Bitcoin and the B-word

It's not hard these days to find a chart comparing the price of Bitcoin to the NASDAQ from the dotcom bubble.  They line up pretty well, provided you stretch the time scale of Bitcoin out considerably on the way up and somewhat less considerably on the way down.  Whether this means Bitcoin is actually in a bubble is something we don't know just yet.  Bubbles are only referred to with certainty in past tense: "That was a bubble".

There are arguments on either side.  One that I don't buy is "The last time Bitcoin fell by X amount, it later rose by way-more-than-X amount."  That's nice, but I'd kinda like to see a mechanism, not just numbers.  There aren't that many 10X jumps left before Bitcoin is literally all the money in the world (I do realize that that's the endgame if you're a hardcore cryptocurrency advocate).  There are interesting questions about just exactly how that would happen, but what happens after that?  What does it mean for Bitcoin to appreciate another 10X over the dollar if there are no more dollars?

Presumably at some point BTC rising against the dollar no longer means that Bitcoin is becoming more valuable in terms of the goods and services a Bitcoin can purchase, but that the dollar is becoming less valuable in real terms until it finally goes away.  How we get hyperinflation in a currency whose supply is going to zero is an interesting question.  I'm not sure there are any historical precedents here.  When the major currencies went off the gold standard in the 20th century, gold was still there and still had value.  If dollars go away entirely then at some point we're dividing zero by zero, which can come out to any number you like.

But, for the Nth time in drafting this post, I digress down a rabbit hole of speculation over Just What Does It All Mean.  The question I wanted to address here is, "Is Bitcoin in a bubble?"

But I already answered that.  One of the defining properties of a bubble is you don't know for sure if you're in it.  It's possible, at least in principle, that the price of Bitcoin could stabilize in some fairly tight range, and if that range isn't too far off the top (somewhere north of $19K) then we had some wild fluctuations, but not a bubble.  If it keeps falling toward zero, even if it eventually stabilizes around $1000, or $100, or $10 or whatever, then I think you'll have to say we had a bubble.

Does it matter?

I'd say not really.  If you're trading BTC, the important part is how you came out.  You might have made a lot of money, or lost it, or even both, but you can do that trading blue chips on the NYSE (How do you make a small fortune on Wall Street?  Start with a large one.)  If you're interested in Bitcoin as a store of value or a payment system or whatever, then what matters is whether that comes to pass, not the exact price of BTC when that may happen.

People throw around terms like "correction", "crash" or "bubble collapse" mainly, I think, to express an opinion about what's going to happen, not what has.  A correction implies that things got a bit out of hand but everything will be fine in the long run.  A crash means prices fell far and fast, but doesn't really say anything about the future.  A bubble collapse says that not only did prices fall, but there was much less ever there than people thought at the time.  If prices ever do recover, it won't be for a good long time, and for much different reasons than drove the runup to the bubble bursting.  Which of those is happening now depends on who you ask (though it's hard to call a 60%+ drop off the top a correction with a straight face).

I think that, along with the previous post, is about all I want to say about Bitcoin for a while.  I note that it's been a prevalent topic here for a while -- not that I've been posting that much on anything here -- and there's got to be other web.stuff to talk about.

Crypto assets

A large portion of what one might read about Bitcoin and company online falls into a few broad classes:

• Bitcoin is totally a bubble!
• It's unfolding just like the dotcom bubble around the turn of the century, but a lot faster
• Bitcoin isn't actually worth anything
• Bitcoin is totally not a bubble!
• The last time it crashed it was way, way up a year later.  Do you really want to miss out?
• Cryptocurrencies will take over the world.  The world's money supply is worth tens of trillions of dollars, so BTC is conservatively worth at least $1 million (or something along those lines).
• You're all missing the point.  It's not Bitcoin, it's the blockchain.
• Blockchains are useful because they provide a secure, shared, decentralized ledger
• Even if a particular currency fizzles out, there's still value in the technology

While researching a separate post, which I may or may not end up actually posting [I did, more or less -- see next post], I ran across this much more nuanced take by Adam Ludwin on the blog for chain.com.  If nothing else, I love the disclaimers at the top, a bullet list ending with several "Very few people <in some group> understand what's going on" and finally "It’s very possible I don’t understand what’s going on".

In that spirit, a disclaimer or two of my own: I'd never heard of Chain or Adam Ludwin before this and I have no financial interest in it or in any crypto currency.  I do note that Chain's tagline is "We build cryptographic ledgers that underpin breakthrough financial products," so it's pretty clear what Ludwin/Chain's basic stance is (and, of course, that's a good thing).

