COVIDigital: #Neuland²

Don’t sit down, we have to move on.

COVID-19: some countries are doing comparatively fine, some went down the hole. And everybody is wondering: what’s going on?
So that’s my try to come up with some ideas of what went wrong and what went well.

I count myself as lucky. My former colleagues in India are still in lockdown, while the subcontinet explodes around them. My friends in the US are struggling with a situation, where calling it batshit crazy would be putting lipstick on a rather frantic pig.

I count myself as lucky, because Germany is still mostly doing fine. Health-wise, we managed to somewhat contain the curse. Economically, the dip was comparatively harmless – which most likely has a lot to do with the former. A homegrown candidate for a vaccine seems to be under way, with no undue shortcuts, all proper process.

Yes, our share of crazies tried down to knock down our parliament and there’s always the random maskless superhero waving a random medical certificate downloaded from the Internet, which actually says more about the bearer’s mental capacities than his alleged medical conditions.
But, hey, we’re coming to that.

For now let’s look at what went well in Germany.
A virus is a rather uncanny thing. It’s neither dead nor alive, a parasitic string of information which converts an unsuspecting cell into a replicator of itself. This latest Corona virus now comes with a feature set, which made it quite successful: rather stealthy, quite contagious, not too deadly (killing too many hosts limits the spread of the disease).

Dealing with this as a society comes with many challenges. Primarily, it’s a math problem. The more people get it,

– the quicker herd immunity will be reached (virus pretty much disappears due to lack of ready hosts)
– but the more people get it, the more will fill up hospitals and ICUs, more medical personnel will get infected, thereby reducing the level of available health care, and people will die

Unfortunately, for most people math is already the problem. Exponential growth is NOT a human dimension. It’s hard to grasp, but can nicely be visualized.

It’s not that complicated, is it? Well. End of March, one of Germany’s leading news channel came up with this model calculation: 168 trillion Germans will be infected in just anbout 100 days.

Math on meth.

Yes, math is hard. But if you gathered already a bit of data and your model is sophisticated enough, you can not only calculate unfettered exponential growth quite well. You will be able to estimate the effect of different measures, which then need to be executed properly. Step by step, measure by measure you will be able to lower the probability of further contagion. There’s no silver bullet. You make the viral threat wither by slowly starving it out of potential hosts.

If you seem to loose control, try to shutdown as much as possible. The less people meet and greet, the lesser the spread. Obviously, this comes with quite a price tag attached. Shutting down an economy is quite costly. And even deadly. Shutting it down too early makes you look silly and the competition just leaves you in the dust. Shutting down too late lets the virus rampage through the population – thereby shutting down the economy anyway, but in a less controllable way. It’s a loose-loose game, with no happy ending.

From this perspective, Germany was setup quite well to deal with a crisis with many unknown factors. Despite being a Western country without any real virus encounters in the last decades and not really being up to the game, unlike places like Taiwan or South Korea.

It may have helped to have somebody at the helm with a solid scientific background and a very clear and analytical mind.

The German way: the Chancellor explains the R factor.

Because, obviously, not all heads of states are created equal:

ūüĎŹūüĎŹūüĎŹ: soon after this statement, Boris was treated for COVID, while too many Britons continued to shake hands and, not too surprisingly, got infected as well.

If your estimated leader doesn’t listen to epidemiologists and other scientists or experts, but to his gut feelings, there’s a good chance that the outcome will pretty much resemble the outcomings of his digestive system and you end up knee deep in ūüí©ūüí©ūüí©.

But some systemic factors may be even more relevant. Germany is traditionally a quite decentralized society. In case of viral threats, the local departments of health are in charge. They collect the data and perform the tracking and tracing. One of the key data points: as long as the local departments could track and trace, the pandemic was pretty much under control. But when the case load threatens to overload the system, further steps need to be taken. That’s why timely information is so critical.

The testing is done mostly by independent private labs. The very moment the Charité/WHO test kit was available, they added Corona to their range of tests. Because of course it made business sense. The notable effect: testing scaled really fast and well.

Compare this to the disaster in the US, where the CDC sits like a partially defunded spider in its web and lost almost two months due to some rather unnecessary mishaps.

The CDC’s German counterpart, the Robert Koch Institut, has a much leaner assignment and only an advisory role. In the beginning of the crisis, RKI’s president Prof. Dr. Lothar H. Wieler press briefings were widely watched by many interested citizens as well. Being a veterinarian by trade, specialized in microbiology and animal pandemic, he might sound like a weird choice. Especially with him being, of his own account, a bit dyscalculic (and dealing with epidemics, as stated before, is mostly a math problem). But his cal√∂m way of communicating worked pretty well.

Of course, the RKI had their challenges as well: masks where 1st a no go for the public, until the simpler versions where renamed into “Mund Nase Bedeckung” (mouth nose coverings). It would have been Orwellian, wouldn’t it have been so blatantly ridiculous, as in trying to keep up the original statement alive (masks make only sense for medical personnel) while still making it clear that Mund Nase Bedeckungen formerly known as masks (and publicly still known as masks, of course) are really important and helpful.

28.01.2020: Germans trust grey haired academics.

So the German anti-pandemic engine is purring like a brand new Mercedes, we soldier on for a couple of more months and then do the final lap with a ready vaccine. ūüŹĀ and off we go.
Not so fast.

Let’s stick with the car metaphore for a minute. Yes, everything seems to be running nicely. And since 1886, when Carl Benz patented the first ICE car, the automobile has evolved nicely. It’s just a bit unfair that a Tesla for half the price is twice as fast and sexy.

Same thing with the RKI. They have spectacular data scientists on board. Their modeling skills are phenomenal. Alas, the whole setup in regards of collecting data pretty much has been modeled when this guy’s phone had been the pinnacle of modern communications technologies.

A typical reporting chain for an infectious disease might look like this:

  1. person visits doctor with sore throat
  2. doctor performs test
  3. test gets sent to lab
  4. lab tests. Result: corona positive.
  5. lab notifies doctor
  6. doctor notifies patient
  7. doctor notifies local health department (phone, mail, email, fax)
  8. local health department collates all notifications by local doctors in some kind of document
  9. local health department sends data to RKI (email, fax)
  10. RKI puts data into their system

If you wonder why the whole chain is so convoluted, you’re not alone. Yes, we naive outsiders would think that at the very moment the lab has the result it could automatically notify the RKI (after all, time is of the essence).

