Category Archives: Politics and Economics

As I Said, Ethereum is Winning the CryptoTulip Award

I already tapped Ethereum as the favorite for CryptoTulip of the Year, but the goofiness goes on.  Not content with complete breakdowns and hundred million dollar oopsies, Ethereum is now plagued by a successful fad – CryptoKitties.

I learned about CryptoKitties from the BBC, which goes to show you that the mania is so manic it’s visible in the wider culture.

The idea of the game is slightly clever, though nothing that wasn’t done on a PDP 8 circa 1977. You can buy digital kitties, and, more interestingly, you can breed them.  I’m assuming you could trade or sell them.

The news is that this very simple artificial life game is implemented on the Ethereum blockchain, and financed via Ether.  Of course, you could have implemented this game in any number of ways.  It’s hard to say that the blockchain per se adds anything other than novelty.

There have been efforts to implement games using a blockchain before, but CryptoKitties has really caught on.  And that’s a problem.

Ethereum executable contracts are Turing Complete, which means that you can implement any computer program on the Ethereum blockchain. However, these scripts are going to be really, really slow, and there isn’t much storage available.  So most programs are going to suck badly on the blockchain.

In this case, the storage used by CryptoKitties has become a significant fraction of all the records in the entire Ethereum universe.  Recapitulating the history of campus mainframes, game playing is pushing out all other uses of the shared blockchain.

Of course, unlike University computing facilities, there is no authority to shut down the game on Ethererum.  So who knows what will happen?

Philosophically, we see that this episode illustrates that the classis Nakamotoan blockchain is vulnerable to a tragedy of the commons. In fact, it seems designed to be a demonstration of this phenomenon. And, by the way, there will certainly be attempts to clone the success of CryptoKitties.  So there could be multiple games, all sucking down the common resources.

This game shines an interesting light on the “value” of digital currency. CryptoKitties are fundamentally no different than any other tokens traded on a blockchain.  But these are dressed up with a concrete, human-visible representation, and a bit of human-oriented gameplay.  So these cryptographically secured digital tokens are selling like hotcakes, unlike most Ehtereum based apps.  Value depends on people.

It is also interesting to observe the cognitive dissonance produced by this challenge to the system. A lot of users are surely feeling that playing this pointless game a waste of blockchain resources, and taking away from the important, serious things they want to do. On the other hand, CryptoKitties is becoming one of the most successful businesses ever to use Ethereum. And if playing a game isn’t “serious”, it’s at least as reasonable a use as the endless variations on EBay or PayPal.  So, CryptoKitties is dumb, but people want it enough to actually pay for it.

Now, criticizing all the other users of the shared blockchain is just not done.  I mean, the whole Nakamotoan design requires a libertarian tolerance for what all those transactions you help with are really about. Did I just help implement an extortion payment?  Tax evasion?  Human trafficking?  Don’t ask.

It will be interesting to see if CryptoKitties continues to grow, and if so, what will happen to the whole system. Aside from the performance issues (at some point, CryptoKitties and clones could exceed the total capacity of the network protocols), crowding out other uses threatens the underlying logic of the consensus mechanism. I don’t think I’ve seen a design where a blockchain is dominated by a single massive application, while maintained by many independent nodes voluntarily participating in the verification and consensus protocols.

If one game is using all the resources and sucking much of the revenue, will that drive away everyone else?  If so, will there be a feedback effect, as fewer nodes lead others to drop out?  Will developers walk away?  Or just be hired by the game company?


  1. BBC News, CryptoKitties craze slows down transactions on Ethereum, in BBC News – Technology. 2017.


Cryptocurrency Thursday

Bitcoin Will Crash – Soon

Even the grown up news is filled this week with stories about Bitcoin’s soaring exchange rate against the USD and other currencies.  We also see the watershed moment when the CME gets in the game.

Who knows what may develop next, even in the instant between key strokes of a blogger?

So I’m not going to chase the skyrocket here. Instead, I will go on record and we’ll see how my predictions go.

For the record, I am saying:

Bitcoin is bubbling irrationally and will crash very soon. Probably by the end of the year.

There will be a lot of ups and downs, of course. Unregulated electronic trading is a recipe for chaos, and that will happen.  The details of chaos mean nothing other than, well, chaos.

There will be fall out from all the movements.  Systems will fail, will be hacked, and in some cases will cheat their customers.  Naïve speculators will discover that “at your own risk” means “too bad for you”. People will discover that unregulated, offshore, “autonomous” systems are, well, not protected by law or anything at all.

Ultimately, Bitcoin will be tarnished and with good reason. Whatever Bitcoin might be useful for, the world never needed this kind of virtual Tulip Mania.

