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  • The Thrilling and Sometimes Terrifying World of Crypto-Innovation Is at a Turning Point

    The Thrilling and Sometimes Terrifying World of Crypto-Innovation Is at a Turning Point

    It’s one thing to read about cryptoeconomics and another thing to actually do it. I had been reading about Bitcoin in the abstract from 2009, but it wasn’t until I became an owner in 2013 that I began to realize the implications of this technology.

    My boots were on the ground, as they say, and I saw and experienced things I never imagined possible. A money and payment system in one application? Made entirely from code? Invented by an anonymous programmer and gradually adopted in a globally distributed system run by hobbyists? The whole thing seemed crazy.

    I wanted to know more. So I organized one of the earliest national conferences on the topic in Atlanta, Georgia, in October 2013, when the Bitcon/dollar exchange ratio had reached $100 from $14 at the start of the year. My purpose was to bring economists and technicians together to develop a better understanding of what exactly was happening.

    Last night, nearly four years later, I attended an exciting and passion-filled blockchain meetup in Atlanta. The Bitcoin price floats around $2,500, but this is off from a high that nearly touched $3,000. Many of the people who attended my first CryptoCurrency Conference were there again, but this time was different. Instead of being curious onlookers, many people in the room were part of what we might call the digital 1%: immense earnings based on speculative investments that paid off.

    The New World 



    Now times are getting serious. The biggest banks and brokerage houses are on board. Tens of thousands of blockchain startups exist. There is a crowdfunding campaign for a new digital service and token nearly every day.

    There are so many white papers being issued that no one can keep up. For all the world, it looks like Tulipmania except that this is what many people have claimed for eight years, during which time a new world has been born.

     During Tulipmania, you were right to be suspicious because tulips had always been around. They didn’t represent anything new. The blockchain is something completely new: a new technology for porting adaptable information bits into immutable bundles to move cheaply and quickly across geographically non-contiguous lines.

    With this new capability, spreading all over the world, a new class of geeks is leading a technological push to reconstruct the way we transmit money but also do contracts, property titles, and financial markets. All of this is based on a new way of commercial engagement, from dependency on intermediaries to working directly with each other.

    Block Size 

    But merely to reflect on the amazingness of all this is not what drew the group together. The topic of the night is the pressing issue of the block size, a debate that has been rumbling around for a couple of years but which now cries out for resolution. The problem is that the blocks in the chain are currently limited to 1 megabyte, which is too small to hold all the transactions (and more complex forms of information) that the network is trying to push through. This is making the use of the network more expensive and slower than it should be. For some payment processors, it is becoming an impossible situation.

    The core development team is famously conservative. In any case, merely busting the protocol with an arbitrary expansion is not a solution. What it needs is a long-term fix. Solutions were coming so slowly that a group of users acted to schedule the implementation of what amounts to a fork in the blockchain. (For more on the debate and the plan, and the difference between hard and soft forks, go here.)

    Regardless, on August 1, something big is going to happen. It will be the biggest change to Bitcoin since its inception, with the purpose of making it scalable to compete directly with conventional payment processing.

    The debate online can seem wickedly rhetorical, and forbidding to outsiders. For my own part, I’ve stayed out because I don’t have the level of technological knowledge sufficient to weigh in. Plus, having watched the community at work for years, I know by now that online sound and fury most often masks what is at the root a sober and prudent set of developers, miners, and users. Stephen Pair is most likely right: the great forking event will most likely be boring.

    The Exciting Stuff 

    If this debate is too much – and only industry insiders are really thinking and writing about it – consider another level of complication.

    Let’s talk about what used to be called alt-coins and the category of digital assets. (Incidentally, we are nearing the point where even the world alt-coin is deprecated. We now call them what they are: Litecoin, Dash, Dogecoin, and so on.)

    When I held my conference, there were a few additional coins floating around out there. Hardly anyone thought they were viable. Back then, Bitcoin was amazing when it passed the $10 mark. Today, there are 12 additional coins that float above $10, and three of those have market capitalizations above $1 billion.

    Here’s another interesting change: there are fully 18 digital assets that trade above $10. And 10 of these assets have market capitalizations above $1 billion. Most are based on Ethereum, which is a platform for the development of a new class of services running blockchain technology. At the time it was first described, it seems visionary but outlandish. A few years later, it is a reality in the making.

    I’ve been slow to get involved in the asset market, but just yesterday tried my hand at moving tokens around in the space. I can’t begin to describe to you the complications. This is not for mere mortals. As I performed the task of moving from one asset to another, switching platforms and watching for confirmations and thresholds, I felt that same sense of awe I had when I first received and sent bitcoins. If possible, it was actually more difficult.