But unfortunately, this is quite symptomatic for the RKI – and a general German challenge. Point in fact: if you travel to Spain, you preregister your data on the web. Two days before arrival you get a QR code which is then easily scanned at entry. The RKI solution: download a PDF, print it out and fill it out by hand (no, it’s not a form of course), leave the signed copy with the airline staff. And if you enter one of the Corona testcenters for travellers: you get the same form again and fill it out again so you can watch somebody sitting in front of you trying to decipher your handwriting and putting it finally into a computer.

This process, seemingly designed by slightlky demented Franz Kafka, is unfortunately kind of emblematic for the offical German approach to all things digital.

Alternative f√ľr Digital

Richard David Precht, our favorite TV philosopher proudly states to have a smartphone with no apps. I’m not really sure what he means by that, because I would assume that this would imply just a black screen he’s staring at but what do I know. Maybe he needs this visualization of nothingness, while watching other people getting pestered by Whatsapp notifications, work emails and text messages.

What he knows is that digitalization is inherently dangerous (which is true, like for pretty much every technology) and the best approach is to abstain (which is pretty much bonkers, as with pretty much every other technology as well).

The effect of this widely spread mindset is visible all over the German Internets. Especially government run services. Just a random example out of my encounters with the online services of the City of Berlin. As office hours are either limited or totally canceled, many service can and should be handled online. Yay. Little did I know how they implemented it.

– prepare your documents as PDF
– send it via email to a specific mail address
– wait (but don’t wait for any advanced things like an autoresponder acknowleding the receipt of the docs, not even talking about the inherently unsafe process of sending out critical documents via email …)
– wait, but don’t call: nobody has any idea anyway if the documents reached the right address or if anything is being processed
– I’m still waiting. But then it has only been two and a half weeks. For a service where they proudly claim can be finalized immediately.

This digital scepticism is hampering efforts all over the place. After some publicly stated scepticim about the track and trace app, the RKI is now fully endorsing the app – which had anyway been developed with RKI on board. Adoption could be much higher. But then there’s a curious coalition of digital sceptics, who do not a trust a fully vetted open source app. But happily scribble their contact data on paper sheets openly laying around in cafes and restaurants or hand over rather critical personal data to some airline purser who subsequently will probably handover your data to somebody else, we just do not know whom for doing something with it we don’t know either.

That this paper data is inherently less secure then a fully anomynized digital service has already been proven by the Bavarian minister of interior affairs. He allowed the Bavarian police to use those mandatory paper tracking lists for crime related searches. A brilliant move: he is perfectly emphasizing the distrust people already have in regards of sharing their data. Which will affect the trust in the fully anomynized app as well. And lead to even more Donald Ducks and Homer Simpsons signbuing into the local bars. That’s how you put a monkey wrench into system critical process. But then, he was the guy installing a rather nutty right winger as the head of Germany’s internal secrect service.

Stupid is as stupid does. And the fact that until now, either by luck or apt handling or both, Germany managed to come out fairly well out of the virus crisis still leads to a fairly small but shouty alliance marching against the virus. Or actually, the containment measures. Initially I thought this might be related to the fact that German death numbers are fairly low. Which might or might not have something to do with the setup of the German health care system. Some wing nuts actually made this argument (“See, we don’t need masks because the streets have not been filled with dead people”). But then, in the US some streets have been filled with dead people but the anti-vaxxers, anti-maskers, anti-Gates, plandemic Qanon wackos are marching there as well.

The only good thing I can read out of the idea of a plandemic is this implicit belief in the organizational capabilities of us human beings. Any project manager will to tell you: humans are barely able to plan a lunch break. But this cabal gets Israel and the Hamas to secretly cooperate, just to keep up appearances.

If you believe that, please DM me.
I think there’s several bridges you might be interested in.

GDPR: the good, the bad and the struggling

What’s the thing with the GDPR? Here’s the situation in a single tweet:

(Of course, that’s utter nonsense. The Nigerian Prince will be fine with you sending him consent in June, July or 2020 or whenever.) But why this sudden hubbub about the acronym GDPR, which causes all those spam-like messages asking you to click somewhere to receive more spam-like messages in the near future?

Say Hi to the General Data Protection Regulation of the European Union, which is in place since quite some time but starts to become enforceable on May 25. In a nutshell, what’s regulated is how corporates have to deal with personal data in our digital world. It’s still¬†a bit rough and undefined on the edges, which leads to messages like this:

Screen Shot 2018-05-11 at 17.01.02 Yes, everyone is a bit late in the game (due to lack of clear specifications), some lawyers and consultants are making a killing, some tech and product teams loose sleep and weight.

The weirdest approach I’ve seen so far is this,¬†https://gdpr-shield.io/, presented by all means by a German company.

Screen Shot 2018-05-11 at 17.08.19

How does it work? Simply paste our JavaScript snippet into your website’s code. We’ll check every visitor of your site and will block access to users located within the EU.¬†

Uhm, Ok. Sounds legit. As long as their JavaScript can verify the citizenship of an anonymous Internet user. I’m honestly still unsure if this is a totally bonkers snake oil scam or just very nerdy satire.

What’s the real life impact of the GDPR? For users, it mostly means that your data might become a little bit more safeguarded. Less sloppy sharing of unprotected Excels with medical information. Less handovers of personal information from A to B to Cambridge Analytica. Your data will still be floating around like crazy. But the crazy will become a little bit more contained.

And what’s the impact on business? If you listen to some startup gnomes, the world of European innovation is coming to an end. How can I build the next Facebook, they ask, when the EU puts out a privacy regulation, which doesn’t end with “and if you don’t listen to the regulator, you won’t get any free avocado toast for lunch for the next 14 days”? Instead, some bad hombres in Brussels came up with the following maximum penalty:

Up to ‚ā¨20 million, or 4% of the worldwide annual revenue of the prior financial year, whichever is higher, shall be issued for infringements of …

That’s quite a statement. Applied to Facebook’s 2017 revenue of 40 Billion USD, the maximum fine would be a staggering 1.6 Billion USD. Which explains why a) FB moved their non-EU international user base out of Dublin and b) why there won’t be a European Facebook-clone replacing Facebook: the Zuckerberg-machine is munching through personal data like a 1978 supersonic Concorde is guzzling kerosine and has a history of approaching privacy with quite some laissez faire-bravado. Taking on this juggernaut by playing even more loose with user data has never been that winning an option. Now it’s completely off limits for European Entrepreneurs.

