bitcoin

Showing 29 posts tagged bitcoin

Thoughts on Ethereum.

“Don’t ask yourself what the world needs. Ask yourself what makes you come alive and then go do that. Because what the world needs is people who have come alive.” Howard Thurman

Mihai Alisie (from Ethereum) nails it with post: dreaming with open minds. Lots of awesome nuggets in that post.

Back in December when I was researching personal coin ideas, just like Vitalik, I discovered that, at that stage, doing any kind of colored coin system on the Bitcoin blockchain will be possible, but very, very ‘hack’-y. I even came up with an overly complicated decentralized altcoin process (that probably has millions of holes). It was spammy and didn’t really feel like it would fit. And the odd combination of having to keep normal btc to transfer colored coins. It’s messy.

I was glad to discover that Vitalik started Ethereum: solving exactly those problems. And it is on the surface, a simple proposition: move the ‘unit of account’ to a processing unit. Ether, is the ‘gas’ to process multitude of smart contracts.

In Bitcoin’s case, the ‘transaction fee’ was what was paid to change state of the currency unit, processing a relatively simple contract on the ledger.

In Ethereum, this contract can become much more complex and a lot more can be changed in the state besides a “currency unit”. But now, a transaction fee in the case of Bitcoin won’t suffice [pay per kb], as more complex contracts would not match linearly with increase in size. And thus, ‘ether’ is used to process these contracts and state changes.

If you are up for some reading on this fine Thursday, do read the white paper: https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper.

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The potential this has is immense. I’m especially looking forward to working on decentralized reputation systems (so you could hopefully tap it more easily into systems such as OpenBazaar), and again working on personal coins.

But, that’s probably just low hanging fruit with Ethereum. I’m so so excited about what will happen, and what will be created. Here’s even a basic experiment in defining art with a dash of behavioural economics in a contract (by Rob Myers): http://bitcoinagile.com/5E897/ethereum-art-is_stream. Because why not?

The jury is still out on the economics of this system [including the concept of a pre-sale of ether]. But to able to figure it out is a really, really difficult problem.

At the end of the day, I take my hat off to the Ethereum guys. I like supporting people who create, and are passionate about what they are creating. Doing something so monumental is no easy task. There’s technical, economical, cryptographic & legal problems, and then you have to deal with the haters as well [don’t be a hater, be a creator].

As humanity, we are paving our way to defeating the entropy of large social systems, and whether Ethereum fails or succeeds, it’s a historical step.

I bought some ether so I can do some cool contracts when it launches and saying thanks to the hard-working team for doing epic shit. Not much, as I need to still bootstrap this new company I’m busy with. ;)

The blueprints for a decentralized Uber.

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Uber recently received $1.2 Billion in investment at a $17 Billion valuation. Kudos to them. Fundamentally, they provide a great service. They could become much bigger, filling into the niche of every “transport as a service”. If so, $17 billion is still low. Even though it is only just 4 years old, it already claims huge revenue.

It comes down to our revenue numbers, the growth of those numbers and our business model itself. … The [numbers] are incredibly compelling.

But. And here’s a thought experiment… We have a company in the business of market-making: matching up people to transport. They provide additional services that make it a more compelling experience: a reputation system for drivers, decent cars, vehicle tracking & instant payment through an app.

Like Michael Arrington states in this 2010 post about Uber, it solves the following annoyances:

In my order, that’s flagging one down, finding the cash to pay, and being in a sometimes disgusting car.

It brings the hallmarks of the ‘sharing economy’ to the transport industry: identity/reputation systems, and ease of transferring value. The same with Airbnb. Bringing in an ID/reputation system with the ease of value transfer. Apartment/home rentals abroad were often confusing & unorganised.

Fundamentally though, the services these companies provide alleviate some of the inefficiencies in bringing it all together: tying in reputation to a specific subset of a market (past time/space constraints), being a trusted brand & being the payment processor. Rightfully so, they take a cut for their services.

On a smaller scale, you wouldn’t require a third party, as the market would be efficient enough. There’s enough trust between participants so that people would be content to use normal means of “market making”. Take the example of a small seaside town. If you have friends that want to come visit you over the holidays, local knowledge, know-how and connection to the locals in the area is enough to find out who has a place free for your friends to come and stay. Once the scale becomes larger, and larger, these efficiencies become too large, and internet-scale services such as Airbnb & Uber are required.