    Why Is this So Hard? 

    There are two factors here. First, this is nowhere near ready for the mainstream consumer marketplace. For anyone but full-time code slingers, this feels like rocket science. Second, everywhere you move, you bump into evidence of government regulation of exchanges, dating from that fateful day in the spring of 2013 when the Department of Treasury decided to effectively shut down an entire class of entrepreneurial ventures.

    It’s hard enough to reinvent the infrastructure of the global exchange economy. It is too much to attempt this feat in the face of regulators who have no clue whatsoever about the structure and technology we are dealing with here. Governments are trying to retrofit a disruptive technology by trying to make them behave like the old forms they are trying to replace.

    All of this is enormously annoying. But let me say this: it is temporary. They can slow us down but they can’t stop us. You could feel it in the energetic meetup last night. These people are smart, dedicated, and they see the future. They won’t be stopped. More than that, because they are all owners and stakeholders in this new digital space, they have the passion to follow through.

    The sad fate of revolutionary technology like this is that it doesn’t gain popular enthusiasm until it is used by the average person. Even then, the period of awe only lasts a brief time until we just assume that the world was destined to work this way. It’s this way with map apps, email, electricity, flight, steel, soap, eyeglasses, or any other invention.

    Here’s to the innovators and entrepreneurs who just keep making the world better despite every barrier and despite the absence of public acclaim they so richly deserve.


    Jeffrey A. Tucker

    Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

    This article was originally published on FEE.org. Read the original article.


  • Listening to starlight: Our ongoing search for alien intelligence

    Six hours a day, seven days a week, for four straight months. That’s how long radio astronomer Frank D. Drake pointed the 26-meter telescope at the National Radio Astronomy Observatory (NRAO) research facility in Green Bank, West Virginia, toward the heavens, looking for signs of intelligent life beyond Earth. He dubbed his efforts Project Ozma, in honor of the Queen of Oz from L. Frank Baum’s famed children’s book series.

    Between April and July of 1960, Drake recorded some 150 hours of tape speckled with radio noise. While no meaningful encoded signals or patterns emerged from those readings, Drake still earned himself a place in history for performing what would become the first scientific search for extraterrestrial intelligence in the modern era.

    Since then, research organizations around the world have performed nearly 100 SETI (search for extraterrestrial intelligence) experiments. Even NASA got in on the hunt, working with the SETI Institute between 1988 and 1993, when Sen. Richard Bryan (a Democrat from Nevada) introduced an amendment that cut the program’s government funding.

    But as the next generation of telescopes come online, like the upcoming Webb Space Telescope or dedicated planet hunter the Kepler Telescope, the scientific community is beginning to warm to the idea of SETI as not just a valid scientific discipline but an essential one. “I think people are kind of coming around to the idea that SETI as a scientific endeavor is one that’s worth pursuing,” Croft added. Especially, “when we can answer a scientific question or attempt to answer the scientific question are we alone in the universe?”

    The SETI Institute of California is trying to do just that. The 33-year-old organization formed in 1984 with the mission of understanding the origins and nature of life in the universe. It employs 120 staffers, 75 of whom are PhD-level researchers, and conducts research among 22 fields of inquiry over seven branches of research: astronomy and astrophysics, geoscience, exoplanets and exploration, exobiology and SETI.

    For its SETI efforts, the Institute relies on radio and optical telescopes. On the radio side, the Institute leverages its Allen Telescope Array (ATA), a 42-dish setup located at Hat Creek Radio Observatory, nearly 300 miles Northeast of San Francisco. It can scan four octaves of radio frequency and generates roughly 55 terabytes of data every day. Unlike conventional radio telescopes used for radio astronomy, the ATA scans a broader swath of the radio spectrum, albeit at a lower sensitivity.

    The group is also working with Paul Horowitz, a physicist and electrical engineer at Harvard, to develop “all sky all the time optical SETI survey systems” where the ATA would perform wide surveys of the sky while other, more sensitive telescopes — like the Lick — would follow up with more focused surveys covering a smaller portion of sky.

    For its optical surveys, the Institute splits its time between the UC Berkeley’s Lick Observatory and the Harvard Haystack telescope. These telescopes are looking for laser emissions, specifically. These could be from any number of alien sources including communication arrays, weapon tests or transportation (hello, laser sails). “But in any case a monochromatic high-intensity highly focused coherent beam of light would be a fairly indicative sign of technology that could potentially be seen from very far away,” Bill Diamond, CEO of the SETI Institute explained.