But does this mean the GDPR will really kill Europe’s still nascient digital business world? Actually, to the contrary. Think about it: if you run an international business, do you really want to exclude the citizens of the second largest economy (after China) from your potential market? Most likely not.

With a GDP of 19.9 Trillion USD, the EU pulls quite a bit of weight. But if all others, with a combined GDP of 127 trillion USD will continue to play loose, will Europe not become a digital pipsqueak, hopelessly left behind, while rainbow coloured unicorns start grazing all over the globe?

Actually to the contrary. Nassim Nicholas Taleb explains the mechanism quite nicely in his essay The Most Intolerant Wins: The Dictatorship of the Small Minority.

A Kosher (or halal) eater will never eat nonkosher (or nonhalal) food , but a nonkosher eater isn’t banned from eating kosher.

or

Someone with a peanut allergy will not eat products that touch peanuts but a person without such allergy can eat items without peanut traces in them.

That’s the whole secret. And it has major implications.

Now consider this manifestation of the dictatorship of the minority. In the United Kingdom, where the (practicing) Muslim population is only three to four percent, a very high number of the meat we find is halal. Close to seventy percent of lamb imports from New Zealand are halal.

The same applies to the GDPR. Don’t forget: in an international business, regulatory compliance is already quite a tricky beast. And if you start out with the lax American standards, some things won’t even be OK in next-door Canada.¬†But if you design for compliance with the most demanding environment, you’ll be quite fine, out of the box, pretty much all over the world.

You may call this approach Europe First. But instead of a coal-fired¬†America First, it’s actually an open source protocol. Everybody can use it anywhere for free, no strings or localities attached. You don’t have to be in Europe to be GDPR-compliant. Your user data doesn’t have to be in Europe¬†to be GDPR-compliant. Not even your users have to be in Europe. But if they are, you better be prepared.

View at Medium.com

HOW DIGITAL DESTROYED DEMOCRACY

TED talks became a bit like the ten biblical plagues crossbred with Genesis 1:28 (be fruitful, and multiply) and a strictly enforced scripted reality TV format: the plentitude of mandatory upbeat ideas worth spreading has even been infecting non-TED talks, some talked about ideas are strictly chemtrails for academics, many the presenters with their trained TED-stage personalities are almost as bad as the cloned startup pitchers churned out by the countless accelerators.

Still, I went to TEDx BerlinSalon on Democracy. And, really, it was worth it. Mostly because of one talk. Lawrence Lessig on HOW DIGITAL DESTROYED DEMOCRACY (not yet posted).

In a nutshell, his reasoning goes like this:

  • In the 19th century, elites governed, had (mostly) no idea what their subjects thought, and the people got their information from very fragmented local media.
  • In the 20th century, broadcasting mainstreamed cultures and opinions, George Gallup came up with statistically relevant polling methods, and governing included feeling the pulse of what’s happening in the minds of their people.
  • In the 21st century, we’re back to media fragmentation – but now combined with hyper-competition and a built-in feedback loop.

In the 19th century, the fragmentation of media was mostly defined by locality. Local competition, of it existed, may have been fierce – but, due to the immense CAPEX and OPEX was quite limited.

In the 21st century, media has morphed into opinion factories with potentially global reach. The limiting resources aren’t capital or allocable spectrum, but our limited attention span. Polarization not only shouts for attention, it does it by playing towards our tribal instincts.¬†Us vs. them is the cheapest way to create a pretend-relationship – but comes at a price: it becomes a problem for democracy.

 

Lessig’s case is quite convincing. By locking tribes into micro-medial echo chambers, our societies loose their connecting tissue. We, the people, make sense about our¬†surroundings, our lifes by story telling. That’s why media matters. Media is about helping us to connect the dots. And, compared to other ways, like a preaching every Sunday in a church, media scales very, very well – making it a core building block of societies comprised of millions and millions of people. ¬†But if this building block is converted into trans-local tribalism, the effects are noticeably bad.

In true TED spirit, he had to attach a potential way out of the bleak conundrum we’re finding ourselves in.¬†As there’s no way back to the broadly shared virtual fireplaces of 20th century broadcasting, he’s pointing towards a different democratic approach. His example: how Mongolia’s civil society is integrated into the political decision making process, thereby creating the missing “we” …

… but asking at the same time if a process like this might scale.

Lessig is brilliantly connecting the dots. But do I really subscribe to his diagnosis? Is it really the side-effects of digital, which are destroying democracy?¬†Let’s not forget: the uniting factor of broadcast media is a quite double-sided sword. Nazi-Germany used their central control over broadcasting (and all other media) to destroy democracy quite effectively.

Granted: the ugly underbelly of the Internet is, yes, ugly. The bile of astroturfed tribes is poisoning all political conversations. Volume and frequency of the ugliness are deafening. But the tonality ain’t new.

Look at graffiti in Pompeji:

All the deadbeats and Macerius ask for Vatia as aedile.

Try the Lutheran Insulter, spouting out Martin Luther’s most over the top insults:

Even if the Antichrist appears, what greater evil can he do than what you have done and do daily?

For sure, the fake-media engines spouting partisan insults are not helping. Some of them are even directly based on Lessig’s diagnosis of¬†same facts, different understanding. There are site operators catering to audiences to the right AND the left, reusing the same content, just changing a couple of words to change the bias.

But¬†same facts, different understanding¬†is the natural realm of the spinmeisters framing the story around the facts according to their paymaster’s needs, from climate change to tobacco smoke to gun control to however larger or small the issue may be.

Consequently, facts seem to have lost all meaning. If you can’t spin it, just use alternative facts.

But maybe the killer of the WE is not us living in our filter bubbles. Otherwise, the bile of Facebook comments and Twitter replies would not exist. In our modern technocracies, the WE is reduced to an incremental HOW.

Media, be it digital or printed or broadcasted, is always an echo chamber. Only resonating messages are amplified. By default, technocracy has no message to relay. Look at the EU. A war-torn continent uniting itself, a mind-boggling political project if there ever was one. A decade of populist onslaughts may well have ended in the demise of it. Was this driven by digital fragmentation? Most likely not.