So, what it it comes down to: when the scale becomes larger, we need third parties such as Airbnb & Uber to help us in market making… and we pay them for it.

There thus exists a hole in the market. An internet-scale decentralized, reputation-based marketplace (for everything). Immense costs will be cut. A more globally efficient market.

Ever since, I heard Mike Hearn talk about the possibility of a “TradeNet” (slides), I’ve been keeping an eye on this problem. A decentralized marketplace for everything (including machines posting jobs for machines). I’ve been slowly educating myself in the esoteric parts of how such a system could function, reading up things like Kademlia DHTs. By no means am I equipped yet to understand how it would work technically, but thankfully there’s people considerably smarter than I am!

And it is coming. It’s called OpenBazaar. OpenBazaar is a fork of DarkMarket. DarkMarket’s slant is decidedly more political. I’m much more a fan of the neutral-sounding OpenBazaar. It’s not just about being to sell anything, it’s also about solving efficiencies in global scale market making. It’s not just about being to able sell drugs. The media already looks at DarkMarket like it is only for that.

Brian Hoffman, current lead dev on the project, puts it succinctly:

“The goal is not to make it simple to find drugs or guns. Period. I am not spending my time contributing to something to help others buy drugs, I’m trying to help sellers save money on transaction and payment processing costs, and open up new customer bases. There’s a lot more here than drug or gun sales.”

OpenBazaar

In short, it is a p2p market. Cut one part of the hydra off, and it remains alive. It will have secure p2p merchants, anonymous rating systems & 3rd-party arbitration.

Without going into too technical detail, it will hopefully be possible for someone to build a global reputation for a specific market need (driving people around), and won’t require a third-party to bring it together.

A decentralized Uber could thus use OpenBazaar as its “back-end”, and then someone would build the additional features such as tracking of taxis. Others could use the same back-end and innovate. It could all be open-source too.

Of course, this would be simplifying parts of the process, and perhaps it wouldn’t necessarily be as close to Uber, but it is definitely possible, and it is definitely coming. If market efficiencies make it better for the driver and the passenger: cost cutting & saving on fees, it could be adopted like wildfire. It could also mean that markets could become more efficient. Uber’s top-down “surge pricing” might not be the most efficient.

It’s going to create rippling ramifications in the political/legal sphere. Uber & Airbnb are already bashing against them. But what will happen when all this gets decentralized? And what happens when not only humans start using this OpenBazaar, but autonomous agents as well [self-driving cars picking up packages and delivering them]? Also, imagine a permissionless, global marketplace? “Permissionless innovation” is a buzz-word, but seriously, imagine the possibilities?

All I know is, it will most likely create a world that will be more cost effective, and bring people closer. And that’s an experiment worth trying. Now, I just need to copy myself, so I can work on more of these awesome projects!

Thoughts?

Systems, trust and the blockchain.

(Some background music for this post. Click play).

For my masters degree that I finished last year, I decided to research something that’s always interested me: group dynamics (and specifically the concept of ‘critical mass’). I wanted to know what happens with groups of people, as they grow larger. I ended up finding a niche in this, but it still came from a curiosity in terms of how humanity functions together.

I’m particularly fascinated by the research of the Robin Dunbar, a British anthropologist that correlated the size of the prefrontal cortex in relation to size of groups in primates.

What he discovered (and it’s just a well substantiated hypothesis) is that the size of the prefrontal cortex does in fact correlate to larger group sizes. Later on, he went on and postulated the idea of the “social brain hypothesis”. There is safety in numbers, and the primates that managed to be able to group together in larger numbers, survived. One of our greatest assets is the extent of social capability.

In a sort of fibonacci manner, these groups extend in size by increasingly larger factors. Here’s an in-depth post on it looking deeper into these delineations. 

This picture says a lot:

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Have you ever been to a social gathering, where there is 5-7 people? Everyone has fun together, but once you add the 8th person, it’s too much and the conversations splinter.

You’ll also agree that that you probably have 5-7 really close friends/family. Then after that it starts branching into close acquaintances (and friends you don’t see often), up to about 50 people. Then it goes onwards until 150, which according to Dunbar is the limit of people with which we can have “stable” relationships with.

