The Power of Rationalization or why Bitcoin stays a ⚡ hog

MVP, the Minimum Viable Product: you’re laser focused on solving one problem. Everything else is just a distraction. In regards of Bitcoin, the focus is clear: in 2007 our centralized monetary system had quite spectacularly crashed. Total doom was somewhat averted, some monetary were band-aids applied. And seemingly out of the blue falls a software protocol, which jumpstarts the Internet of Money from zero to 10.000 BTC for 2 pizzas to a multi trillion USD market.

4 years after the notorious pizza deal (with roughly 500 USD per BTC now worth a very nice 2 bed room apartment in Manhattan), I had a first look at BTC’s already notorious consumption of energy. Back then, 0.13 nuclear power plants were necessary to feed BTC’s Proof of Work consensus. CPU mining was already a thing of the past, Ethereum still on the drawing board, and Proof of Stake as a less energy hungry consensus model even more unproven than PoW back then.

Where are we now? Here’s the pizzas’ post crash valuation in June 2021. Think something between a fleet of super yachts, a sizeable island archipelago in the Caribbean, or a pre-owned space station.

So what about the power necessary to run the network? Ah, well …


https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume

Yes, this certainly sounds like a lot of energy. Or, in other words: it is. And, for the time being, will be. In a bit of a distant future, harvesting energy will be a virtually free commodity. But until then, energy conservation is where we’re heading. Because saving energy is a much quicker win.

Meanwhile, Harvard Business Review reiterates some of the standard arguments of some vocal Bitcoinistas. Mining uses more greener energy than average and its worth it anyways. Finally, the piece ends with a slight finger wagging:

What’s missing here? The alternative. While Ethereum is preparing for the big switch towards PoS, and newer chains like Cosmos, Polkadot, FLOW are live with PoS since their Genesis, the Bitcoin universe seems eternally stuck in its rationalization of being a massive stinker.

There’s three main line of arguments you might encounter:

  1. BTC is much greener than you think. And it’s even an incentive to invest into a green future.
    Let’s call this the Happy Rainbow Fallacy.
  2. Man made climate change is not a thing anyway. Therefore: nothing to worry about, please move on.
    This may be called the I am Right and You are Wrong syndrome.
  3. It’s worth it (and gold, FIAT etc use MUCH more energy).
    Here weg go: Whataboutism meets Low Self Esteem.

The Happy Rainbow at least kind of acknowledges that something may be off here. Yes, we use a lot of energy. But at least compared to let’s say the US average, the CO2 output is much less. Because many miners use green energy. That’s all very fine of course. But let’s put it like this: BTC are not the only scarce commodity. So is clean power equipment. Therefore, every green coin W/h equals a coal plant not converted yet. But hey, look here, the sky is pink and filled with winged unicorns.

I am Right and You are Wrong is an integral part of the fact free universe of climate change denialism, closely related to the “THERE IS NO VIRUS” plandemiacs and the chemtrail survivalists. If you listen to some of the godfathers of coinage, you get an idea that being a brilliant mathematician doesn’t prevent you from becoming a racist blubberhead on other affairs and unfortunately this kind of meme-DNA seems quite prevalent in the space.

Whataboutism meets Low Self Esteem. Yes, we know: the gold is DIRTY by default and what’s to love about the financial system. But maybe you didn’t get the question right? It’s not about the question “is BTC useful enough to put xyz extra tons of CO2 into the atmosphere” but “how do you plan to reduce your carbon footprint”.

Basically, all three line of arguments are based on is the following assumption: there is no alternative to PoW. Let’s not get into the religious wars around the technicalities of the issue. It’s not the year 2007 anymore and there had been quite some learnings and deployments.

But, unfortunately, a range of monetary iconoclasts of yesteryear have turned into functional conservations in regards of the vehicle they’re massively invested in, time- and moneywise.

This purely defensive position comes at a price.

The ESG Dilemma

How is startedHow it ended
When you value your company higher than your crypto holdings.

Bitcoin positions itself as Digital Gold, an immutable store of value, an investment asset where more and more institutional investors are moving in. But some institutionals are a bit hampered here. More and more legislation is now paving the way to funnel money into crypto assets. But the E in ESG (Environment, Social, Governance) is gaining much more weight as well. So being the unapologetic energy hog might be a bit counterproductive.

It’s just like why Musk did flip flop on BTC for TSLA. When the dirt coin story clashed with TSLAs clean knight in shining armour image, Elon became a Tesla-maxi.

Yes, being an unapologetic stinker is bad for business.

OPEX

Not to forget: energy is a cost factor as well. If you are a true monopolist by default (A.K.A. a true Bitcoin maximalist), OPEX is almost irrelevant. In any other line of business, it’s either you move it down – or you will be moved out.

Regulatory Achilles’ Heel

If you don’t clean up your act I tax you out of the game and here’s our CO2-neutral centralized Central Bank Digital Currency to play with.

But that’s the wheel of life: successfully rationalization away your weak points will be your final weakness.

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 €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

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.

 

“You’ll be done with any other screen,” he says. “You won’t need it. It will be generated on a surface in the air. Put your finger over your palm, it’s a phone. Your desk becomes a laptop.”The resolution two generations from now will give you a 4K experience, so you probably won’t go to a movie theater. Why would you buy a wall-sized TV?”

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

Software Patents

What are software patents good for? NPR’s “This American Life” explained nicely the
theory behind the software patent business
.

A more hands-on approach comes from Sanjay Jha, CEO of Motorola Mobility. After hinting that Motorola could use its bazillion mobile patents to tax some of its Android competitors, Google defended its Android franchise by buying
the whole of Motorola Mobility
.