A Primer on Primecoin

(image from Bitcoinmagazine)

No. This is not really a full primer on Primecoin. I still have yet to completely understand the dynamics of it. I just wanted to use that title.

The cryptocurrency field is becoming really interesting. Although Litecoin is the second largest one, I always thought PPCoin was the most innovative one. It had 2 things that stood out from Bitcoin, proof-of-stake (vs proof-of-work) to generate consensus, and its minting process was more akin to gold. The higher the difficulty the fewer coins are being generated. It it thus naturally inflationary in the beginning, but over time decreases until very few coins are being generated per block.

The same creator, Sunny King, recently introduced Primecoin, a new altcoin. It once again shows the genius behind the concept of cryptocurrencies. One of the critiques of Bitcoin is that all the mining and electricity expenditure to perform the proof-of-work (which is essentially just brute-forcing random numbers) goes to waste. The actual verification of the blockchain is quick.

Primecoin introduces a new idea. The proof-of-work is done through the generation of primes. So although it is still more resource heavy than proof-of-stake altcoins, it is going towards a collective benefit. The resources are anyway being spent for nothing, so why not spend it on something useful? Luis von Ahn (creator or recaptcha and duolingo) will be proud. It’s realigning the incentives. Think SETI@Home meets Bitcoin.

I still have to read up more on how it works. With some initial reading, it seems it is generating prime chains. These chains are then used as a replacement for the hashes (as in the case of other altcoins). Bitcoinmagazine has a write-up of Primecoin’s inner workings.

What is amazing though, is the potential now exists for these proof-of-work mechanisms to be useful on its own. Bitcoin’s distributed network is the “largest” (note the quotation marks) supercomputer that exists in the world. We can now both run a math-based currency AND use it for the benefit of humanity.

It begs the question. What if we can realign the proof-of-work even further? What if anyone can use a supercomputer to do some number-crunching and then let it act as a proof-of-work? A free API to a supercomputer.

The cryptocurrency revolution is here and it is changing the world.

Thoughts on Bitcoin and Tax.

One of the more interesting thought experiments around Bitcoin is related to the idea of tax. How do you reconcile a cash-based internet currency with tax in a nation state? Is tax an old idea? How can you tax something if you can’t track it? 

There are a lot really Bitcoin enthusiasts that insist that tax is immoral. It is being forced on people. And that tax is the only reason why any governmental money succeeds: you must earn USD, because you must pay tax in it.

Let’s first look at this perspective. Let’s assume we still want tax in a nation. The benefit of providing social good through taxation in a fair and equal society means cheap healthcare, policing, education, upkeep, etc.

If someone chooses to earn their keep in Bitcoin because of it’s ease of use (freelance jobs through the internet for example), and you still want to contribute to the society you benefit from, how would you pay taxes?

There are 2 ways I see it. You can classify it as assets, which you then have to declare. Selling those assets for fiat, means you then pay capital gains tax. The problem with approach however, is that Bitcoin is a very liquid asset. To declare that I received 0.001 Bitcoin is unfeasible and pointless.

The other way is when you convert it to fiat, you declare it as income (or foreign income). And then get taxed according to income brackets. This is easier for the individual, but the problem with this is, you can function start functioning in a society without having to cash out. There are pubs, sites, grocery stores, etc starting to accept Bitcoin. See the upcoming crowdfunded documentary, Life on Bitcoin.

With the second idea, you could simply monthly declare the Bitcoin at the current exchange rates as income. The government would then still insist on the taxes for that income. You are then REQUIRED to convert the specific amount to fiat and pay the government. Are there any other ways? What do you think?

For the 2nd though experiment, it goes a bit into tin-foil hat territory. Do we still need tax? I’m asking this question not because I think we do not need tax, but rather I think it’s an important question to ask. Technology like Bitcoin forces us to contemplate it at least.