Each new delineation means a new kind of relationship. In humanity’s history we’ve consistently found ways to extends these groupings. With each new technology (as part of our system), as individuals we’ve managed to collectively put faith in it so that we can function better together: the sum is greater than the parts.

If you look at innovations such as agriculture, sewage systems, rail, cars, internet, etc. Each time we can let go of some “trust” in others, but put faith in the “technology” so we can ALL be better off. If we are only primates in the wild, we required the trust of others in the group: which limits us to 150. But NOW, we don’t. We can arbitrate the trust through the extra pillars in our systems.

Now we manage to collectively hold faith in systems such as democracy, capitalism, policing, nation states, etc to able to function at “higher levels” of organization.

I mean. If you think about it. Isn’t it a bit weird that another individual has the authority to lock you away? Or isn’t it weird that we stop for red robots, which is just a red light? Isn’t it weird, that on some pieces of land I can walk freely, but then suddenly walk into artificial boundaries? We, however agree to work with this, because for the most part, it enables other things. We are all cogs in an increasingly larger machine (not implying the negative connotation here): allowing us to enjoy things like Game of Thrones thousands of kilometres away, allowing us to enjoy the Internet, communicating with fascinating stranger in different countries.

It’s a growing, complex system. The parts become larger, creating smaller autonomous pockets within the larger whole. Currently the escape velocity of these systems seem to get stuck at nation states. We’ve tried creating systems of international (and wordly) agreement, but it still sometimes fails. We unfortunately must still have  an hegemony to act as the world’s “police” (aka USA). Nations (*cough* Russia) continuously test their geopolitical influence, and international agreements often fizzle out.

The benefit of the Internet has made nation states more intertwined, which is good. We seem to move towards the right path.

Now: if you catch where I’m heading towards. In terms of humanity, trust and systems, technology enables us to trust the people less, because we can put trust in the system. As time went on, we put more and more trust in the “black box” of the systems we’ve created. To use a crude example, I can swipe my credit card at a shop in Amsterdam, and everything *should* be okay, because we can put trust in the systems behind it. I don’t have to worry that the waitress behind the desk has any incentive to suddenly whip out a knife and kill me for my clothes. I don’t know her… from anywhere. But I don’t need to. And that’s the beauty of the wonderful systems we’ve created. Some are still flawed, but we’ve managed to do a really great job so far, thanks to our prefrontal cortex.

We understand the concept of “police”, blackboxing it in our minds, that allows us to go along with the collective “illusion” that another individual can lock us away.

To sum up thus far: better systems require less trust -> enabling us to achieve more. (I generally don’t need to worry that my chair that’s keeping me steady is going to break). In the center of this is technology/innovation. In terms of complexity theory: it’s the rock solid foundation that allows creativity and innovation to exist at the “edge of chaos”.

Now comes the most fucking mind-blowing part: the next step. The almost perfect trust-less system. A cryptocurrency’s blockchain.

Humanity, in the guise of a group of people (or individual) created Bitcoin: Satoshi Nakamoto. A system that propels humanity aeons ahead. Through clever exploitation of numbers, verifiable by the laws of the universe we inhabit, we can establish consensus. Just think about it: a verifiably secure, global, nearly instant public ledger. That’s unfathomable.

The blockchain becomes the foundation for a system in which humanity can organise in a much larger fashion: continuing our walk to trump Dunbar’s Number.

Think of it as a pillar - a strut - propping up humanity. A “large city” attracting people from neighbouring towns. A star, attracting celestial bodies to form a solar system. The blockchain’s “systemic gravity” is incredibly strong.

Like agriculture, sewage systems, the automobile, the pc & the internet, we’ve reached a new substrate in complex systems that will help us withstand the entropy of large social systems.

It’s going to a really awesome decade or 2 ahead.

Currency as language.

On this wonderful journey of cryptocurrencies, I explained why in the next decade there will be a currency for everything (even people).

One of the rising protagonists of the cryptocurrency movement is Andreas Antonopoulos. He shares my vision of a world where there will be thousands of currencies. He has a knack for distilling some of the concepts into succinct terms. During the recent Coinsummit conference, he mentioned this future again and used a term that so aptly describes what is going to happen.

Currency will become a language.