    However, both the radio and optical instruments have noticeable limitations. While humankind is theoretically capable of blasting a laser beam into space that is 10,000 times stronger than the sun, Diamond continued, “there isn’t an instrument on Earth that can detect an Earth-like planet with Earth-like leakage of electromagnetic radiation.” This leakage refers to the general emission of radio signals a civilization gives off through its various technologies, rather than powerful, highly focused signals intentionally designed to get another planet’s attention. And while using overlapping technologies, as in the case of the SETI Institute-Horowitz collaboration, can boost our relative capabilities, it’s still not good enough to intercept complex communications that rely on, say, wideband carrier signals.

    “We don’t want to make too many assumptions about the kind of signals that an extraterrestrial civilization might be sending,” Croft said. “It might not be kind of a simple tone. You know a transmission which is a single frequency will have a drifting tone because it is on a planet that’s going around a star.” Who knows, maybe Frank Drake did find an alien message in that radio static but it’s encoded in a manner that researchers haven’t yet been able to identify and decipher. “They might be sending some kind of complicated data; we make all sorts of complicated transmissions ourselves as humans,” Croft concluded.

    This technological wall has spurned SETI researchers to seek out more effective means of scouring the galaxy. In the case of Berkeley’s Breakthrough Listen project, that involved securing a 10-year, $100 million funding grant from Yuri Milner, a Russian entrepreneur, and physicist Stephen Hawking. This money will be used to buy time on two of the world’s most powerful telescopes (the Green Bank in West Virginia and the Parkes in Australia).

    Over the past 18 months, the Breakthrough Listen Initiative has also teamed with the SETI@Home project, run by a team from UC Berkeley, to process a portion of the data generated each day. SETI@Home launched in 1999 as a means of distributing the computational workload that analyzing dozens of terabytes of radio signal data generated by the Arecibo telescope across hundreds of thousands of personal desktop computers. “Actually Berkeley and the SETI Institute have a long history together,” Diamond said. “Berkeley was involved with us in the very early days of developing the Allen Telescope Array, so we go back a long time. ”

    The program currently only has around 150,000 volunteers (down from a peak of 1.5 million users) and “we’re getting back into our problem again in that the telescope can generate far more data than we can analyze with the best sensitivity,” said Dr. Eric Korpela, head of the SETI@Home project.

    The Breakthrough Listen Initiative has a “pipeline” that divides 1 GHz of spectrum into 3hz channels (330 million in total) that are scanned for potential signals. You want the channels to be as narrow as possible in order to maximize the sensitivity, however, as both the Earth and whatever exoplanet the telescope is looking at move through their respective solar systems, signals tend to “drift” in frequency. “You want to use computer power to correct for that motion,” Korpela explained, although the process is incredibly CPU-intensive. But that’s exactly what SETI@Home is trying to do.

    However, even with the million-odd CPU cores at SETI@Home’s disposal, analyzing all that data is still slow going. Its volunteers only account for around 2 percent of the Breakthrough Listen Initiative’s analytical power. The program simply doesn’t have enough volunteers to keep up with the demand. And the fact that many people have ditched their desktops for mobile devices is not helping either.

    “It is an issue that we worry about,” Korpela admitted. “We do have an app for Android. The processors that are in a typical phone right now are not comparable with what are in most desktops, but they’re certainly better than a processor from 1999.” The app is currently running on 22,000 volunteer mobile devices, or around 15 percent of the total base. However, these devices are only contributing 2.3 TFLOP/s of processing, 0.5 percent of the program’s total computational power. As such, SETI@Home doesn’t face a technological hurdle in accelerating its search for intelligent extraterrestrial life so much as a societal one.

    “But given that there are a couple billion Android devices out there,” Korpela mused, “there are another 200 petaFLOP/s out there that we haven’t tapped yet.” The SETI@Home team hopes to garner new interest in their efforts when they release their report from the Breakthrough Listen Initiative this fall.

    Source: Listening to starlight: Our ongoing search for alien intelligence


  • Hayek and Satoshi Meet in Vegas

    Hayek and Satoshi Meet in Vegas

    F.A. Hayek is smiling, or perhaps blushing, if news has trickled up to where all great Austrian economists go. The Legends Room Gentlemen’s Club in Las Vegas has created its own virtual currency, known as LGD.



    Todd Prince broke the story in the Las Vegas Review Journal that the soon-to-be-open club is “hoping a new marketing weapon – a virtual currency – will help them wrestle tech- and investment-savvy clients away from the strip club giants.”