An interesting perspective to this (through discussion on Twitter with Len v. Heerden). A government has nothing do with Bitcoin. They provide no benefit to the functioning of it. Thus, why do we need to give the government value when I earned Bitcoin without the use of my government? If I was being paid in Rand, then sure. They provide the facility of currency in the country. It’s an interesting point, because it sort of pits a nation’s currency against Bitcoin (or global currencies). The government must provide incentives to use Rand over Bitcoin, without trying to force its citizens to use it. They shouldn’t hyper-inflate it. They should create incentives for people to buy Rand, such as saying: if you want small business support we only pay you in Rand. A public park will only be built by paying the contractors in Rand. Tax then sort of becomes like the monthly fee to participate in the benefits that your nation provides. If your nation sucks, then you don’t have to pay it. It’s still a difficult viewpoint to process because public goods can’t so easily be separated.

From my perspective, I don’t see how we can provide benefits for the commons without some form of taxation. However, I do think there are some clues to how this could be feasible. Bitcoin is such an example. We THINK we need centralised creation of benefits, but as can be seen with a well-thought out system like Bitcoin, we don’t. Are there incentives, technologies, machines and systems we can design to benefit humanity without the need for money to siphon to the top and back down again?

For example, what if there is a way to incentivize people to perform policing duties? Conducting acts of good and lawful protection of citizens, and you will be rewarded. The acts of good and lawfulness are mathematically enforced by some protocol? Spitballing here. There are gaps in this argument.

What if we could utilize the latent knowledge in a community, and have people teach one another instead of relying on the idea of a school? Is it possible to induce equality in a decentralized system like this? Will equality even be an issue?

Decentralized systems have always failed because we lacked ways to police it. And Bitcoin has in a way solved that philosophical problem. Can variations of it be used in other forms?

All these are interesting questions! What are your thoughts?

Excuse me of I might have gone a bit too tin-foil here. I don’t usually like ascribing to extreme view points, but it is more for a thought experiment than anything else.

A post on medium and a new tumblr.

Quick update.

Tried out Medium.com. I put up a post on there talking about tenacity vs iteration. When do you stop with something when it doesn’t work out, and when do you keep going? I really enjoy the writing experience, but it’s not enough to convince me to move platforms.

Then. I’ve started a new tumblr. It’s more in the vain of how tumblr is generally used. I’ve always had a fascination for spaces and the meanings we imbue it with. From maps, cities and abandoned buildings. Follow it here: A Place for Spaces.

Cheers.

WWW 2013 and Rio de Janeiro.

At the end of last year, after doing some data collection on my thesis, I checked around for conferences to submit preliminary results to. The first one that popped up, was the premier www conference. It always attracts great speakers, great research and great people. This year, it was hosted in Rio de Janeiro, Brazil. Another fantastic reason to try! So I did, and got a poster accepted with my supervisor, Kobus!

I was both nervous and excited about the trip. Apprehensive and amped! Although I’ve been to several countries, it was my first time solo travelling to another country. Adding to the ‘firsts’, I also opted for trying new things such as trying Airbnb. So here’s what went down:

Friday, 10 May.

Leave early early morning with a lift from my brother. Flight was CPT-JHB-Sao Paulo-Rio. Pretty chill flight. I arrive in Sao Paulo, and have to check my bags in again for the domestic flight to Rio. I walk through… and forget my poster tube at the baggage reclaim. Epic fail. So there I was running through Sao Paulo airport trying to figure out how to get back in and get it. Luckily, I found the SAA lost luggage office. The man there was extremely helpful and managed to call a guy working at the baggage reclaim to find it. Luckily it was still standing there. Phew. Successfully retrieved!

I arrive at night in Rio. I opted to try Airbnb and stay in this little place. After getting lost in the building, I found the place. The caretaker of the apartment was a woman living next door… She only spoke Portugese. But I manage to do just fine. Sleep.

Saturday, 11 May.

(view from airbnb apartment)

An acquaintance, Pri, was going to show me around the city. Unfortunately, family issues arose and she couldn’t anymore. I’m still really grateful for her open-ness and willingness to show a gringo around!

Went to see Sugarloaf Mountain and Christ the Redeemer. Amazing views! The tram ride to the top of Christo Redentor is pretty interesting as you slalom through forests and buildings. The combination of navigating a foreign city in a warm summer’s day and lack of human communication left me exhausted. Crashed.

Sunday, 12 May.

Woke up and missioned to Copacabana. Walked along the beach and had a beer and lunch.