Because (soon) anyone can create a currency that is instantly global and more to secure to counterfeiting than any other form of money we’ve seen. And when this happens, people will have free choice to affiliate their monetary value to any community they wish.

When you are faced with an option to use equally secure forms of money with equal monetary value, you are going to use the one that speaks to you: that represents the ideas you want to affiliate with. For example: let’s say there is a currency for death-metal fans & a currency for jazz fans. If you had the option to (without financial risk*) to use one that speaks to you (jazz), you’ll use that one. It becomes a vote for that community. It is the glue & lifeblood that builds a foundation for those networks of value. I like putting it in terms of this other post I made about music & people’s disdain for when artists go mainstream. The “law of hipster connection” states: 

The more obscure and deeper down the rabbit hole of music you go, the deeper and more intimate connections between individuals become.

Replace “music” with any “meme” (in the Dawkins sense of the word). I use art as an explanation as well.

Understanding others through a cultural meme is sort like a proof-of-work for connection. If I like something, and someone else likes it as well, it speaks to what has happened in our life and the roads we unknowingly shared to be able to come together and appreciate that meme (note. Again, I’m using meme in the correct way here, not referring to funny internet jokes).

This week, through serendipity of the internet, Marc, a musician from Johannesburg called me to explain just how excited he is about “The Cypherfunks" (internet band & cryptocurrency community). It is inevitable then that barriers of trust are completely destroyed, because we both "get" it. It is a wonderful feeling.

And so, currencies will become languages: indirect votes of the community you affiliate with. If I use Dogecoin, it represents the welcome, light-hearted and charitable community we’ve come to know and love. If I use FUNK, it represents the community of musicians coming together to make music with others across the world. The currency becomes loaded with meaning, and that meaning speaks.

And that is so exciting. So incredibly exciting. It speaks to people in terms of agency & in terms of connection. The great inventions of the world bring us closer, because deep down, one of our greatest desires is to rally against this shell that is our body. We touch. We talk. We fall in love so that the barrier between us and others fall down. And that makes these experiments all the more worthwhile.

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*Just a note on financial risk. Of course, if we assume a very liquid world containing various networked currencies, there’s going to be some risk in holding a currency. The natural order of things is for communities to arise and die, but sometimes your propensity of risk is to not necessarily want to be financially involved. There are however ways to mitigate this, and it is already becoming possible. An example is Coinbase’s (apparently) upcoming feature that when people spend their Bitcoin, it immediately transfers your dollars in your Bank account (through ACH) to Bitcoin and pays with that (or replenishes it, straight afterwards). This means. When faced with a situation to pay for something, you can choose a currency, as long as it is immediately exchanged into the other. For those with less propensity of risk , they can keep their currency in a system that is currently more stable, and then when paying, it becomes a vote for a more specific community. Paying with Bitcoin through Coinbase using this method is a vote for Bitcoin: a community that represents this potential. In the future, it could even be from Bitcoin -> other currency networks.

A blockchain as host for a decentralized virtual/augmented reality.

So. Now that Facebook has acquired Oculus, there’s talk (on the Oculus) sub-reddit about metaverses. Facebook could make & build a metaverse. And they suspect that, of course, there will be multiple metaverses created by different companies. However, we stare slap-bang right into a problem of ownership & centralization… Something humanity has managed to solve in the form of… a blockchain.

Bitcoin is a shared ledger, currently used for currency. But that shared ledger technology can be used for almost anything. The incentive of the “tokens” used in it, should just be aligned with incentives to keep the blockchain alive. So, an example of this is Namecoin: a tool store decentralized dns. But which has also now been used to create a decentralized directory of people: onename.io.

Now. Thinking about virtual (& augmented reality for example), there WILL be incentives to create a metaverse not controlled by a central authority (such as Facebook). We’ll want to create objects in these spaces that are decentralized, and we have the technology to do so. Pure virtual reality might be some time off (as it is perhaps a bit more complex), but let’s look at augmented reality. If I place an augmented chocolate on the ground in front of my house, and someone else walks by with their (say Google Glass), they will need to be able to see it. So a bare minimum, this is already possible. You create a key-value system, similar to Namecoin, but call it AugmentedCoin. Similarly, you need AugCoins to store the coordinates of these virtual objects. The extra part is the reference to how this augmented object acts in the augmented space [if the reference is missing, it disappears?].

