Diversity and Inclusion for Bitcoin

No field of technology has accomplished as much as Bitcoin when it comes to promoting diversity and inclusion. Check it out — In recent weeks, we’ve learned:

  • North Korea spun up hundreds of Bitcoin (mining?) nodes beginning in May.
  • Japanese digital services company GMO is investing $90M in a new Bitcoin mining facility.
  • Putin’s Internet ombudsman is raising $100M for a Bitcoin mining farm. It will reportedly take advantage of Russia’s excess power capacity at deeply discounted rates.

Bitcoin’s strength lies in its jurisdictional diversity. Every transaction is created equal, no matter by whom or where. China’s concentration of mining power has been one of the biggest threats to Bitcoin, but if these new developments play out, we could see multiple state-sponsored server farms jockeying for power.

The biggest benefit of diversity is that every new idea is confronted with lots of competing opinions, so no decision ever gets done. This preserves the blockchain’s doctrine of immutability and permissionless access. The most inclusive state of the network is one in which every node is divided in a Mexican standoff.

I know, I know: People like to signal virtue by bemoaning Bitcoin’s lack of gender diversity. That’s okay. Signaling serves an important evolutionary function, and I have much respect for anyone privileged enough to expend resources on such an activity.

Still, diversity-driven virtue signaling is horribly misguided. Gender diversity is of zero concern for anything but the elitest of elite Western institutions. Bitcoin and its blockchain brethren are global: No other technological advancement so effectively serves state-oppressed Venezuelans as well as Silicon Valley software engineers. That’s the power of inclusion and equality.

Fiat Institutions in Virtual Worlds

Long before the age of billion-dollar Bitcoin mines, China was the world’s richest source of World of Warcraft gold.

WoW gold is a virtual currency that players use to buy weapons and animals for in-game missions. The currency is normally earned by completing challenges and killing monsters, but professional “farmers” spend their days performing rote tasks to acquire gold which they resell for US dollars. For a while, Chinese prison guards forced labor camp inmates to play Warcraft so that they could harvest the gold. Even Steve Bannon helped run a gold farming business.

There’s more: Each game server features an auction house, where gold can be used to buy tokens redeemable for digital goods and access to other Blizzard games. Tokens trade in a real-time market. It’s not that different from the ether-ICO economy, except that central banks haven’t tried to ban World of Warcraft.

A number of countries now want to control how people invest their digital currencies, but they will fail. Fiat authority is not transferable.

Just like money is a shared hallucination, so is authority. It makes no difference whether players are using virtual gold to buy virtual swords to join virtual guilds; or if they’re using virtual ether to buy virtual tokens issued by virtual companies. The only way to assert authority over a Warcraft realm is to become a max-level paladin, and the only way to assert authority over a decentralized currency is to control 51% of the nodes.

As a reminder, here is a handy guide from Mircea Popescu on how to interact with fiat institutions that attempt to claim jurisdiction over virtual realms.

See Also:
A history of World of Warcraft’s gold economy –Memory Insufficient

R3 Should Have Used a Smart Contract

Ripple (XRP) one-year price chart

Don’t you hate it when you become a billion-dollar company through no effort of your own, only to have some asshole take it away from you?

Such is the plight of R3.

A year ago, Ripple gave R3 an out-of-the-money call option to buy 5 billion XRPs at $0.0085 apiece. Now that the price of XRP has gone up by 4000%, the option is worth a billion dollars and represents R3’s single most valuable asset. Ripple wants to renege, and R3 is understandably annoyed.

You guys!! This is exactly the type of thing that should have been done with a smart contract.

R3 is a busy consortium, so maybe they forgot what line of work they were in. A quick reminder: R3 created their own distributed ledger platform to execute smart contracts in a trust-minimized manner. It’s called Corda, and it already has a contract template to represent blockchain token assets.

People will be quick to point out that the Ripple agreement can’t simply be a smart contract, because there are weird edge cases and unforeseen circumstances that can’t be accommodated with code. For example, Ripple claims that they were misled in the agreement, because they thought they would benefit from R3’s banking partnerships. “R3 turns out to be useless” is not a state that can be codified by a smart contract.

That’s fine: Nobel Prize laureate Oliver Hart has a whole body of work about how to deal with incomplete contracts. The solution is to pre-allocate decision rights. In a Corda smart contract, it might look something like this:

A feature of Corda contracts is that they have transferable exit keys, which are used to remove an obligation from the ledger. The holder of the exit key determines when to exit, and where the assets end up. In other words, the party that controls the exit keys has decision rights for what to do next.