I also predict that regulators will step in to close the barn door.  There will also be schemes floated to create various self-regulatory and self-insurance schemes that reproduce the conventional financial system.  These will have little impact on the giddy Bitcoinistas.

And finally, remember that Bitcoin still hasn’t figured out how to solve its scaling problem.  Sooner or later, technological obsolescence will take its toll, and the masses will boot up new cryptocurrencies, to recapitulate history.


(Note: this was originally drafted on Monday December 5, 2017.   Who knows what may happen in the interim while the post is queued.)



Cryptocurency Thursday

Make Smthng week?

This is MAKE SMTHNG Week, promoted by Greenpeace among others.  This idea combines interest in reducing wasteful consumption and empowerment by Making, and ties it to countering the commercial maelstrom of the holiday shopping season.

In short, they advocate, ‘instead of going shopping, make and do it ourselves.’

I certainly appreciate the value of reducing consumption, and, where it makes sense, reusing and sharing.  And I’m a long time advocate for Making and personal fabrication.  But this project leaves me uneasy for several reasons.

For one thing, while Making is certainly empowering, it isn’t necessarily ecologically sustainable.  Some makers are into reuse and upcycling, but many use non-recycled materials to build what amount to toys. In fact, the whole idea of Making is to create whatever you want, not to reduce consumption.

In short, upcycling is a subset of Making, but you don’t have to be interested in reusing stuff to be a Maker.  For that matter, you don’t have to be a Maker to reduce waste and consumption.

Even more troubling is my observation that many local makers try to make a living from their own DIY creativity.  That is, local cratspeople sell their creations for income. These artisans rely on holiday sales are critical for their livelihood.

So, ‘making smthng’ instead of buying from local makers can be really bad for your local makers, for your local economy, and for the whole planet.

To my mind, “buy smthng local’ is more important that ‘make smthng yourself’.  Not that you can’t do both – though that probably uses more resources.

All that said, I certainly encourage people to learn about reuse, sharing, and recycling. The more you understand where stuff comes from and what your choices are, the better citizen you will be.

By the way, I do like their web page, which invites you to “Start creating…[drag the elements around]”.  That’s kind of cool, though utterly and totally useless and wasteful (because using the internet on a computer or mobile device is horribly, horribly resource intensive.)

(File this under “Bah! Humbug!”)

  1. Greenpeace. MAKE SMTHNG Week 2017,


Ethereum Insanity: CryptoTulip of the Year?

The cryptoworld is all excited because the US dollar is falling against not only other fiat currencies but also against Bitcoin and other cryptocurrencies. Whether this trend has anything at all to do with the merits of Bitcoin is far from obvious.  Fueling the irrational exuberance, the Chicago Mercantile Exchange plans to traffic in Bitcoin futures – contracts to bet on the movement of Bitcoin against the US dollar. (Maybe.)

Most of the news is about the bubble in “Initial Coin Offerings”, blockchain based contracts that most grown ups see as unregulated securities. Pretty much every regulator in the world has issued stern warnings about these virtual Tulips, which scarcely dims their luster for the enthusiasts.

But Ethereum is vying for the title of “CryptoTulip of the year”.

After a catastrophic 2016, which should have been the end of Ethereum, it survived, and seems to be thriving.  A preposterous “mishap” in early November resulted in hundreds of millions of dollars “frozen” in unreachable accounts.  So far, there seems to be no way to fix this oopsie, short of rewriting history—again.  (Rachel Rose O’Leary memorably tags it as a “Brain Freeze”.)

Despite this insane-clown history and the obviously flawed design, Ether “prices” (exchange rates against the USD) are near an all time high.  How can this be?  (At least part of the answer is “heavy buying in Korea”.)

Clearly, there is little relationship between these speculations and either the technology or the economy.  These cryptocurrencies are proving to be impossible to maintain, let alone upgrade. When people talk about “trustless” systems, they don’t intend to mean “systems that can’t be trusted”.

Let’s be very clear here:  the exchange rates have gone up.  They will go down.  Assuming the software doesn’t crash or get hacked to death first.

  1. Omkar Godbole, All-Time High: Ether Prices Pass $440 as Key Level Breached. Coindesk.November 24 2017,
  2. Rachel Rose O’Leary,  Brain Freeze? Parity Bug Continues With No Easy Solution in Sight. Coindesk.November 24 2017,
  3. John McCrank, CME says bitcoin futures coming this year, but date not set. 2017, Reuters.


Cryptocurrency Thursday

The Neverending Ethereum Disaster

This month Bitcoin almost split in two, pulling back from the brink at the last minute. Of course, there is no solution in sight for the dire scaling problems of Bitcoin, but who cares as long as the exchange rate keeps rising against the weakening US dollar?