The beauty of this system too, is that proof-of-work can act as spam control. In order words, you can’t just place a shitload of bananas all over the meta-layer [over earth]. The basic form is that transaction fees limit continuous placing of objects. But you could also add another layer, where the higher fee becomes the first object (form of proof-of-sacrfice)?

Anyway. Just some quick thoughts. I do however think this is inevitable. It might some time to eke out the details (economics & technology), but it is entirely possible. If it can be decentralized, it WILL be decentralized.

The Cypherfunks. One month in.

Wow. What a crazy few weeks it’s been.

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[Thanks to Frederick for the photo]

On the 21st of February, the genesis block for The Cypherfunks was created: an internet band and currency. A project for musicians from around the world to come together and make music under one name [no permission is required]. The currency acts as quantification of the network.

Since then it has gotten wings in ways I did not imagine. As you can see from the photo above, never did I think I would be on national news in South Africa talking about it.

In other ways, it’s been more difficult than I imagined. Let’s talk about that first… Considering that this project comprises of 2 different communities, it’s been difficult to convince either of the benefit it provides. For the cryptocurrency, cypherfunks, is technically NOT an altcoin. It’s not supposed to compete with Bitcoin, Litecoin or Dogecoin. It’s a new way of crowdfunding, and it is using cryptocurrency as the method. For the musicians, explaining cryptocurrencies have also been an upwards battle. But it’s also more than that, it’s also explaining why cryptocurrencies is an effective way to attempt this experiment vs other forms of crowdfunding (in short: both are decentralized, that’s why crypto is better).

Chances are, the support behind this project is more than the price reflects (which is good and bad). Good, because there’s definitely support here that’s not obvious, but bad, because it’s not revealed in the price. For a project like this to succeed, liquidity is needed (from speculators).

On the plus side. It’s been amazing to see people from across the world get involved with project! 23 songs have been released, and people from Europe, Africa, America and Asia have gotten involved. It’s been exciting to see. Creatively, it’s also been a wonderful adventure (in just a month). I’m really proud about this collab (a totally original production fully within “The Cypherfunks”): https://soundcloud.com/simon-segfault/the-cypherfunks-weavers.

Such a nice blend of chillwave/electro-pop. Just the style I like. And it was birthed solely thanks to this project. In wonderful moments of serendipity, I met a journalist, Justin, at an informal dinner at one of Stellenbosch Unversity’s new student housings (which I was invited to thanks to Johannes). He invited me to an interview on RSG about the project. It was fun! And then the national news wanted an insert (thanks Naledi!). So odd, and wonderful at the same time.

Word of the project is proliferating to musicians across the world. For one month, it’s been such a great experience. I’ve met so many great people, listened to great music, appeared on national tv. And it’s only starting. So excited for where this will lead! Worth every penny so far!

It’s also birthed an entirely new start-up I’m so excited about, doing it with the coolest people. Will share it soon, once we have a prototype going.

We are the cypherfunks.

Country-based cryptocurrencies with self-regulating incentives.

Or: “Keeping a crypto-currency focused towards the country in question.”

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I’ve posted about this before, on how communities can create their own altcoins with self-regulating incentives. I’d just like to re-iterate how this could be done.

In the past few weeks, country-coins have been making big splashes, with Auroracoin almost hitting $1 Billion cap (although a bit misguided as the amount of coins in supply weren’t ALL the coins). The others one that splashes are coins such as Mazacoin (of the independent Lakota nation) & Spaincoin.

It is permission-less innovation. A cryptocurrency is automatically a global network. The way in which these coins focus on a country is to pre-mine a large portion of it (say %50), and then manually distribute it to citizens of the country. This is called an airdrop. You can read how Auroracoin will do it in Iceland. The gist is that using ID, you verify your citizenship and can claim a portion of the pre-mine.

The problem with this method, is that over time there is no guarantee that Auroracoins will stay in the system or in the hands of Icelanders. A strong mining group outside of Iceland can mine it or a wealthy individual over time can just buy a lot of it. While this, to some extent is “fine”, there is no self-regulating incentive to KEEP the center of the system within Iceland. Auroracoin can be adopted by Iceland (officially), but that still doesn’t stop it from it flowing out of the network it is INTENDED to support.