Since ages, British print tabloids are masters of polarization. Pushing for BREXIT came as a natural to them (digital? well, not really.).

The most relevant effect as of so far for the EU: it’s finally finding a WE. For now, the populist successes of BREXIT and Trumpism is drawing Europe closer together, opening political talks way beyond the technocratic.

In the US, the situation is a bit different. The flag-waving WE was way to weak to cover the structural imbalances any longer.

Successful populists leverage any kind of media. The Commander in Tweet is not the result of a development in communications technologies.

DAO ‚Ȇ D.O.A.

Before we start talking about the great $79 million DAO robbery, let’s make a quick introduction.

The DAO is a Decentralized Autonomous Organization (‚ÄúDAO‚ÄĚ) – more specifically, it is a new breed of human organization never before attempted. The DAO is borne from immutable, unstoppable, and irrefutable computer code, operated entirely by its members, and fueled using ETH which Creates DAO tokens.

Thus spoke The DAO.
Which is just one possible way to implement Decentralized Autonomous Organizations.

A translation attempt into plain English may sound like this:

In traditional western economies, capital ownership, production and consumption are separated entities:

  1. Uber investors pour billions of USD into a company they own.
  2. The drivers invest into production¬†(CAPEX like¬†cars, OPEX like gas and insurances, their time) and pay their USD tribute to Uber’s shareholders.
  3. Passengers pay USD for the ride.

A¬†decentralized autonomous organization isn’t a shareholder ¬†construct, but a stakeholder model based upon securely transferable crypto tokens.

  • Every token holder is a stakeholder in the DAO’s ecosystem
  • Tokens can be held …
  • … or¬†circulated to pay for services rendered or products received …
  • … or exchanged into another crypto token (e.g. Bitcoin) or any legacy currency

synergistic

It’s a radically different type of participatory economy¬†and¬†may offer the chance to fix a dangerous flaw of our current monetary system:
– the “real”¬†economy is dwarfed by an unbridled financial system
– the financial sector is¬†pretty much decoupled from the “real”, productive economy
Рbut both spheres share the same tokens to exchange value: our traditional currencies like the EUR, the GBP or the USD
Рthose currencies are basically minted and controlled by the aforementioned financial sector.

A DAO token works like a programmable complementary currency. Traditional alternative systems looked like the Wörgl Schilling: a piece of paper used to locally exchange value to keep external problems at bay. Being just locally accepted is the key constraint Рand the defining feature. Because the intent behind is purely local.

freigeld1

DAO tokens resemble complimentary currencies in this. They are constrained currencies. Traditional currencies are pretty much universal: highly fungible currencies like the USD or the EUR can be used to pay for any kind of product or service or asset pretty much all over the globe.

The Wörgl Schilling was only valid in Wörgl, the Bavarian  Chiemgauer is only accepted in this beautifully set local economy:

chiemsee_vonkampenwand¬†…¬†but not in W√∂rgl,¬†located just a one hour car drive further down south in Austria.

Like with traditional complimentary currencies, the DAO token’s constraint is it’s limitation to a specific economy.¬†It may be tied to a locality (like with the Chiemgauer) or a specific private entity¬†(like airline miles, which are a certain form of private currency) – but is much more versatile.

In the DAO, the token is not only used to exchange value.

  1. Every token owner is a stakeholder of the specified economy.
  2. The token itself is programmable. Ideally, it becomes an intrinsic part of the whole process, not just the value exchange.

Token holders are a bit like owners of printed bearer shares: he who owns the physical share is the rightful owner of the asset represented¬†in the paper. The company’s central ledger only lists the shares, but knows nothing about their ownership.

Crypto tokens, be it DAO or Bitcoin, pretty much automate all authentication, validation and transaction processes needed with an amazingly safe technology. Traditionally, all those transactions are safeguarded by a central authority. To buy shares of a company, you need to trust the company as the issuer, the stock exchange as the trade facilitator, the clearing house as the middleman, the settlement process for the exchange of assets (money/shares), and the custodian for administering your held securities.

Crypto transactions are pretty much trustless, meaning: as long as the crypto process is untainted, the whole chain of the transaction, from trade facilitation, clearing, settlement to custody services is inherently secure.

So how come somebody can instigate a rather dubious $79 million transaction?

Let’s go back to the trustless thing. If you read really carefully, you might have noticed I left an important piece out of the trustless specification: the issuer of the share.

victor_lustig

And here’s the reason. Meet Victor Lustig. The man who sold the Eiffel Tower – twice. His con was actually pretty hilarious. He convinced a couple of Parisian scrap metal moguls that he represents the French government and they should bribe him for the right to melt down the rusting iron world wonder.

Some misplaced trust in charming Lustig later, the tower was still standing, the government still the owner of the cast iron hulk¬†and¬†Lustig’s target, one of the scrap metal dealers, a bit richer in experience and bit poorer in funds.

A trustless crypto transaction wouldn’t have affected Lustig’s con at all. Like¬†every gifted con man,¬†Lustig¬†leveraged the conditio¬†humana.

Every transaction is a chain of trust. The perceived transaction started with a land register certifying the French government as the rightful owner of the tower and ended with a cash transfer, a trusted means of value exchange.

But in the Eiffel Tower case, the starting point of the trust chain was Lustig and his made-up credentials. Or, to use crypto speak: the Genesis transaction was not building and owning the tower, but Lustig coming up with a fake identity and a masterfully implemented storyline.

Let’s go back to the DAO. In a rather spectacular crowd funding, a quite substantial amount of (crypto) money was raised. The basic premise:

Historically, corporations have only been able to act through people (or through corporate entities that were themselves ultimately controlled by people). This presents two simple and fundamental problems. Whatever a private contract or public law require: (1) people do not always follow the rules and (2) people do not always agree what the rules actually require.

From the DAO Whitepaper.

The offered solution:

The DAO is self-governing and not influenced by outside forces: its software operates autonomously and its by-laws are immutably chiseled into the Ethereum blockchain.

https://daohub.org/about.html

Or, in a nutshell:

  • the problem: people are not always following rules or not always really agreeing what those rules¬†really do mean.
  • the solution: immutable contracts.