The piece itself is to some extent in the third bucket above, except with a lot more thought and detail and without the usual air of certainty.  The thesis, as I understand it, is that Bitcoin and things like it are properly assets, not currency, and their value lies in supporting a certain class of distributed application where various people contribute resources to the application as a whole, and/or consume such resources.

To make this work there has to be some sort of ledger that everyone trusts.  One way to do that is to put someone -- say, a bank -- in charge of the ledger.  Crypto assets provide an alternative, namely a secure ledger with no single, centralized authority, which can be trusted without having to trust all the other participants, or even any particular participant.

Ludwin is careful to point out that this is not always, or even often, worth the trouble.  A decentralized, secure ledger incurs significant overhead, since one way or another you have to be sure that the various parties can agree on what's in the ledger.  More importantly, at least in my view, a decentralized system is by definition not governed by any single authority, meaning governance has to be provided directly by the participants.  There should be cases where this is worth the trouble, but it's not a given.

Bitcoin itself is probably not the best example of what Ludwin is driving at.  Better examples (which Ludwin cites) would be Filecoin (a token for tracking who is providing and using storage in a decentralized cloud) and Ethereum (a generalized platform for crypto assets).  Ludwin attributes special significance to Bitcoin anyway on the basis that it currently represents the biggest chunk of actual money associated with crypto assets.  I'm personally skeptical of this argument, and "first mover advantage" arguments in general, but it's not totally unreasonable.

What follows are my own thoughts, which should all start with "It’s very possible I don’t understand what’s going on", but in bigger, bolder letters.

One of my fundamental concerns with "cryptocurrencies" in general and Bitcoin in particular is that it seems hard to draw a direct line from the value of secure, decentralized ledgers as a service to the value of the associated asset.  The ledger technology may be valuable in general, but that doesn't mean that any particular crypto asset is valuable.  Which tokens you're using is essentially a matter of what ledger you're writing things on, but what makes a ledger valuable?

Before computers, actual paper ledgers carried records of billions of dollars in assets, but the price of paper didn't rise as a result.  It came down over time as paper-making and printing became more efficient.  Very few people cared who printed the ledger, so long as the layout was usable.

One of the key ideas behind Bitcoin and some but not all other tokens is that they will become more valuable over time because there is a strictly limited supply.  But if the price of BTC in dollars keeps going up because everyone is hodling on to them, why use it?  Why not use something else, or spin up your own tokens on Ethereum?

At the end of the day people hosting the ledger will need to be paid for the computing resources they provide, but this should be a modest cost relative to the amounts recorded on the ledger.  One way or another there will be a flow of money from users of the ledger to providers of the service.  In some cases these will be the same people.  If I buy some capacity from a cloud provider and use it to participate in a ledger that I also use to record transactions of whatever nature, then I'm paying the cost of the computing resources to the cloud provider, and that may be about it.

This is assuming that participating in a ledger is relatively cheap.  This is decidedly not the case for proof-of-work based systems like Bitcoin.  Adding a new block to the Bitcoin blockchain currently gets a reward of 12.5 BTC plus whatever transaction fees are included (currently nominal).  At current prices that's somewhere around $80K per block, or around $60 per transaction.  This reward is effectively covered by inflating BTC rather than by direct payment, but miners are most certainly getting paid and are most certainly spending reserve currency on equipment and electricity.

However, I see no structural reason for a ledger to be expensive, unless proof-of-work really is the only way to solve the double spending problem. Without proof-of-work you're computing cryptographic signatures and copying bytes over a network.  This isn't free, but it's not that expensive either.

Which leaves us with this.  If secure, distributed ledgers are expensive, that's one more reason not to use them.  If they're cheap, then it's hard to see how people will make huge piles of money off them.  The optimum is probably in the middle somewhere, with people making modest amounts of money for providing a useful but fairly mundane service.  It's still possible for individuals to make serious money in such an environment, but more in "old-fashioned" ways such as providing better service or a marginally lower price to a lot of customers.

Another beautiful web.toy

Following a link from Wikipedia, I landed at earth.nullschool.net, which shows a gorgeous visualization of the current wind patterns on earth, at your choice of altitudes and with several possible color overlays, including temperature, humidity and "misery index".  You can, of course, zoom and pan where you like and, for bonus style points, the pan feature redraws the map projection in real time, giving the impression that you're warping the fabric of space itself.

I'm pretty sure I've seen visualizations like this before, and even mentioned one or two here, but I'm pretty sure I haven't run across/linked to this particular one before.  A quick search suggests I haven't.  In any case, enjoy!