What is needed, is for the money supply to consistently stay at the center of the intended network: ie Iceland.

Now. The next part is a bit more decentralized, and ideas that could make it more decentralized are welcomed.

Each block’s coinbase MUST have an additional hardcoded address [preferably a multi-sig M-of-N for security if possible]. That address belongs to the central bank or government. It gets 10% of each block [for example]. Every year, citizens can claim 3% of it [a yearly ‘airdrop’]: equally [like claiming pension currently]. The other 7% goes to the central bank & government. That is the “tax” the citizens pay towards the government. That is what they will use instead of all other forms of tax [perhaps a bit drastic] to build roads, schools, policing, and so forth.

Considering that that address is known, extreme transparency of public funds are now possible as well. Every transaction from that address must be signed by multiple people, and every transaction must be explained by the government what it was spent on.

This means: the incentives are aligned. Other miners can be a part of the blockchain, but they will inherently do it to form of an incentive structure of belief of the country in question. ie, Miners will mine the USD country-coin, because they believe in the power of the US to utilize it effectively. It also means, coins generally stay within the country, as the incentives remain there.

It also means, in order for the country to use the coins better and put it to better use, they need to remain honest and build the country to the best of their ability. Let it float freely. The more valuable it becomes, the more the country and all of it citizens can do with their country-coin.

So, here’s an example:

Let’s do one for South Africa. Let’s call “E-money Mzansi”. It’s a sha256 coin modeled off of Bitcoin. It has similar timeframes. 4 years halving. Except, its nominal amount is increased a bit so that each citizen could have about 1000 coins each. Eventually supply will thus be (correcting for expected population growth) about 70 Billion. So block rewards are adjusted accordingly.

Each block has an extra coinbase address where 10% of the reward goes to the South African Reserve Bank. If it is NOT there, it is not a valid block. And then those coins are then used as described above.

Some technical considerations:

That hardcoded address is extremely, extremely vulnerable. Once compromised, it’s game over. M-of-N only keeps it safer for a while. Also, not ideal.

Forks. It is possible for citizens to just fork off that requirement for that hardcoded address. However, the government will only work on their fork: the one with their address in it. Citizens only get yearly airdrops from their fork (which will give poorer citizens that rely on it incentive to stay on that chain too), and government contractors will also work from their fork, and will then proliferate into the rest of society.

To start with this know, might be a bit difficult. You could go the current country-coin route and do it without permission. The developers of the coin simply keep the private key of the central address, until the government comes on board. Or you could actually go to a central bank and ask them (good luck with that). Another, more interesting way, is to kickstart this with a new political party. Chances, the rest of the crypto-world will absolutely love what you are doing and because cryptos float so easily, you’ll see money flowing in from around the world, strengthening your cause dramatically.

You could also radically do this without permission from the government. Create your own group and transparently commit to use the money to better the lives of ALL South African. Donating money to community projects that benefit South Africa.

I want some thoughts? I know some people are anti-centralization and anti-government. If you are, then also please give comments also, but please be constructive rather than just harping on about how bad they are. I do think it provides a very, very interesting alternative.

Introducing “The Cypherfunks”: a decentralized band & cryptocurrency.

For the past 3 weeks I’ve been building “The Cypherfunks”, and it is now ready for pre-announcement.

"The Cypherfunks" is a decentralized band and cryptocurrency: sustaining a new type of music collective.

To quote the website:

The idea is to create a music collective anyone can be a part of (in all manners of affiliation). The time is ripe to attempt such an experiment thanks to the Internet, technology and cryptocurrencies. With the age of the Internet, it’s a given that the sum of the talent outside any group is always greater than those inside. We see this with open source companies and projects such as Linux. Collectively, the sum of contributions made possible through the Internet to a mutual goal, always results in wondrous new concepts.

"The Cypherfunks" is such a new experiment towards music. We are all part of one big band. We release music under this collective, and we all have equal rights to "The Cypherfunks". Music is to be produced, reproduced, shared, reshared, sampled, resampled in all forms and manner. Like Lennon and McCartney famously collaborated within The Beatles, so can any form of affiliations come together as "The Cypherfunks" to create and remix. Anyone can also play and gig as "The Cypherfunks".