Etherereum should be so lucky. After the DAO disaster in 2016, followed by several hard forks that rewrote history, you would think that sensible people would have headed for the hills. Of course that’s not happening.

This fall has seen yet another disaster. One of the most used wallets experienced a bug which led to the freeze of a large amount of Ethereum. I don’t really understand the bug itself, but somehow the coins were consigned to accounts that can no longer be managed. You can see your money, but no one can get it.

Just as baffling as the bug, there seems to be little urgency to fix it. It’s been a week now, and there seems to be little idea of what can be done, and shockingly little indication that anything will be done soon.

Stan Higgens writes in Coindesk that “Parity Floats Fix for $160 Million Ether Fund Freeze”, but the actual text indicates that there is no fix in sight except maybe a hard fork due in 2018 [2]. In other words, you are out of luck if you are wanting to use some of those millions of Ether any time soon.

The good ship Ethereum is like the Titanic, except when it sinks they roll back time and sail again—to sink all over again.

It is important to point out that these disasters in Ethereum are mostly not due to the core protocols and cryptography that define the distributed ledger itself. The DAO went down with all hands because of a bug in executable contract code, and the Parity Wallet ran aground due to the wallet code (related to executable contract code, I think), not the ledger itself.

The point is, security is an end-to-end thing <<link>>. People who talk about how invulnerable the core ledger is supposed to be are missing the point: Ethereum or any cryptocurrency is only as secure as the weakest link between two users. And there are a lot of links: wallets, APIs, servers, networks, mobile devices, and OS code, to name a few. And there are people in the chain, too, heaven help us.

At some point, you have to ask whether Ethereum is creating more problems than it is solving.

  1. Stan Higgins, Parity Floats Fix for $160 Million Ether Fund Freeze. Coindesk.November 13 2017,
  2. Parity Technologies, Parity Technologies Multi-Sig Wallet Issue Update, in Parity Technologies Blog. 2017.


Cryptocurrency Thursday


What is Coworking? It’s More Diverse Than You Might Think

It is frequently observed that Coworking Spaces, like the Tech Industry, seems pretty, well, undiverse.

For example, Lori Kane commented, [4]

it hit me immediately: almost everyone in the space was young and white” (and mostly male). This was “not at all what the walk through the diverse neighborhood primed me to expect.

Similar sentiments have been expressed by many people.

At the same time, coworkers frequently perceive their own workplace to be diverse, and, indeed, the diversity of fellow workers is seen to be one of the principle benefits of a coworking space (e.g., [5, 8, 9]).

What is going on here?

For one thing, there are many different ways to be “diverse”. Kane notices the visible demographics of the space, especially compared to the city around it. Others are more focused on the range professional and technical skills in the room.

A second caveat is that any given coworking space has only so many workers, and generally draws a group “like-minded” workers. But there are many coworking spaces, with different membership, and no single workplace represents all coworking spaces or coworkers.

Atypical Entrepreneurs”

Sean Captain wrote last year in Fast Company about “A Growing Movement Of Coworking Spaces For Atypical Entrepreneurs” [1].  He writes about the emergence of “work spaces with public-service missions”. These operations may be not-for-profit, or for-profit B-corps, and may have a variety of members. The common theme is serving a social mission rather than pure profit.

Captain views this as a “new” trend, but coworking has had this strain of social mission from the beginning (e.g., the Centre for Social Innovation [9], Make Shift Boston [6], or EnSpiral Space [3]). But he does find that this concept is holding its own amid “mainstream, big-city coworking spaces like those in the WeWork empire” and their clones.

Besides a social mission, these spaces are also emphatically local.

Captain quotes Robbie Brown of WELabs [12] (located in Long Beach), “we’re drawing in membership from the community here rather than so much attracting outside folks into the area,” As Kane suggested, the local group is ”less threatening than walking into a coworking space and seeing a bunch of white guys in dress shirts, their faces in computers and typing away.

Captain mentions similarly local work spaces in Raleigh, NC,  Detroit, and other cities.

Again, the emphasis on serving a local community has been a key to coworking from the beginning. Indeed, the gigantic, one-size-fits all WeWork-Seats2Meet-NextSpace style of “consumer coworking” is a recent development. In the beginning, all coworking was “authentic”, local coworking, and there are plenty of locally oriented (but not necessarily social mission oriented) work spaces, such as The Harlem Collective [10], The Shift [11], Nebula [7], or CoHoots [2]).

In addition to demographic diversity (or perhaps, demographic locality), these small, low profit operations generally attract a variety of “non-traditional” businesses. He notes a variety of occupations and businesses, including healthcare, small manufacturing, and community development projects.

