchain to allow users to play a popular board game peer-to-peer. The project is only a few days old, and very rough, but as a proof of concept I found it worthy of documenting. I’ve also interviewed the author to understand more about the project.

Board game and Blockchain?

I stumbled across the project a few days ago on reddit with the headline:

Boardgame “go” inside of a cryptocurrency. Moves are transactions which miners verify. Small python program, fast to install.

I happen to enjoy playing Go, also known as wéiqí, igo, or baduk. If you’re not familiar with the game, you should check it out. It’s older than chess, and extremely popular in east Asia.

My favorite board game merged with a cryptocurrency? I couldn’t resist, so I visited the Github repository. It was a brand new project, with one contributor, Zack-Bitcoin, the creator who had posted on reddit.

I checked out the code, and it seemed legitimate, if a bit haphazard. I cloned it, and with a bit of help from other redditors, eventually got it running. It runs by downloading the blockchain, which is a history of moves played in the game, and by running a gui that is accessible by pointing localhost at port 8090.

It didn’t work at first. There is a cost associated with playing a game, and a cryptocurrency that needs to be mined to facilitate the games. It appeared that there were only three people who had installed the new project, myself, Zach-Bitcoin, and another redditor named Archer. Sending the coins needed to play the game wasn’t built into the interface yet! To get around that, the creator made the default wallet accessible to myself and Archer to get us started (he needed testers badly).

It worked! I sent along my public address to Archer, and we started the first game.

Gameplay

Here’s what the interface looked like.

Blockchain Go

I played black. My opponent was new to Go, and as we played we chatted and I gave pointers (on a separate interface, it doesn’t support chat).

The gameplay was very crude. You clicked to place your stone, which sent the move into the blockchain. Since the game continually monitors the blockchain, the gameplay can take place fairly quickly, but the interface didn’t automatically display my opponents moves. I had to click refresh each time, which got annoying. There was also no counter to display captured stones, nor to indicate whose turn it was.

By using the chat, Archer and I were able to make it through an entire game. Here’s the result of our game.

CryptGo4

If you’re familiar with Go, you know that selecting dead groups and counting territory is in integral part of the endgame. Archer and I couldn’t figure out how to end the game and determine the count. We could have done it manually, but didn’t bother since it wasn’t a close game. We had to wait for the 5 minute timer to expire, and me to hit “Win game,” which appeared to be intended for people who abandoned gameplay.

The result was anticlimactic, when we refreshed it said “The game does not exist,” not giving a count or even mentioning that I’d won.

It was clear that this was the very beginning of the project, which needed significant work if it were going to be useful for playing Go. I later learned that our game was one of the first ever played with the program.

Archer and I had found many bugs and had lots of suggestions for improvement, so I contacted the creator, Zack, to let him know. He’s tried making some of the changes, and the project was on hold for a day until some of the bigger bugs were worked out.

He appreciated the help and suggestions, and we struck up a conversation. I offered up the name CryptGo for the project, which he liked and adopted.

Interview with Zack-Bitcoin

By this point, I felt the project was worth writing about, so I asked Zack if I could send him along a few questions, which he kindly agreed to and answered.

Are you a student? What’s your occupation? How did you learn programming?

I was a student studying Physics at UCSB. I was one of the top physicists in my class, in my third year, when I dropped out to work on this project. I have enjoyed making small mathematical programs since I was 13 or so. I fixated on finding prime numbers, and other such problems.

Where did you get the idea for this program? Why create it?

DAC=Distributed Autonomous Corporations are beautiful to me. I love the lack of hierarchy. Most people think that cryptocurrencies can only be used for money, but really, distributed computers can compute anything that a normal computer can compute. I want to build big DACs which will replace our governments, schools, businesses, etc.

Whenever possible, I prefer making fun things rather than non-fun things. As cool as bitcoin is, it is not fun.

Are you aware of any other blockchain based games? How long did it take to create?

I heard about huntercoin, but have not looked at it. I have spent a little under 2 months working on CryptGo so far. What is unique about CryptGo, is that it is written completely from scratch. Almost every other altcoin is a copy of bitcoin.