As bedroom producers, and garage acts, we know that this is a passion: a passion we would like to continue doing. In order to sustain this: “The Cypherfunks” is also a cryptocurrency. We can tip, pay and transact with others in and outside of the collective. Like a rendition? Tip a fellow member. Perhaps “The Cypherfunks” want to play at a local venue, but don’t have enough money? Donate through the Internet.

The cryptocurrency also means that if the collective releases great music, we ALL become successful: enabling us to continue churning out great music to share and remix. It is music, decentralized: attempting to be the world’s biggest, and most diverse band. We are ALL “The Cypherfunks”. A decentralized band. An “open-source” band.

Everything is working. Just have to do some final small adjustments, and it is good to go. This is my first attempt at creating a cryptocurrency, so I anticipate some hiccups initially. I hope you will bear with me, as we jam and music together!

The tentative release date is: 21 February 8am UTC. This gives me the whole of Friday (I’m GMT+2) to help and work out problems if there will be any.

This IS a community project. I’m only the lead developer. We need miners, developer, musicians, listeners, fans, etc. So join! You are welcome!

More details on the website: http://thecypherfunks.com

Follow @thecypherfunks where I’ll be posting most of the updates in the run-up to the launch.

Thanks to the people who has been a soundboard for various parts of it so far: Christopher Franko, Bryce Weiner, Candice Holdsworth, Niel de la Rouviere, the “Crypto Klets Kamer”.

Here’s the first song that forms part of the collective: a happy epic anthem about “The Cypherfunks”.

Woohoo! Let’s go!

Bitcoin’s biggest innovation.

There’s so many facets to cryptocurrencies. Since I’ve been deep into the trenches, there’s just so many new great things about it that hasn’t been able before.

Things like smart property, decentralized contracts (that can disrupt civil law, arbitration, etc), payment channels, colored coins, decentralized autonomous corporations (2), trust-less storage and autonomous agents. I lose track sometimes. I’m sure I missed some.

When you can decentralize trust into a shared ledger, it brings about quite interesting new features as you can see by the examples above.

But. There’s one part of the cryptocurrency revolution that stands out.

Just like the web brought about the democratization of information and communication, so cryptocurrencies will do to value.

Let me reiterate:

Web - Democratization of information.

Cryptocurrencies - Democratization of value.

In humanity’s history, the systems that were capable of sustaining a currency were your larger institutions: governments (and more recently, banks). The reason was: only they were capable of protecting the currency from being counterfeited. Part of the faith required in using any form of currency is the belief that it is prohibitively difficult to counterfeit. If I on my own, start printing some paper money, and tell people to use it, they are going to laugh at me. The only way to make sure people don’t laugh at you, is to make sure you are big enough (in systems scale), so that faith can be put in your capability that it is not being counterfeited.

Even the mightiest institutions in the world have to constantly keep up: with an estimated $60 - $100 million counterfeit USD alone being in circulation (of the $1,29 trillion in circulation). Not a lot: a respectable 0.01 of cash in circulation. But, where does that leave any other institution? Nearly impossible. A lot of smaller banks failed due to the troubles of counterfeit bonds, and notes. It has been left to the devices of a select few institutions.

When you look at what the world of information looked like before the web, the pattern shows its colours. While it was easier than making a currency, information was still locked up in institutions that had the power to spread it. Media was in control: book publishers, newspapers, TV stations, radio, etc. The power of the man on the street was classifieds in their local newspaper and word-of-mouth.

We all know how that story played out. Twitter, Facebook, Wikipedia. FREE information sharing, instantly across the globe. And we are all better off because of it.

Now, when you see what’s happening with cryptocurrencies, the same pattern emerges. Cryptocurrencies allow anyone to create one where counterfeiting IS NOT POSSIBLE. All you need is an electronic device to do some hashing (even smartphones can churn).

The power of the value maintainers are given to the hands of anyone and everyone. Currently, you can even create an altcoin with just a form. And it just going to become A LOT easier. Soon Jimmy in primary school can create a currency that’s STRONGER in terms of trust/security than any fiat currency.

Can we even fathom what this entails?

As Andreas Antonopoulos, eloquently stated: “We can now decouple monetary value from a currency”.

This will give freedom of choice, and agency to everyone who wants to opt-in. Freedom to store value wherever you decide it to be. The first obvious choice would be to take your value away from corrupt regimes and countries that mismanage a currency. People were once powerless against information spread by the media, and now we have the choice to make up our mind, enquire and research on our own. It doesn’t even have to be anti-statist, just like mass media now is still around (in a different form). It’s about empowering people.