Give us your money or we'll pirate your shows a few days early

Recently HBO suffered a data breach by parties who then tried to extort money using the threat of publicly releasing, among other things, Game of Thrones episodes and internal emails.  HBO, despite having initially offered a much lower sum than demanded, reportedly in a bid to buy time, ultimately did not pay the extortionists.  The Grauniad* has what looks like a pretty good summary on this one.

One thing that jumps out of this is that HBO was not particularly concerned with having episodes of its flagship show leak early.  There are probably several reasons for this.  HBO subscribers aren't paying per view, but monthly for the service as a whole.  If someone were able to repeatedly steal HBO productions and escape prosecution, that would likely be a problem.  Leaks of a few select episodes probably not.

Even if you can somehow make repeatedly stealing HBO content work, you're basically competing with HBO and the cable channels at distributing HBO content.  That's not a game I'd personally want to get into. Your milage may vary, but bear in mind that people are already pirating HBO content after it airs.  It's not clear how taking the extra risk to steal from HBO directly is providing that much of a competitive advantage.

More broadly, this all pushes back against the idea that, to make money selling content in a world where content can easily be copied, you need to provide something "live", like breaking news, live sporting or musical events, interactive games and such.

Of course, people can and do make money this way, but clearly that's not the only way.  HBO and many other content providers have done well with more traditional productions.  People seem happy to pay a modest monthly fee in order to see comedy, drama, documentaries and whatever other genres.

In principle there's a free-rider problem here in that people can get the same content, albeit generally illegally, without paying.  In practice, the problem appears tolerable.  HBO's refusal to pay a ransom to prevent GOT episodes from leaking underscores this.  People are apparently content to pay for the brand rather than the ability to access any particular bits at any particular time.


*I tend to use the Private Eye names for the major British newspapers, particularly the Grauniad and Torygraph, because, well, sorta funny, but also fairly apt.  The Telegraph is well known for its Tory leanings and the Guardian, however well it's built its brand as an international news outlet, is still prone to the sort of typo that led to the nickname in the first place.  But on the other hand, if your instructions as editor are to "carry on as heretofore," I suppose that has to include the tyops.  Sorry, typos.

On to the next milestone

It looks like I ended up adding a few more posts to the original five (four real posts plus the birthday post).  Counting this one, that'll make ten in all (but only eight real posts).

That seems like enough for now.  I'll probably come back later and edit for typos and stylistic blunders, and maybe add some missing links, but I make no promise as to what will appear here for the next while.  As usual, I might post again tomorrow, or not for months.  I probably will post again at some point, but if not, the 600+ existing posts aren't going anywhere.

It does seem like someone (or someone's web crawler, at least) has been reading, and that's cool.  If you've read and enjoyed, so much the better.

Cheers!

Bitcoin: Yeah, dunno about Venezuela either

Not long after posting the last post on Bitcoin I saw some headlines about Venezuelans using bitcoin instead of the Bolivar fuerte (fuerte meaning "strong") since the Bolivar itself is currently in hyperinflation.  This makes some sense, in that if the inflation rate for a currency is around 700-800%, Bitcoin's fluctuations against the dollar seem like less of a problem.  Bitcoin wallets and exchanges also provide a way to store value independent of the nation's banking system.

On the other hand, Bitcoin is not the only solution to this problem.  Besides buying and selling a reserve currency on the black market, people have historically come up with all kinds of solutions to currency shocks, including IOUs, home-grown alternative currencies, commodities and good old-fashioned barter.

I'm not saying any of these is a good solution.  In a situation such as this one there may not be any good solutions.  The point is that Bitcoin is not the only game in town.

There are also practical issues.  If the problem with reserve currencies is that trading in them is illegal, then the only legal way to buy Bitcoin is with Bolivares at the official rate, which exposes you to the same hyperinflation you're trying to get away from.  If you're willing to trade on the black market, it's not clear why you need Bitcoin.  And for that matter, the Venezuelan government can always make trading Bitcoin itself illegal.

If, somehow, Venezuela switched entirely to Bitcoin, that would currently mean around 800 billion dollars worth of Bolivares chasing around 70 billion dollars worth of Bitcoin, but that seems like a big if.  For that kind of money, one could build one's own cryptocurrency.

But I'm not an economist.  All of the above seems plausible to me, but I've been wrong before.  So, once again ... ¯\_(ツ)_/¯.

(And once again, I don't have any position in Bitcoin one way or the other)

I'm on a party line

There have been headlines lately about new FCC regulations allowing internet service providers to sell information about what sites you visit.  From the summary I read in The Verge, which looks well put together and overall plausible, the situation is a bit more complicated than that, but certainly ISPs have access to quite a bit of information about what sites a particular IP address under their management connects to, and they have to have access to that information in order to provide good service.