Became a bit overwhelmed by all of it: solo travel, can’t talk, foreign city, random apartment (with no hotel creature comforts). Felt anxious and exhausted (also somehow developed complete lack of appetite). Wanted to just get a blanket and crawl under it, which I did.

Monday, 13 May.

Conference time! :D

After struggling to speak with the caretaker and difficulty hailing a taxi, I managed to arrive at the Windsor Barra (a bit outside the main city).

Amazing venue! Attended some talks. And then checked in at 12. Some time before the conference, I checked the #www2013 hashtag on Twitter and saw that a guy (Ted Benson) was looking for a roommate. I thought why not. Cheaper bill, meet cool people!

Also met Ulrich, another South African, currently at Xbox. Was great to also be able to speak Afrikaans. Went to grab dinner and caipirinhas! 

Tuesday, 14 May.

Attended early morning session with Bert Bos (one of the creators of CSS), talking about CSS3. Quite interesting. Although… some new features of CSS3 seem really arb, such as the plethora of gradient tools. Gradients feel very 90’s… Attended linked data workshop and REST workshop (this was quite cool). The night, there was a party hosted by Facebook (recruiters + employees). Don’t really know how they choose to invite people (feels a bit like high school, vying to be ‘popular’), but got in as a +1 with Ted. Met cool people, had free beer and snacks.

Wednesday, 15 May.

Conference only started at 1pm today, so went for a morning run along the beach. Took a swim. Leisurely breakfast and lunch and then attended first keynoye from Luis von Ahn (recaptcha and duolingo).

Great talk. Afterwards attended an entrepreneur focused Q&A with Luis. Was great to hear his advice! Attended a session on web economics and monetization and a Q&A with Tim Berners-Lee. DRM and copyright was a hot topic. Someone even asked timbl about Bitcoin! The night was poster reception time. There was more caipirinhas. Had a few interested people stop by! I’m just surprised there were actually other people doing research about lists on Twitter!

Thursday. 16 May.

Same as yesterday. Walk along the beach. Go to breakfast, and see that Max (a friend I met earlier) was sitting there. Fun guy. More people joined, included Tim Berners-Lee that sat next to me. For academics in the web circuit it might have been normal, but for me it was pretty surreal. The topic somehow went from weather to gulf streams and South Africa. Great to have met him!

Day went from surreal to mind-blowing as Dr. Miguel Nicolelis spoke about brain-to-machine interfaces. From monkey’s brains being able to develop virtual limbs to control, to mice’s brains being connected (as one) across time and space. Bizarre, sci-fi-ish! See this TED talk about it. (very similar talk). What was awesome: this tech is planned to be used at the Brazil 2014 world cup opening. A paraplegic person, connected to a robotic exoskeleton will stand up and kick a ball. Spectacle! FUTURE.

Afterwards there was net neutrality panel discussion (more DRM + copyright talk). Attended a session on social network analysis.

Then, one of the best moments of the trip: the gala dinner. After a lengthy bus trip, we arrived at the venue. Samba band was playing, caipirinhas was had. Fun. Then the meat extravaganza! So. Much. Meat. Then everyone headed back out for what was one the coolest live gigs I’ve seen. A Beatles cover band adding a samba twist. The people in the group were all young. I was so envious, as the cool guys and cute girls jammed it out. It seemed like a such fun thing to do. They handed out masks, confetti, hats and bowties, and the party kicked off.

There was plenty of conga-lines (at one stage I somehow led one). And at the end, a rather punky version of Yellow Submarine led to a mosh pit. The “It’s Saturday night at the indie stage at a music festival. It’s 9pm, everyone’s a bit drunk” kind of mosh pit. The fun kind! Perfect way to end it.

Friday, 17 May.

Due to my flight leaving early, I couldn’t attend Friday’s sessions. I left on the first rainy day I saw (luckily). All in all. Great fun.