Which are a really great solution for many real world problems. But not for the problems they try to solve. Because they missed (3) people cannot foresee all consequences a contract or by-law may have

This is not a new thing, born out of crypto contracts.¬†Matt Levine¬†brings a great example¬†in his Bloomberg piece¬†Blockchain Company’s Smart Contracts Were Dumb.

One more story, one of my all-time favorites. The¬†California electric grid operator built a set of rules for generating, distributing and paying for electricity. Those rules were dumb and bad. If you read them carefully and greedily, you could get paid silly amounts of money for generating electricity, not because the electricity was worth that much but because you found a way to exploit the rules. JPMorgan read the rules carefully and greedily, and exploited the rules. It did this openly and honestly, in ways that were ridiculous but¬†explicitly allowed by the rules. The Federal Energy Regulatory Commission fined it $410 million for doing this, and JPMorgan meekly paid up. What JPMorgan did was explicitly allowed by the rules, but that doesn’t mean that it was allowed. Just because rules are dumb and you are smart, that doesn’t always mean that you get to take advantage of them.

Contracts have always been a complicated affair. Because they have to formalize a stable framework around fuzzy intentions by using language Рwhich as a tool is inherently fuzzy as well.

The proposed solution for this inherent fuzziness created by the mismatches of intent and description and the thereby caused mismatching realities is probably a bit too ambitious: bug free software.

 

 

And what do you know: somebody smart quickly outsmarted the contract.

I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward.

It’s unclear if the text¬†has been written by the hacking trickster, who just wants to add a bit of insult to the injury. But the consequences of his contract are actually rather unclear as well. He may just be entitled to keep the load.

Because The DAO as a non-organisation constructed itself around the premise of its own infallibility. Read this part of self descriptive hubris:

The DAO will be deployed as an exact implementation of the Standard DAO Framework. The Whitepaper therefore describes perfectly how the DAO functions and is a great place to start learning more.

… exact implementation … describes perfectly …
Well. Obviously not that perfectly exact.

In the DAO’s belief system,¬†acts of people are the problem, so let’s move them out of the equation.¬†This created an entity ready to be preyed upon by other people of rather questionable intent. With the attack vector being people not being able to create 100% perfect contracts.

Hard core smart contractors don’t see a problem with this. Win some, loose some: it’s part of the package of immutability. Changing the rules after the fact may be technically possible, but violates the core principle of a¬†Decentralized Autonomous Organization. Rolling back those transactions by an deus ex machina-act would inherently destroy the trust in the perfect engine: mind you, it worked actually without a fault.

Which is probably right. Because in their hubris, The Dao tried to construct themselves as an infallibility engine without any meaningful mechanisms for mediation or arbitration or recourse. And saving The DAO by ex-post changes might really hurt the underlying case for Decentralized Autonomous Organizations.

On the other hand: creating a machine, which enables smart contract-con men¬†to systematically defraud unsuspecting token investors, who wouldn’t have any¬†path of recourse at all … this sounds like a solid way to implement fringe system of very limited reach and effect.

As VC Albert Wenger writes: The Path to  Learning requires Failing: The DAO

Blockchains and smart contracts are amazing new tools in our overall technological toolset. We have to learn how to deploy them to the best uses (many of which have yet to be invented). That will take failures. The DAO is not the first one (e.g., Mt. Gox) and won’t be the last one.

Unfortunately, the first DAO failure might have been somewhat expensive.

 

 

 

 

 

 

The Highlander Syndrome 

Jules Urbach is the brilliant founder and CEO of OTOY, a rockstar virtual reality and 3D company. But reading this, I did fear at first that he’s taking a bit too much of a Magic Leap¬†(pun intended) here:

When I ask him how virtual reality will be able to encompass our increasing habit of watching videos on our smartphones, he has one answer: sunglasses.

 

‚ÄúYou‚Äôll be done with any other screen,‚ÄĚ he says. ‚ÄúYou won‚Äôt need it. It will be generated on a surface in the air. Put your finger over your palm, it‚Äôs a phone. Your desk becomes a laptop.”The resolution two generations from now will give you a 4K experience, so you probably won‚Äôt go to a movie theater. Why would you buy a wall-sized TV?‚ÄĚ

I wouldn’t disagree with the glass approach (or, a bit more far fetched: contact lenses, like Vernor Vinge proposes in Rainbows End). But the “done withy any other screen” sounds¬†like funky hyperbole. Screens are getting bigger for a reason. Not just because they can.

It’s not primarily a matter of technical feasibility. Engineering the super shades might take a bit longer that folding a Google cardboard, but hey the Magic Leap guys are on it. And the promise is right:¬†no more¬†weird little screens on microwaves, printers or fridges. Even your¬†phone could probably live without it’s main¬†screen. And your personal Netflix will¬†do nicely without a non-virtual big screen on the wal.

But what’s with all those non-core watching use cases? Let’s take television.¬†Watching TV implies somewhat that somebody is attentively following what’s happening on¬†a screen. Which, most likely, you won’t. One of the primary use cases of any¬†TV set (not just wall-sized whales) is the animated wallpaper. TV’s main¬†job is¬†to de-dull any room.

Well, seems like Magic Leap has fixed this, by enabling you to fix¬†any virtual device spatially in any real place. Just watch the first 15 seconds of the video and see what’s happening with the YouTube screen. This might be how a future¬†TV set behaves:

Case closed? Maybe¬†not. TV sets do augment our physical reality in a very social kind of way. It’s an experience which may be flat but is inherently a shared, for good or worse.¬†The question will be: why do we really put moving images¬†on a wall-sized TV? We will have to look at the proper use cases more¬†diligently. When I watch a movie with my daughter, projected on a wall, she watches me watching. Don’t I dare to check my Facebook while we sit together. Will I then become a glasshole, secretly overlaying the movie with my Twitter feed?

It might be more obvious with¬†the movie theatre case.¬†How much of going to the movies is the large screen? How important is the social aspect of a dedicated public room, a cinematic cathedral? What’s the significance of¬†mostly going in a pack or at least a twosome, but rarely alone?

And, as a matter of practicability, you will not wear your glasses 24/7. Maybe not even the far fetched future scifi lenses.
That’s why, most likely, we’ll be surrounded by even more screens, big or small. But wearing your magic holodeck/-lens leap glasses, you might¬†be able to easily replace what’s on those screens.