How many people have been played so far / how many games completed?

3 games have been played. You vs Archer. Me vs Archer, and my dorm-mate vs me.


Where do you hope CryptGo ends up? Do you see the blockchain setup being used for more games in the future?

I have immediate plans to put the game amiraa into a blockchain. There is a turned-based videogame called “civilization”. the most recent version is “Civ V”. I think that I could build something similar into a blockchain. I would love to do poker, but I think it might be impossible.

I see blockchains being used for lots of purposes in the future. I see them replacing all email, social networking, gambling, datastorage… I think that blockchains will be used for all cases of homesteading, and for determining property rights of land, and objects. I think that blockchains will replace armies for national defense, because a blockchain-based assassination market will be created.

I want to change places like Las Vegas and Washington DC into useless relics. I hope that blockchains will cause every instance of management, or hierarchy, to become so extremely non-optimal, that people will adapt away from those modes of existence.

Any other projects you’re working on?

I am currently working on a reddit clone blockchain. It is being called “NEWScoin” right now.

Any general thoughts or questions I’ve missed?

CryptoGo is written in the functional style of coding. Most people talk about “object oriented” coding today. Functional coding is a very un-popular alternative to object oriented. Functional coding is nice, because the best functional coders are able to write more than 10 times faster than the best object oriented coders. It is the only reason I was able to write a cryptocurrency in 2 months. I learned from this book.

I am an agorist, which is a type of anarchist or voluntaryist. We believe that actions like voting do not make the world any better. We think that the current system is too broken to fix from within.

Agorists think that a person who works a government regulated job is unable to understand how anarchy could work. Mark Twain explains the phenomenon well.
Agorists think that building up the black market, and giving people opportunities for non-regulated jobs, is the best way to improve the world. Every additional person working a black market job is one more person who can think about anarchy rationally.

I am interested in DACs because I think this is the easiest way for me to create legal black-market jobs.

I want my children to grow up in a better world than the one that I grew up in.

Novelty or New Direction?

It’s clear that CryptGo isn’t ready for the limelight. If there is a demand at all for this type of project, it would need a larger development team and a whole lot more testing and building. As I post this Zack is trying to work out a way to fix problems with forking and mining, and the roll-out hasn’t been smooth.

It’s unclear that there are enough Go players who are unsatisfied with their current online play that they would use something like this.

Regardless of the slim possibility that CryptGo will be widely adopted, projects like CryptGo (and another blockchain game, Huntercoin) are worth watching.

Zach’s vision of a world where blockchain technology eliminates hierarchies seems unrealistic. But the fact that a relatively inexperienced programmer created this project himself in a short period of time proves that the experimentation with blockchain technology has very low barriers to entry. If blockchain projects receive even a fraction of the effort that is dedicated to the app economy, who knows what new projects we might see?

A Response to Senator Manchin’s Call to Ban Bitcoin

Today, Senator Joe Manchin (D-W.Va.) asked federal regulators to ban Bitcoin. His full remarks can be found here. This is a response to Senator Manchin and his staff.

 

Dear Senator Manchin,

I’m writing in response to your recent call to prohibit the use of the digital currency Bitcoin.

It’s understandable that you would be concerned about the impacts that this new technology would have. Since Bitcoin is so unlike existing monetary systems, it’s natural to focus on the threats it poses. However, doing so ignores the potential benefits of a decentralized digital currency.

How should policymakers such as yourself determine the best path to balancing the threats and benefits of Bitcoin? The first step is for you and your staff to learn as much as possible. I’m sure that you feel confident you’ve gathered the appropriate amount of knowledge before publicly calling for a prohibition on Bitcoin. I’m reaching out to you in order to challenge this belief, using your own letter as evidence that you don’t yet have the knowledge of Bitcoin necessary to craft public policy.

Inaccuracy No. 1

This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy.

Bitcoin is not “currently unregulated.”