Conclusion:

Overall. It was what I expected. It was going to be a whirlwind of experiences! And boy was that the case. The conference itself was amazing. Loved every minute of it. Met incredible people and saw fascinating research! Rio de Janeiro is a picturesque city. In some ways, it reminds me of South Africa. Incredible natural beauty. But poor people live right next to rich people. The brazilian people I met were all really friendly, even though I couldn’t speak Portugese. Would I try Airbnb again? Yes. But for specific reasons. One thing you kinda forget, is that hotels include stuff like breakfast. Being in a foreign city, finding great breakfast is a mission. Foursquare helped a bit, but I still had to try and order with broken Portugese. So it depends. Airbnb would be a perfect fit for a group of people, and when you are sure you know more about the area (like finding convenience stores to buy breakfast cereal or eggs to make).

Overall, unforgettable experiences. And on that note, would just like to express gratitude towards my lab (MIH Media Lab) that offer these travel  opportunities to us. I don’t know how to say thank-you enough!

Upwards and onwards.

On Creativity and Innovation

A friend (Dave Freeman) whom I met while I was involved with the indie game development scene back in 2007, posted this today on Facebook:

Let me tell you a little story about innovation and creativity. Years ago, I worked on a wiki-based project to find the first instance of ideas/techniques in video games (like the first game to use cameras as weapons, or the first game to have stealth as a play element). It excited me to dig to give credit to those who laid the foundations of ideas that we now take for granted. I couldn’t wait to show the world how creative and innovative these unknown game designers/developers were. 

I went into it with much passion and excitement, but unexpectedly, it turned out that there were almost no “firsts”. Every time someone put up a game that was the first to do/contain something, there was another earlier game put up to replace it with a SLIGHTLY less sophisticated, or SLIGHTLY different version of the same thing. The gradient was so smooth and constant that eventually, the element we were focusing on lost meaning. It became an unremarkable point to address at all. We ended up constantly overwriting people’s work with smaller, less passionate articles, containing a bunch of crappy games that only technically were the first to do something in the crudest manner. Sometimes only aesthetically.

After a lot of time sunk into this project, I came to the conclusion that I was mistaken about innovation/creativity. It would have been a better project to track the path of ideas/techniques than to try to find the first instance of an idea/technique. I held innovation so highly for years before that, but after this project, I saw just how small it was. How it was but a tiny extension of the thoughts of millions before it. A tiny mutation of a microscopic speck that laid on top of a mountain. It was a valuable experience that helped me very much creatively.

I’ve learned this to be true as well, and this example articulates it so well. Coincidentally, had a discussion with another friend last night about Bitcoin (what’s new?). It really is a perfect storm of ideas that incrementally came together. There were proof-of-work systems before (Hashcash), and all the technology existed for quite a while. The incremental innovation here was combining the technology (cryptography), the proof-of-work system with the idea of a public shared ledger.

Ultimately. Creativity and innovation happens when ideas meet. And to make that happen, you need to become a vessel for ideas. No matter how mundane, or arbitrary, you need to want to learn and enquire. You want to talk to people, learn what ideas are in their minds, and combine it with your own ideas (sort of like Sylar in Heroes, but for ideas). You’d want to get other people together so they can share their ideas. And you’d want to openly share your ideas so they can manifest themselves in other people’s minds. I’m starting to sounds like Jason Silva here.

"RADICAL OPENNESS" - for TEDGlobal 2012 by @JasonSilva from Jason Silva on Vimeo.

As Jack Dorsey also says in his foundation interview with Kevin Rose (starts at 14min):

One of the best things you can do as an entrepreneur is to not only rely luck. You have to cultivate the ability to recognise fortunate situations when they present themselves.

To innovate, you must become a vessel for ideas and realise the fortunate situations when they present themselves.

The Bar (of the future).

I look down. I’ve got my favourite shirt on. There are more people than usual tonight. The sip of beer tastes refreshing and slightly bitter. Just the way I like it: South African style.

The room next door fills with the usual playlist. Old-school tunes! My brother is already here, sitting at at a table. Schweet. He is sipping a guinness. It’s been ages! I should get one after this.

He says ‘hi’, and I greet with the usual ‘how’s it hanging?!’. We talk. The usual. What’s new, how’s life, what’s the plans? what music are you listening to? what’s up with Bitcoin? etc.