    Club owners are selling memberships to Legends for $5,000, which can be paid for with bitcoin as well as the US government’s legal tender or credit cards. “Members in return will receive 5,000 LGD, a virtual currency created by Legends Room, that can be used to pay for lap dances and drinks.”

    Alert readers will notice that the club’s owners have set the LGD/$ exchange rate at par. One wonders whether it will remain there. After all, the aforementioned bitcoin has taken off yet again and it takes 1,994.42 of Uncle Sam’s bucks to buy a single Satoshi bitcoin.

    A New Crypto

    Non-members will be required to buy at least one LGD to enter the club’s VIP room, so the owners hope this will create a market for their cryptocurrency. If nothing else, they are dreaming big, with plans to display the daily price of their currency along with bitcoin on video monitors throughout the club.

    Prince explains, “Members and other token-holders will be able to sell their LGD for bitcoin on the Bittrex cryptocurrency exchange or for cash through the club’s concierge to those seeking access to the VIP room.” LGD will be just one of the more than 190 cryptocurrencies Bittrex supports.

    In a vast departure from typical strip club protocol, Legends will offer a Bloomberg terminal for patrons to monitor stock and bond prices during trading hours. No doubt some dancers will take advantage of the terminal to keep an eye on their investments. (The most remembered story I’ve told to all economics classes I’ve taught is about the worst stock tip I ever received – from a dancer in a strip club.)

    A Fad No More

    By coincidence, the May 19th issue of Grant’s Interest Rate Observer devotes its front page to bitcoin with the catchy title “I own tulips at 40 cents a bulb.” The folks at Grant’s queried a few investors in the bitcoin space. None poo-pooed the cryptocurrency as a bubbly fad: “It’s a stored value, a monetary asset that’s winning its place in the hearts and minds of the world’s financially repressed,” says Murray Stahl, speaking of Satoshi’s handiwork.

     

    Stahl went from not knowing what a bitcoin was two years ago to buying 20 computer servers and beginning a bitcoin mining operation. Besides Satoshi’s technology, Stahl was impressed with the bitcoin founder’s theory. “He wanted to create a non-inflationary currency,” Stahl told Grant’s. “That is really what he wanted to do. The first one that ever existed that no government could ever tamper with, and he did it.”

    By the way, Stahl says the cost to mine a bitcoin is about $1,200, but he’s not about to sell his. “I think that something has to replace the current monetary insanity.”

    Another friend of Grant’s is buying other cryptocurrencies. The business plan of these currency creators is speculation, “and they all say the same thing,” Grant’s friend concludes. “It’s no problem, we’re just going to convert it into bitcoin.”

    For Professor Hayek, competition in currencies was not about creating speculative vehicles, but instead, “under the proposed scheme, the managers of the bank would learn that its business depended on the unshaken confidence that it would continue to regulate its issue of ducats (etc.) so that their purchasing power remained approximately constant.”

    In his book Denationalization of Money, Hayek anticipated the current monetary insanity Murray Stahl speaks of, explaining,

    And it should be in the power of each issuer of a distinct currency to regulate its quantity so as to make it most acceptable to the public – and competition would force him to do so. Indeed, he would know that the penalty for failing to fulfill the expectations raised would be the prompt loss of the business. Successful entry into it would evidently be a very profitable venture, and success would depend on establishing the credibility and trust that the bank was able and determined to carry out its declared intentions. It would seem that in this situation sheer desire for gain would produce a better money than government has ever produced.

    QR Codes

    Besides its store of value potential, bitcoin and other cryptocurrencies have great advantages in ease of payment. Great wealth can be transmitted with the push of a button. Or, for the girls who will work at Legends, Mr. Prince writes, “Members would be able to scan QR bars either on the dancer’s phone or placed on her body rather than stuffing dollars into her stockings.”

    While the number of bitcoin to be produced will stop just short of 21 million, the ambitious owners of Legends are giving themselves more running room, limiting the number of LGD to 30 million. Janet Yellen and Mario Draghi have no such constrictions.

    Legends will open in June, and will be a great place for a field trip to see cryptocurrency in action during Freedomfest July 19th through July 22nd.


    Douglas French

    Douglas French is an Associated Scholar at the Johnson Center at Troy University and adjunct professor at Georgia Military College. He is the author of three books: Early Speculative Bubbles and Increases in the Supply of Money, Walk Away, and The Failure of Common Knowledge.

    This article was originally published on FEE.org. Read the original article.