On March 18, 2013 the Financial Crimes Enforcement Network (FinCEN) issued guidance explaining that “an administrator or exchanger [of virtual currency] is an MSB under FinCEN’s regulations.” This regulation requires that American Bitcoin companies register with FinCEN as a money service business (MSB) and follow the rules laid out.

Additionally, Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations apply to these businesses as well. In fact, only in the past few weeks has a Bitcoin ATM been launched in the United States, lagging behind other countries because of our regulatory complexity.

Inaccuracy No. 2

Each Bitcoin is defined by a public address and a private key, thus Bitcoin is not only a token of value but also a method for transferring that value.  It also means that Bitcoin provides a unique digital fingerprint, which allows for anonymous and irreversible transactions.

Bitcoin transactions aren’t anonymous.

Every single Bitcoin transaction ever made is recorded in a publicly accessibly ledger, called the blockchain. You make this point yourself by mentioning the “digital fingerprint,” it’s not often that fingerprints and anonymity are mentioned together. In fact, Bitcoin has been referred to as “prosecution futures” by law enforcement due to its lack of anonymity.

The assumption that digital currencies are necessarily anonymous was explicitly rejected by testimony from the Acting Assistant Attorney General of the Department of Justice, Mythili Raman, at a Senate hearing last November:

To be clear, virtual currency is not necessarily synonymous with anonymity. A convertible virtual currency with appropriate anti-money laundering and know-your-customer controls, as required by U.S. law, can safeguard its system from exploitation by criminals and terrorists in the same way any other money services business could.

American Bitcoin companies already adhere to the applicable regulations mentioned above.

Inaccuracy No. 3

Bitcoin has also become a haven for individuals to buy black market items. Individuals are able to anonymously purchase items such as drugs and weapons illegally. I have already written to regulators once on the now-closed Silkroad, which operated for years in supplying drugs and other black market items to criminals, thanks in large part to the creation of Bitcoin.

Bitcoin is not a haven for illegal activity.

It’s a shame that you were not in attendance at the Senate hearing last year, because the law enforcement experts testifying would have helped put your claims in context.

Edward Lowry of the Secret Service mentioned two digital currencies in his testimony, e-gold and Liberty Reserve. Bitcoin wasn’t mentioned at all, because in his words, criminals:

…have not by and large gravitated toward peer-to-peer cryptocurrencies…[they have] by and large gravitated toward centralized digital currencies that are based in a locale that may have less regulatory guidelines and less aggressive law enforcement.

Bitcoin is a peer to peer currency, not a centralized currency, thus merited no mention from Lowry.

Unlike your letter, which contained no data or references to support your claims, the experts at this hearing used data to put illicit Bitcoin activity in context. FinCEN director Jennifer Shasky Calvery stated the following:

In the case of Bitcoin, it has been publicly reported that its users processed transactions worth approximately $8 billion over the twelve-month period preceding October 2013; however, this measure may be artificially high due to the extensive use of automated layering in many Bitcoin transactions…

This relative volume of transactions becomes important when you consider that, according to the United Nations Office on Drugs and Crime (UNODC), the best estimate for the amount of all global criminal proceeds available for laundering through the financial system in 2009 was $1.6 trillion.

It’s clear when looking at the numbers that any illicit Bitcoin activity is nearly immeasurable when compared to illicit usage of traditional currencies, such as US dollars.

Also, your mention of the Silk Road doesn’t work in your favor. Law enforcement was able to take down the Silk Road, seize the Bitcoin, and arrest many of the dealers and buyers. This is a law enforcement success story, and doesn’t show a necessity for any further restrictions.

Inaccuracy No. 4

That is why more than a handful of countries, and their banking systems, have cautioned against the use of Bitcoin.  Indeed, it has been banned in two different countries—Thailand and China—and South Korea stated that it will not recognize Bitcoin as a legitimate currency.

Bitcoin is not illegal in Thailand or China.

It’s true that Thailand did originally reject Bitcoin usage, but they have recently reversed course and are allowing it. China has restrictions in place, but it has not been banned and several Chinese Bitcoin exchanges are functioning right now.