I'm not going to offer an opinion here on whether this is good, bad, indifferent or some combination.  Instead I wanted to take a look at privacy in general.

If you live in a house with separate rooms with doors that close and may even lock, it's easy to think of having a room of one's own as the natural state of things, but that's not universally the case.  There are plenty of examples of people sharing space, whether in a one-room house or a portable structure such as a tent, yurt or tipi.  Or think of an un-air-conditioned apartment block in summer.  If everyone's window is open onto the same courtyard, privacy is going to be a bit limited.  Enhanced privacy isn't the most obvious benefit of air conditioning, but it would certainly appear to be one.

Even if doors and windows can close, living in a small community, particularly one that has to be fairly self-sufficient, means getting to know more than one might care to about one's neighbors, and having them know details about one's own life.  Arguably this is actually the normal state of things.  Urbanization is a fairly recent phenomenon in human history.

Again, not saying any of this is good or bad, just that privacy is not necessarily something that we once had, but lost once technology came along.

For that matter, and back at the title, in the earlier days of telephony, many customers had a party line arrangement, meaning that a number of households shared the same physical phone line.  This meant that if someone else was making a call and you picked up your phone, you would hear them talking, at which point you might hang up and try again later, or perhaps ask them if they would be done soon ... or just listen in for a while.

Even placing a call meant, at least in some cases, calling an operator and telling them whom you wanted to call, so they could patch the call through -- literally using a patch cord.  That process was eventually automated, but the phone company still needed to keep records, at least of long-distance calls, in order to bill for them.  Those records could be subpoenaed in the course of criminal investigations and in any case were available to at least some company employees.

People seemed largely OK with all this, perhaps because the convenience of the telephone outweighed the lack of privacy, perhaps because people figured out ways of minimizing the intrusion (some interesting game theory/economics there), and probably for other reasons.


We're also social animals.  To some extent we want to share things about ourselves and have others share with us.  It's not clear to me whether social media have amplified this kind of behavior so much as reflected it.

What seems different about modern technological privacy is that the people with access to one's private information are strangers with their own incentives and plans.  In a small, tight-knit community information flows both ways.  "Everybody knows everything about everybody."  With a 20th-century phone company or a 21st-century ISP this isn't the case, and generally the entity in question is in business to make money.

One can argue that such businesses have a strong incentive to respect their customer's privacy on the grounds that failing to respect it would be bad for business, but that doesn't always seem particularly comforting.  On the other hand, the basic issues are clearly older than the internet, so at least we've had some time to work them out.  I could have added 19th-century telegraph companies or maybe even 18th-century messenger services to the paragraph above.

I think the problem decreases as you go back in time, since communicating via commercial services run by strangers becomes less pervasive, but the telephone was a pretty integral part of 20th-century life, particularly in the second half.  It's not clear to me how much more integral the net is.  I'm sure it is to some extent, but not how much.

I honestly don't know what to conclude from all that, but I did at least want to offer the perspective that, as in other cases, the internet doesn't necessarily change everything.  Some things, almost certainly, but the real fun lies in figuring out exactly what.

Unplugging ... or not

Years ago a friend told me of a mutual friend who had taken a hiking trip out in the mountains somewhere.  "Yeah, they decided to take a cell phone," my friend said.

My immediate reaction was "What's the point? I thought the whole point of going out in the boonies was to get away from phones and such."  My friend explained that the phone was for emergencies, and 911 did work where they were (there was apparently a tower nearby).  I don't think they actually ended up using the cell phone.

As I write this I'm up in the mountains, though still more or less in civilization (different mountains, as it happens).  There is intermittent cell reception ... and wifi throughout the place.  The wifi is also a bit spotty, but not because of reception.  I have a nice clear connection to the wifi, but so does everyone else, and there are a lot of technophiles around.  Nonetheless it seems to be enough to get messages through to the outside world.  And to blog.

There are still significant parts of the world, even the more or less industrialized world, without internet or cell access, but it's shrinking.  Cell phone carriers would prefer to concentrate their resources where people are (I've heard that "we don't cover the cows" or something like that has been a motto, but Google doesn't seem to back me up on that).  This means that most people will be near coverage, but there's also a knock-on effect.

People get used to coverage, so they really notice when it's not there.  If your fun adventure in the backcountry is marred by not being able to call home in the evening, you may well report "poor coverage by my carrier" to your friends.  No one wants to be that carrier, so there's an incentive to build out coverage even in less profitable areas, an incentive that wasn't there in the early days.  There are still plenty of places where you wouldn't reasonably expect to see coverage, but I wouldn't be surprised if this effect has brought coverage to places that wouldn't have it based on a purely local economic analysis.