Legal courts can still overrule, but the burden of lawsuit has shifted to the counterparty. R3 could secure a much better outcome if it already had its billion-dollar XRPs cashed in, and Ripple was the one who had to sue to get it back. Possession is nine-tenths of the law.

It’s interesting to see that R3 filed a complaint in the Delaware Court of Chancery, while Ripple decided to countersue in California. Legal interpretations vary by state, so contending parties often file in the jurisdiction most favorable to themselves. Delaware happens to be particularly generous in awarding contract expectation damages.

Dispute over choice of venue: Another problem that can be avoided with a blockchain!

R3 has wasted a lot of time writing whitepapers about whether smart contracts can be legally binding. The answer is always no, of course not! It would be a shame if R3’s legal contracts weren’t binding either.

The default issuer name for R3’s smart contract template is “Snake Oil Issuer”. Seriously, look at the source code.

See Also:
Contracts and Trust

Where are the Customers’ Lamborghinis?

h/t: @prestonbyrne

An initial coin offering is a system that transfers wealth from uninformed investors into the pockets of shills and hucksters.

Originally, token buyers were early ether enthusiasts reinvesting their gains. Now I’m hearing more and more stories of kids pouring their life savings into these get-rich-quick schemes, and… man, I hate this industry.

I hate the PR agencies that pump coin offerings in exchange for a percentage profit share. If any PR firms are reading this, please keep me on your mailing list. I enjoy receiving your messages and making fun of your clients behind their backs.

I hate the ad networks that enable this pumping. Is there no editorial oversight over ad campaigns?

And I hate all the peripheral profiteers, the hangers-on, the tangential industries that have sprung up overnight to get in on the game.


Still, I’m glad the three-letter agencies haven’t stepped in. It’s not clear that they can: Many of the perpetrators are overseas, and the participants are pseudonymous at best.

There’s a theory (from @interfluidity) that an opaque financial system encourages investment and growth and progress. Humans aren’t designed to comprehend a global market. We evolved in small communities that provided accountability and social safety nets to empower productive risk-taking.

Obfuscation allows us to indirectly underwrite the risky mortgages of complete strangers. If bank customers were fully informed about the riskiness of their deposits, everyone would freak out and stash gold and never invest in anything again. Society would devolve into a nation of gun-toting goatherds.

ICOs mask the riskiness of venture financing to make it accessible to the world. A lot of token founders are people who couldn’t get traditional VC funding because they’re in the wrong industry, wrong place, wrong business model, or maybe their ideas are just too dumb.

There are downsides to democratization, but are token sales any worse than the student loan industry? Mortgage-backed securities? Nigerian advance-fee fraud?

If you zoom in on individual losses, yes there are people who get screwed. But each of these scams simultaneously enables opportunities that otherwise would not have been available. Countless Americans now have college degrees thanks to the democratization of federal loans. And, you know, countless Nigerians have been lifted out of poverty thanks to Nigerian scams.

Tokens will run the hype cycle, bad ideas will die and society will evolve. People might get hurt, but that’s part of the Darwinian process. We lived through the savings & loan crisis, the dot-com bubble, the housing bubble, the beanie baby bubble. Just don’t bail out the failures, because then people will never learn.

How to Monopolize Solar Energy and Take Over the World

“Since the beginning of time, man has yearned to destroy the sun. I will do the next best thing: Block it out!” –Mr. Burns

Gentlemen, we can do this. In 1995, nuclear power plant tycoon Monty Burns deployed a giant dish over Springfield to deprive citizens of free sunlight and energy. Springfield citizens eventually dismantled the dish, but last week’s eclipse showed us how to do this in a tamper-proof way: BUILD A SECOND MOON.

Eclipse totality lasted only two minutes, but that’s because our existing moon can’t keep still. We can create a stationary moon by launching it into a Lagrangian point.

Any two-body orbital system creates five Lagrangian points, where the combined gravitational forces of the large bodies cancel out the centrifugal force felt by a smaller object, suspending it in place. Anything deployed at these five spots remains parked indefinitely.

One such point happens to sit just between the earth and the sun: L1. We already have a Solar Observatory and Deep Space Climate Observatory (DSCOVR) parked there, but neither one is big enough to cover the sun. Something moon-sized should do the job nicely.

All we need now is a rocket and a giant balloon. Hey Elon Musk, got any spare SpaceX launchers lying around?

Project Echo was a balloon satellite we launched in 1960 to reflect communication signals. If it is unavailable, we can capture and redirect an asteroid, Bruce Willis-style.