People around the world have in JUST 2 months put their value ($50 million of it), in Dogecoin. And if you are a part of it, you know it’s (primarily) not about “sticking it to the man” and “regaining back control”. It’s fun, a great community, giving and welcoming. They’ve donated money to service dogs and olympians. It’s about people choosing to put value where people want their value to be.

You might scoff, and wonder “why the fuck would people do that”? And the beauty of it: you don’t HAVE to join. The information revolution brought about people sharing weird erotic fanfiction with others. Being a part of this information revolution doesn’t mean YOU have to read it. But it gives CHOICE, and freedom that you can find that information. With cryptocurrencies, it will be the same: freedom to affiliate value wherever you want it to be.

Just like some people have used the freedom of information to topple corrupt regimes, a lot of it was also about human connection (blogging, social networks, etc), and empowering others (wikipedia). Then there’s also doge and funny cat videos.

We’ll see cryptocurrencies undergo the same use cases: to subvert monetary mismanagement (see Argentina), but to also create the Dogecoin’s of the world AND all of the above will make it all worthwhile.

In what seems like a fun joke, the Dogecoin community had a big party in NYC recently, and put the Doge face on the Wall Street Bull.

image

In the next decade, we’ll look back and realise just how much this picture meant. Now, we don’t quite know just what we are in for.

It’s a grand time to be alive.

The Bitcoin ‘waves’ of adoption: decentralized funding rounds.

I’ve been fascinated by the rate of Bitcoin’s adoption (and correlation to price). Here’s an interesting graph:image

From this post. And a bigger version.

This is a trend I’ve noticed too. Past performance don’t indicate future performance, but it is still interesting to wonder if there is any credence to these patterns. It seems that with each big ‘rally’ it was an order of magnitude higher. 0.1 - 1. 1 -> 10. 10 -> 100. 100 -> 1000. When it rallies, it rallies close to these patterns (an order of magnitude rally).

When the price rises, the media suddenly starts attributing external factors to it: trying to tie some reason for the price rise. When Zynga news broke, Bitcoin rallied, and media attributed it to that. But now, with even more massive retailers like Overstock, TigerDirect, Fancy, Porn.com, etc accepting it… the price didn’t climb. By correlation to Zynga, it should’ve rallied substantially more.

And then I look at the graph above, and wonder if there isn’t perhaps some other forces at stake here: tied to complexity and systems theory. It seems price leads adoption, not the other way around. It’s as if when a rally happens, it pulls the momentum of this complex network forward, and now allows more freedom and space for the actors in the system to catch up. That’s why: after a price rally, the ecosystem grows, and grows. But it’s not linear. With each wave, it’s been the same. Once the size of the ecosystem catches up to the price, it rallies again.

Then, another comparison comes along… Funding rounds of companies. “Price” leads adoption. VCs provide funding so that the companies can act on improving the network of the company. But it’s a leap of faith. The VC’s have to believe in the future potential and value of the company.

This, is the same with Bitcoin. One of the first, well-known ‘VC’ investments in Bitcoin was someone paying $42 for 10 000 (buying a guy a pizza). Someone was willing to take a risk to buy what could possibly be worth millions. That’s the same in VC. At first, small seed rounds, big risk. Then larger amounts of cash on the table as time goes on. But each time, price enables further adoption. That pizza was investment in Bitcoin, and kickstarted Bitcoin’s capability to create adoption.

With each ‘funding round’, all owners of Bitcoin become wealthier, and then have the capability to further create new parts to the ecosystem. Case in point: I can take time off now after my masters and work on Bitcoin stuff, because those that I bought last year has now appreciated.

What’s interesting to compare as well: with tech companies. Facebook, Dropbox, and Twitter all were valued around $8-10 billion after 5 years (Bitcoin’s age). And when an IPO, happens? Who are the underwriters? “Wall Street”. What’s one of the predictions to happen this year with Bitcoin? Institutional money is going to start pouring in.

As mistaclutch on Twitter replied to me when I linked this picture. It’s probably just apophenia: a tendency to seek patterns in random data. It’s still interesting to speculate. ;)