There can be only one screen.
Memo: a screen is not an independent variable.

Source: The man behind Jon Stewart’s secret project with OTOY lays out the future of media – Business Insider Deutschland

What is TV good for?

What is TV good for? The linear, traditional TV of 1969. No, really. This is a legit question. It’s the 21st century. Rigid timelines of massively parallel broadcasts of more of the same should be a thing of the past. Or, maybe not yet.

TV_prehistoric_7171945403_a14ed75dcf_z
Unreal stats: is TV an immortal unicorn?

What is TV good for? The linear, traditional TV of 1969. No, really. This is a legit question. It’s the¬†21st century. Rigid timelines of massively parallel broadcasts of more of the same should be a thing of the past. Or, maybe not yet.

OK, look at the numbers, viewer shift is happening. To quote this complaint of the American Marketing Association:

Adults between the ages of 50 and 64 spend 191 hours per month watching traditional (rather than time-shifted) TV, according to Nielsen, and those over 65 watch more than 223 hours per month. Teens, by contrast, spend 84 hours per month watching TV.

The younger they are, the less they watch. Like bingo, traditional television smells a bit like an unkempt retirement home. People are dying here! TV is past its prime. Thank you, case closed. Or, is it?

Now bear with me. Let me read you the Oxford Dictionaries’ definition of watch.

Look at or observe attentively over a period of time.

Do 50-64 year olds ‚Äúobserve attentively‚ÄĚ for more than 6 hours per day what‚Äôs happening in the box? Mind you, this is an average we‚Äôre looking at. There must be people out there ‚Äúattentively observing‚ÄĚ the tube 24/7. And if you ever observed attentively a Teenager: does the majority of teens have an attention span of 2 hours plus of single-minded daily dedicated observation of anything? Besides that: a¬†daily active usage of 2 hours plus sounds like user stats any¬†super successful web service would¬†kill for. You’re looking for a Facebook killer? Take grampa’s television.

There seems to be something a bit off-kilter. So I decided to take a fresh look at this TV thing again.

and TV‚Äôs job is …

What are you looking at?!
What are you looking at?!

Working with my friends at Magine TV, a Stockholm-based OTT TV service, I looked for some answers by applying Clayton Christensen‚Äôs Jobs To Be Done-framework. JTBD‚Äôs core concept looks like this: people don‚Äôt buy a product. They ‚Äúhire‚ÄĚ a product to get a ‚Äújob‚ÄĚ done. The researcher‚Äôs job is to identify the job people want to get done.

The outcome can, sometimes, be rather surprising. Christensen’s milkshake-example is all about the insight, that if you know what job a product is hired for, you can much better improve and scale.

“The fact that you’re 18 to 35 years old with a college degree does not cause you to buy a product,” Christensen says. “It may be correlated with the decision, but it doesn’t cause it. We developed this idea because we wanted to understand what causes us to buy a product, not what’s correlated with it. We realized that the causal mechanism behind a purchase is, ‘Oh, I’ve got a job to be done.’ And it turns out that it’s really effective in allowing a company to build products that people want to buy.”

Same goes with TV. We know for a fact that billions of people are ‚Äúhiring‚ÄĚ television on a daily base. But what is television‚Äôs job to them?

Jobs To Be Done is qualitative research. You try to find answers by analyzing longform interviews, which follow a clearly defined timeline. Never ask directly. Stated preferences are your enemy. You chat your people up to get the the gist of what you need to know.

As a former full time journalist, I felt quite comfortable in going this direction. And it worked reasonably well. Most results are of course proprietary. But let me share a couple of things with you: forget about inform and entertain as the core driving factors. There are two core jobs TV has to fix, depending on personal needs. Because not all of you TV viewers are created equal. What we can identify are two quite different sets of viewer personas:

  • there are the bespoke attentive TV personalities
  • and there are the many owners of an animated wallpaper

total attentive immersion: your personal off switch

Totally immersive must watch TV: your world lives in a box.
Totally immersive must watch TV: your world lives in a box.

Let‚Äôs start with the fully immersed, totally attentive viewer. The job he needs done is what you would actually expect from ‚Äúhiring‚ÄĚ TV: get effortlessly tuned out of your daily life.

If there’s a Santa for media executives, the attentive viewer will make top of their wish lists. Turn on, tune in, drop out: they are the idiotes savantes you need in any ad recall measurement.  There are a couple of subgroups here, which differ mostly in how they discover what they want to watch. But their typical user journey starts always like this: I’m coming home from work and need to turn off the day. The subgroups mostly differ in how they choose what to watch.

  • totally passive: you have a relevant subset of two handfuls of channels. You turn on and start to watch what‚Äôs on your favorite channel. If you‚Äôre not satisfied, you switch to the next channel. You prefer to zap or maybe use an EPG to get a quick overview on what‚Äôs currently up. You might even know when your fav show is running. You‚Äôre mostly satisfied with the work the professionals did in programming a timeline. Because everything else would be way too much work.
  • somewhat picky: you have some kind of an idea what you want to watch. Or, maybe even more important: what you do not want to watch. You might have programmed a PVR to record your favorite things. Because this one time effort brings some pleasure later on when you‚Äôre in the mood to watch something (but not anything).
  • totally picky: there‚Äôs just a couple of highlights you‚Äôre after. Maybe top sports events. Maybe top movies. Maybe the daily news (if you are in a decidedly un-Teen age bracket). You actively plan around those events.

You might have recognized yourself already in all three of those subgroups. Which is not too surprising. Those preferences have just a different weight. If you’re totally picky and down with the flu, you easily switch into your totally passive persona.

If you’re leaning towards pickiness, a SVOD service like Netflix sounds like a present from heaven. If you’re the totally passive viewer, you might actively hate the concept. Because, as one of the interviewees mentioned: actively looking for some program to watch is way too much work.

That’s probably one of the main reasons why series and binge watching work so well on SVOD: when a movie ends, you go back to zero and have to start searching all over again. But after the first 13 episodes of a series, you just move on to season two.

extensive wallpapering: radio with benefits

In reality, this electric fireplace is a talking animated wallpaper.
In reality, this electric fireplace is a talking animated wallpaper.