It’s a great night. People around us move in and out of periphery, faces I haven’t seen before. At the end I instinctively reach out for a handshake, and we miss. Our hands pass through each other. I recall this happening. I should be used to this by now! Being a little drunk, you forget that we are a few thousand kilometres apart.

This reality isn’t far away. Using the Oculus Rift for visual immersion and using Kinects for creating 3D representations of your body, you can create environments where people can share realities in ways we haven’t thought of.

In our current shared time-space, the only thing that’s really indicative that we are physically close is that I can touch a person and get physical feedback. Until haptic interfaces get more advanced, this is it. A lot of the interactions you make with people doesn’t involve a lot of touch. If you are in a bar of club, you are ‘physically’ close, but they are simple a few meters away.

If we can make virtual realities and map our bodies (using technology like the Kinect), we can create shared virtual environments on unprecedented scales! I can sit, and get drunk with my brother who is literally a few thousand kilometeres away, but it won’t feel different than sitting across from him in a bar. It’s strange, and exciting!

The possibilities are endless. These virtual environments and meeting places won’t be limited to bars. We’ll have magnificent views. We’ll have DJ’s playing to crowds of thousands. We’ll have architecture that won’t be able to exist in current space and time.

Exciting!

Enabling amateur creators through Bitcoin.

image

Photo credit: MIH Media Lab

If you’ve been following me on Twitter (or seen me in real life) you know I’ve probably mentioned Bitcoin a bit too often lately.

My parents are one of the few unlucky ones, especially my dad. He is a financial advisor here in South Africa, running his own company and sits on a few boards of investment funds. To speak to him about Bitcoin has always been an absolute pleasure. It’s often easy to get completely carried away with all the techno-crypto-future-utopia ideals, and to have someone always keep you grounded, and questioning and being skeptical is refreshing. Understandably so, especially considering you are always dealing with other people’s money.

In the process of explaining the Bitcoin side-project I am working on with my brothers (@nieldlr, @fassadlr), he kept questioning the value of it, especially the use of Bitcoin. Through the conversation and useful introspection, a realisation dawned on me that once again gives me faith in Bitcoin: the ability for people to easily receive value (exchange) over the internet. Especially for the long tail of amateur creators.

I remember back in high school, creating games, I would’ve loved the opportunity to easily experiment and try and sell my game. In South Africa at that time it was near impossible and incredibly difficult to understand how, especially as a high school boy. PayPal wasn’t available yet, and I had to look into sites such as Plimus and Moneybookers. It was overly difficult. Thousands of forms, and stuff that really just impedes creators from trying to sell the stuff they create.

Forward to 2013, and in South Africa it is still stupidly difficult. While I appreciate our exchange control laws (it saved us from a nasty hit in the 2008 recession), it impedes people wanting to sell their digital goods over the internet. I have to sign up for a separate account at FNB (which is not my primary bank), and then arrange to have it paid out to my bank account (through PayPal), etc, etc. Even for an adult, it takes time to understand how to do it. For a boy in high school wanting sell his game, it’s even more difficult, irritating and frustrating.

With Bitcoin, I can start receiving payments from all across the world, in less than 10 minutes. Even if you had to worry about price volatility, for a boy in high school, anything is better than nothing. For amateur creators, especially in the digital space, anything is better than nothing. That’s why pay-as-much-as-you-want has been so successful online. Cost of sales is practically 0 these days (hello cheap cloud storage) for selling digital goods. It enacts purer price discrimination per individual.

I can then eventually keep it, and eventually cash out into fiat, or start spending it in the ecosystem, buying other indie developer’s games. As Fred Wilson from USV puts it (in this interview): Bitcoin is cash for the internet. If cash was the preferred way of paying for something (vs credit cards, or other forms of money), then Bitcoin is its equivalent on the web. As another (oft-quoted) slogan of Bitcoin puts it: “The local currency of the internet.”

For a boy in high school, creating games for fun, Bitcoin is exciting. For the hobbyist musician, creating beats on weekends, Bitcoin is exciting. For the designer creating icon packs to learn new skills, Bitcoin is exciting. For the amateur creator, Bitcoin is exciting.

And that’s what we are hoping to build! And we are excited to share it hopefully within the next month!