Having a mobile phone has long since gone from something that can be handy to something that has influenced our habits thoroughly enough to change our expectations.  For many of us, unplugging by traveling out of reach of the web is no longer an easy option.  If you visit your relatives' cabin at the lake, you probably still have bars.  That mountain retreat has connectivity because enough customers wanted it.  The only real way to unplug is to ... well ... not use the web for a while.  Which, come to think of it, shouldn't really have to be a special occasion.


While writing this, I looked up cell coverage in Alaska.  It looks like, not surprisingly, most of the physical area of the state is uncovered, but almost all of the population is.  It would be interesting to know more about the swaths in the interior that are covered.  I'd guess transportation is involved, just as interstates in the lower 48 tend to have towers at fairly regular intervals, even in unpopulated areas.

Bitcoin: Yeah, I dunno

I've been pretty skeptical about Bitcoin in the past, particularly about Bitcoin as a currency.  My thoughts on the currency part haven't changed meaningfully, but my hunch on Bitcoin as a speculative vehicle -- that it was in a bubble that ought to burst any time now -- is, well,

• kinda confirmed by the way the price has been acting.  It seems to be doing what it was doing around 2013-2014, but with much bigger numbers
• kinda disconfirmed by the way it's not bursting, and didn't completely burst last time

But then, such is the way of bubbles.  You can know for sure you were in a bubble, but not so much that you are in one.  So ... ¯\_(ツ)_/¯

I should point out that I have no money in Bitcoin and no speculative position one way or another.  Just watchin' the show.

Tags and finding things

Putting together these recent posts, and posts on the other web, I notice I'm much more casual about tagging.  I can't bring myself to stop altogether.  A post without tags seems somehow incomplete.  But every time I add a tag I find myself asking "Why am I doing this?"

For years and years it's been possible to add "site:fieldnotesontheweb.com" to a search and find whatever you want on this blog (or likewise any other), whether I've tagged it or not.  The difference, if any, is more a matter of curation.

Donald Knuth, in putting together The Art of Computer Programming, made a great effort to put together a complete index, partly out of frustration with the textbooks he'd had to read as an undergrad.  To him, this wasn't just a matter of searching for all occurrences of a given term (which was possible since the text of TOACP was in digital form), or dumping out a concordance of terms by page.  Context mattered.  The index entry for C. A. R. Hoare might include pages mentioning quicksort, even if Hoare's name doesn't appear on those pages, for example.

I think tags on a blog fill a similar purpose.  If you click on the link for a tag, you'd expect to see posts on that particular topic, regardless of the exact words.  The link for annoyances on this blog includes several annoying things, whether or not I happened to include the word annoy or its forms in the posts.  Machines are getting better at this sort of inference, but they're not great yet.

I think that's a good theory, anyway, and I think human curation is still useful.  On the other hand, I don't really have time to post on this blog, much less read through it and fix up tags.  I've done some re-reading, but I've only really been through a couple hundred posts, and then only fixing typos and adding the occasional note or update.  So what you get here is hit or miss.  Not so much a careful taxonomy as a record of whatever I happened to be thinking at the time.

If I had time, I would probably trim the set of tags down significantly, particularly getting rid of tags that are completely redundant with search results, and probably consolidating a few similar tags down to one canonical choice.  But not today, and not any time soon.  If the tags as they stand make for more interesting browsing, great.

(By the way, I'm not particularly proud that annoyances is currently the most populated tag on this blog)

Now can we stop the password madness?

I've ranted about this plenty of times, and now it seems like the world has come around to my point of view.

Um yeah, right.

I think pretty much anyone who's had to deal with restrictions like "This password must be eight characters long, contain at least one number, one uppercase letter, one lowercase letter, one special character and the characters Pa$$w0rd in order" has recoiled in disgust.  So maybe it wasn't my vast influence.

In any case, headlines are now circulating that the person who promulgated those rules (one Bill Burr of NIST) has said "Sorry, it was all a horrible mistake."  So the person responsible has fessed up and the annoying rules should be history in, oh, let's say ten or twenty years.

As usual, I think the real story is a bit more nuanced, as they say, but it looks like the Naked Security blog at Sophos has already done a better piece on it than I will.  Basically, the advice in the original guidelines in 2003 wasn't bad at the time and it's not Bill Burr's fault that people cargo-culted it into the annoying mess we see today.

Now if we can just get rid of "security questions" ...