Remember the average viewing numbers? 84 hours per month, 191 hours, 223 hours for 65+. TV can look like a full time job, even if you’re not working in media. Not too surprisingly, those viewing hours are only slightly connected to attentive watching. The time is spent with media, but not on media. For those people, TV’s job, to stay in the JBTD-framework, is not immersion, not entertaining. They just need a companion.

A typical example goes like this: you work home alone, be it running a household, working in your home office, preparing your student homework whatever. You sit in front of your notebook. But somewhere in the room, not too far away is a running TV set. It’s either totally muted (if you’re the sensitive type), softly babbling (probably the majority) or blaring in full power (yes, granny, I’m looking at you).

Those TV sets are actually doing what the name television is promising: you can see something happening, far, far away. It’s a window to the world. And like with real windows looking over a street or a back yard, you’re not glued to the view. It’s a just very nice and humane distraction. Being able to look out of a window beats staring at a white washed wall. Mind you, a running TV set cannot (yet) substitute a real window. TV lacks spatial information, the color temperature does usually not match your biorhythm and the time of the day. But it adds a social layer: TV is constantly trying to tell you more or less entertaining stories. You don’t have to ask for anything, search for anything, do anything. If you open the hose, it will never stop until it gets your attention. Then you might turn up the volume and watch for a minute or two.

It’s visual radio (a medium, which used to be an immersive one as well). But without the ads literally shouting at you, because the visual attention grabbing is there as well.

The real television is a talking, animated wallpaper.   

Excess Capacity

What’s the economic driver behind the so called sharing economy? Robin Chase points into one direction. Thanks to technology, we can build platforms which enable us to harvest the excess capacities all around us. As a co-founder of Zipcar, the car-sharing trailblazer, she knows what she’s talking about. Owned cars are sitting around most of the time. Rentals you get for 24 hours (which, hopefully, is a bit longer than you’re actually going to drive it). A Zipcar you get by the hour. Daimler’s Cars2Go are even rented by the minute. That’s harvesting the excess capacity of a massive chunk of hardware which usually hangs around at the curb like idling teenage mall rats after school.

Excess Capacity
Robin Chase on Excess Capacity: too much of something can become a good thing.

Her talk was partly a compressed version of her new book Peers, Inc. The gist: linear solutions for exponential problems just don’t scale. Peers, Inc. is about harnessing massive problems with scaling. How was AirBnB able to quickly offer more as much bed-inventory as the largest hotel chains? Because their technical platform leverages the power of the people to pool their excess capacity.

Of course we do know by now, that some of the drivers of the sharing economy are not that benign. Granny letting out her spare bed room once a year sounds nice. But Mr. Greedy creating new inventory by taking 3 bedrooms condos off the rental market to rent them out by the day is a rather excessive approach to excess capacity.

Harvesting excess capacity is the underlying scalable model. Mr. Greedy may be driven more by taking advantage of regulatory arbitrage. But this is a problem which fairly easily can be remedied.
The complicated part starts when sharing economy entrepreneurs understand, that one excess capacity in later stage capitalist societies is man power. Look at √úber: the drivers take on the capital expense of buying the car, take on the operating expense of maintaining it, take on all the risks.

And that’s how we come back to Robin’s talk. The occasion was our biweekly Bitcoin Startups Meetup. How does this relate? Currently, most sharing economy platforms are driven by shareholder value. The Bitcoin (or crypto) model works differently. It’s a stakeholder model.

Some small steps are already happening. A couple of Denver cabbies are asking: What If Uber Were a Unionized, Worker-Owned Co-Op? Joel DietzSwarm is pushing forward in many different ways.
Crypto-based decentralized applications don’t need statements like “Don’t be evil”. Their DNA is sequenced and public from the start. This includes the potential switch of the underlying economic model, from rent-seeking shareholders to a revenue-sharing stakeholders.

Addendum: here’s some more material from a talk I gave last year on the topic: “The new decentralized sharing economy and crypto coins”

To Infinity and Beyond: Monetary Sci Fi

At ZapChain, the crypto Q&A central, Daniel Cawrey had a pretty funny question: Do you think bitcoin could become the currency of space?
Here’s my slightly enhanced answer.

As sci fi has a tendency to shape future technical realities (think Arthur C. Clarke and the geostationary satellite, think all things Neil Stephenson from his cyberpunk period), and as the pressing need for a non-terran currency may still lay a bit in the future, we should have a look at what sci fi has to tell us on all things currencies:

Credit
Galactic Credit Chips come in handy.

According to Wookiepedia, The Galactic Credit Standard, simply called a credit or abbreviated to cred, colloquially referred to as Republic Dataries, and later known as the Imperial Credit, was the main currency in use in the galaxy since the time of the Galactic Republic.

Around this official currency, alternative currencies seem widespread:

In some other space and time, and in a slightly more post-monetary future, the Federation credit is the monetary unit of the United Federation of Planets. To put things into perspective:

  • a Tribble sets you back 10 credits (that’s obviously before they unveil their rather inflationary reproductional pattern)
  • to use the Barzan Wormhole, the Federation pays a lumps sum of 1.5 million credits and an annual fee of 100.000 credits.

Mars (Total Recall) and the non-radioactive Earth leftovers and its space dominions (Judge Dredd) go for credits as well.

This means:

  • all major centralized utopias rely on a credit based system
  • in their lesser controlled fringes, alternative currencies are highly likely to be accepted

Which shouldn’t be too surprising. A rallying cry like To Infinity and Beyond implies one quite demanding requirement: space is infinite and to conquer infinity you need infinite resources. And to pay for those infinite resources, you need an infinite money supply.

Which is actually not that different from the economic realities of today. Space may be a rather finite commodity for us inhabitants of earth in the early years of the 21st century. But time is endless.
As long as our economic model is based on growth, we will need a money supply which can grow with time – and therefore has to be infinite.

So sorry, BTC or XBT:

  • If Bitcoin or one of its crypto-successors aspires to become THE currency of space, it will need to incorporate the credit principle into its money supply first. A finite resource like Bitcoin or gold will always be on the fringes, be it of future space dominations or the economies of today.

Hyperinflationary reproductional patterns: a Tribble based-currency is not advisable.