Aside from being inaccurate, it’s unclear why you would use the example of authoritarian foreign governments restricting their citizens’ use of digital currency as models to emulate. I trust there are no other economy policies that you would like to replicate from these countries.

Inaccuracy No. 5

Our foreign counterparts have already understood the wide range of problems even with Bitcoin’s legitimate uses – from its significant price fluctuations to its deflationary nature. Just last week, Bitcoin prices plunged after the currency’s major exchange, Mt. Gox, experienced technical issues. Two days ago, this exchange took its website down and is no longer even accessible. This was not a unique event; news of plummeting or skyrocketing Bitcoin prices is almost a weekly occurrence.

Bitcoin’s volatility has been decreasing over time.

Yes, Bitcoin prices have been volatile, though considering the fixed supply and fluctuating demand this is to be expected. However, your comments ignore the fact that as Bitcoin grows, it becomes less volatile, and the data supports this. Eli Dourado, research fellow at the Mercatus Center at George Mason University, has charted this:

volatility-mtgox

Inaccuracy No. 6

In addition, its deflationary trends ensure that only speculators, such as so-called “Bitcoin miners,” will benefit from possessing the virtual currency. There is no doubt average American consumers stand to lose by transacting in Bitcoin. As of December 2013, the Consumer Price Index (CPI) shows 1.3% inflation, while a recent media report indicated Bitcoin CPI has 98% deflation. In other words, spending Bitcoin now will cost you many orders of wealth in the future. This flaw makes Bitcoin’s value to the U.S. economy suspect, if not outright detrimental.

The rapid increase in the number of American consumers and merchants using Bitcoin for transactions contradicts this theoretical, and somewhat nonsensical, objection to Bitcoin.

As an example, San Francisco company Coinbase just reached 1,000,000 consumer Bitcoin wallets and 25,000 merchants using their system. Atlanta company Bitpay has more than 20,000 merchants accepting Bitcoin with their system. It’s difficult to believe that so many Americans would voluntarily choose to use a system if it were so flawed as you claim.

Indeed, the increase in the value of Bitcoin is attractive to many of its users, and it’s unclear how this harms anyone. No one is forced to use Bitcoin, and if they prefer their currency to slowly lose its value they can use US dollars instead.

Inaccuracy No. 7

The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use.

“The clear ends of Bitcoin” are not for illicit uses for the vast majority of users.

Bitcoin is digital money that was created specifically for the internet, and it offers significant benefits over traditional systems. It allows for fast and secure digital payments at a lower cost than credit cards and other systems. Your letter doesn’t mention any of these benefits, nor give any evidence that the vast majority of users aren’t using the currency legally and because of those benefits.

(As an aside, I believe you meant wary, not weary.)

Conclusion

Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.

Regulators in the US have already been weighing in on Bitcoin for months, and none of them have come to the draconian conclusion that you have. Regulators at the state level, particularly New York state, are looking at alternative licensing schemes, but have never even hinted at banning Bitcoin outright. Neither have the experts who testified in multiple hearings on the topic.

Hard-working Americans should be able to decide how they prefer to save, spend, and manage their own money. Bitcoin gives them an alternative to existing systems, and its rapid growth shows that many Americans find it valuable.

I hope this letter has shown that you and your staff should take a step back and learn more about Bitcoin before making any more policy claims. If acted upon, your recommendations would destroy hundreds of American tech start-ups and restrict hundreds of thousands of Americans from handling their own money as they see fit. Policies with such drastic impacts should only be proposed by well-informed policymakers.

Sincerely,

Sam Patterson

New blog, sort of

This site exists primarily for people to find information about me, contact me, find my book, etc. I don’t plan on the blog being frequently updated or widely read.

However, there are occasionally times I’d like to put my thoughts on public display, or announce updates about projects I’m working on. So, here’s the blog.

I’ll start by noting that I’m in this month’s FEE debate, on the subject of Bitcoin. My opponent’s argument is a good one, and there are many things I agree with. Go read it.