.
A dissenting sci fi opinion could be based upon Ian M. Banks wonderful construct of The Culture.
In his interstellar anarchic post-material-scarcity society, us puny humans exist in a symbiotic relationship with tremendously capable (and eternally quirky) artificial intelligences (the minds), humanoids, and other alien species, who all share equal status.
And one side effect of post-material-scarcity for everybody is: units of account, mediums of exchange and values stores are things from a rather barbaric past.

In The Culture, you will just have to forget about credits and crypto-credits and interstellar blockchains. And if you insist on living with the perils and perks of a monetary value system, you can always move to one of the Culture’s lesser enlightened neighbors, which still deal, steal and trade with credits or commodity based currencies.

 

 

Who will win the Bitcoin blocksize war?

My take on this question on Quora: Who will win the Bitcoin blocksize war?

Here we go:

To quote Niel Bohr:

“It’s hard to make predictions, especially about the future.”

But of course we can always make fairly educated guesses.

QuoraThing is: Bitcoin is currently on a crossroads. At stake is the mother of all crypto currencies, the mighty Bitcoin. Due to its size and value, the Bitcoin network had to become a fairly slow mover. Changes take ages. But it’s becoming obvious that the status quo is not really sustainable.

The blocksize war (rather big name for a rather ludicrous challenge) can be seen as a forerunner of bigger things to come. It’s kind of obvious that the Proof of Work mechanism is working really nice, thank you. Unfortunately it tends to be a rather power-hungry (and therefore expensive) way to deliver seigniorage and validating transactions. Newer crypto contenders look into different models, like Proof of Stake, which of course have their very own challenges, but need way less power and are therefore much cheaper in operations.

To put things into perspective: about a year ago, I did a ballpark calculation onPower Hungry Crypto Coins. Back then, the equivalent of about 0.13 nuclear power plants was needed to run the mining infrastructure. Not much, one might say, to power a global currency.

But here we have the next problem: Bitcoin as a currency for everyday transactions just hasn’t taken off. As a currency, it seems a bit of a very clever solution in search for a problem. On the other hand, there are a couple of problems lying around, which would happily latch on to a blockchain based solution – well, if some technicalities would be in place. Hence all the initiatives around Bitcoin 2.0 and VC and other monies pouring into the space, efforts like sidechains, the increase of the blocksize or straight forward competitors like Ethereum.

So let’s come back to the question. The blocksize war is a mere skirmish – which could end up in a civil war. Bitcoin’s technical strength, the power of its network, is at the same time its most prominent weakness. Fiddling with technical specifications means a handful of software engineers tweaking a distributed infrastructure worth several billion Dollars. Some large changes, like the blocksize decision, need a hard fork of the blockchain.

From a miner’s perspective, forks that lower the ROI are always scary. Your margins are as volatile as the exchange value. But your operating cost, due to the energy consumption, are always to be paid in Dollars, EUR or Yuan.

And if the ultimate fork would happen, the switch from PoW to PoS, this would leave you with some server racks filled up with expensive scrap metal. Of curse, on the other hand: if competing currencies or models make Bitcoin obsolete, there’s nothing left to mine for you as well.

As a small Bitcoin holder you can just watch carefully. And if you want to treat your coins as an investment, then do as with any investment: don’t put all your eggs in one basket.

Jobs To Be Done

This year, I was sitting with a rather baffling question. What if there is¬†a kind of successful product in the market, you do lots of research and such.¬†But in the end, you still ask yourself: so what are those users really doing there? You can always ask them nicely. But you know, there’s this difference between stated preferences and reality. Ask people, and they read the NY Times and watch CNN. See the data, and you won’t believe what happens next.

Right. Stated preferences mostly reveals more about the guy asking than what’s really going on. People try to keep up appearances. That’s the human condition.¬†If you’re not a registered sociopath or a saint or another type of fringe personality.

All users lie. But only if you ask.
All users lie. But only if you ask for it.

#JTBD to the rescue

Guess what. There’s a really nice solution out there. Because the problem of not knowing what your customers really do and want is a fairly common one. Clayton Christensen, professor at the Harvard Business School, came up with the concept in the 90ies.

Jobs To Be Done¬†refers to the core concept behind: people don’t buy “a product”. They “hire” a product to get a “job” done. Have a look at those four guys in a subway car. The “job” is always the same: How to not get bored on a subway ride. But three totally different products got¬†“hired”. A book, a smartphone, a magazine (we don’t know about the gentleman to our left).

But that’s not the hard part. The hard part is finding out what the job really is people hire your product for. Think about a newspaper¬†publishers. A weekend issue of the NY Times is a nice thing to stack up in your spacious living room. But unfolding it on the A-train needs lots of manual dexterity, yogi-like body mastery and a certain disregard for the people sitting next to you. It took decades to come up with newspapers sized for subway rides (and no, the NY Times isn’t one of them).

One job, 3 different products hired.

The beauty of Christensen’s concept is its simplicity:

“The fact that you’re 18 to 35 years old with a college degree does not cause you to buy a product,” Christensen says. “It may be correlated with the decision, but it doesn’t cause it. We developed this idea because we wanted to understand what causes us to buy a product, not what’s correlated with it. We realized that the causal mechanism behind a purchase is, ‘Oh, I’ve got a job to be done.’ And it turns out that it’s really effective in allowing a company to build products that people want to buy.”

You want more? Watch Christensen a bit more in detail.

To get to the bottom of the jobs question, you start with interviews. No surprise. What you want is an xray of your customers mindset when he’s using your product, when he decided to buy, and finding out what is¬†really the¬†job¬†he is solving by using it. So you better start talking, and forget all your assumptions (even if they turn out right).

The interview style is pretty interesting: laid back and trying not to be leading you walk your customers along a scripted timeline. I liked it. Seems like my former journalistic life not only lead to excessive noseyness (an occupational hazard).¬†But then, I had some help (thanks, Tor) and many helpful resources. The Jobs be Done Handbook¬†might look¬†rather pricey for being a self-published booklet of just a handful of pages and really hideous typesetting. But hey, it get’s its job done.

More of a challenge: most scripts, guides to scripts and examples of interviews out there are geared towards real products, bricks and mortar style. Tangible goods. Which makes it a bit hard to follow advice like “build around the Point of Sales“. As the PoS will be most likely your customer’s living room.

But hey, I got it to work. It’s just that¬†the how part might have to become another post.