Again, these businesses aren’t as new and ground-breaking as Captain seems to believe–there have been similar community development projects for a century or more in most places. But, again, in recent years the big chains and business schools have promulgated a picture of what entrepreneurs are like, and what they do.

Captain does raise the interesting point that the leadership of these social mission spaces isn’t itself particularly diverse. This is embarrassing, smacking of cultural colonization, but also a matter of access to funding and know-how. Obviously, the next wave of “authentic local coworking” must be locally run and led.

My own view is that coworking has never been as homogeneous or, indeed, “corporate” as the business school version.

More important, coworking is all about community, and about the community feeling of comfortable solidarity and mutual support. Large scale operations may offer consistent, low cost services, but no one community “vibe” will please everyone.

If coworking is to persist and grow, it will need to recruit more and more diverse workers. This will require creating and sustaining communities that attract and nurture new workers, including people who do not aim to “move fast and break things”. (“Move steadily forward and fix things together”?)

For this reason, I view the future of coworking as a patchwork of many spaces, each locally led and connected to it’s location. Authentic, home style, workspaces?

“Even more diverse.”

  1. Sean Captain, Inside A Growing Movement Of Coworking Spaces For Atypical Entrepreneurs, in FastCompany – Leadership. 2016.
  2. CoHoots. CoHoots Coworking. 2017,
  3. Enspiral. Enspiral Space. 2015,
  4. Kane, Lori, Tabitha Borchardt, and Bas de Baar, Reimagination Stations: Creating a Game-Changing In-Home Coworking Space, Lori Kane, 2015.
  5. Liquid Talent, Dude, Where’s My Drone: The future of work and what you can do to prepare for it. 2015.
  6. Make Shift Boston. Make Shift Boston. 2016,
  7. Nebula. Nebula Coworking St. Louis. 2017,
  8. Olma, Sebastian, The Serendipity Machine: A Disruptive Business Model for Society 3.0. 2012.
  9. The Centre for Social Innovation. Culture | The Centre for Social Innovation. 2016,
  10. The Harlem Collective. The Harlem Collective. 2017,
  11. The Shift. The Shift – Home. 2017,
  12. Work Evolution Labs. Work Evolution Labs,. 2017,


What is Coworking

Note:  please stay tuned for my new ebook, “What is Coworking”, coming in 2017 Real Soon Now.

Bitcoin is More Evil Than Ever

From the beginning, Nakamoto style cryptocurrency was intended to enable unimpeded flows of funds [2]. Cryptocurrencies are specifically designed to be the perfect mechanism for grey and black markets; for tax evasion and for money laundering of all kinds. While crypto-enthusiasts see this as a feature, most of civilized society views this as a serious bug.

In the short history of Bitcoin, we have seen it become a medium for illicit commerce and ransomware. (Even more-or-less legitimate uses, such as digital commerce are being highjacked by a flood of scams, including preposterous “initial coin offerings”, which might as well be called “tulipware”.)

It has become evident that Bitcoin has also become a favorite tool for human smuggling and human trafficking: modern day slave trade. I’m not seeing this as a good thing in any way at all.

As reported in Coindesk [1], this issue was highlighted by Joseph Mari of the Bank of Montreal at the The Pontifical Academy of Social Sciences, Workshop on Assisting Victims of Human Trafficking: Best Practices in Legal Aid, Compensation and Resettlement [4]. (It’s not often that I cite something “Pontifical” : – )) Mari reports that, as conventional financial services move to block illicit commerce, including human trafficking, criminals have moved to use Bitcoin to collect their illicit money.

Cryptocurrency enthusiasts are quick to point out that this is pretty much exactly how Bitcoin was designed to work: it is supposed to be immune to “censorship”. Other cynics like me would also point out that the wealthy get away with this stuff without resorting to frippery like Bitcoin. (See perhaps: England, Queen of, offshore accounts of.)

Of course, the original Nakamoto design was more than a little hacky, and it isn’t completely immune to interference by determined authorities. Companies make good money selling analytics that spot suspicious transactions and, with favorable winds and some luck, might nab some bad guys.

However, this mostly retroactive data mining is hardly adequate. Detecting this stuff after the fact doesn’t stop, prevent, or deter it.

Worse, the tiny successes so loudly touted are technically obsolete, as the dark web moves to far more opaque cryptocurrencies.

Mari is right to be concerned, and it is good to educate conventional banks and other authorities about this technology. But I’m really not sure that there is anything that can be done, at least until quantum computing takes it all down.

  1. Michael del Castillo, Vatican Address to Highlight Bitcoin Use in Slave Trade. Coindesk.November 2 2017,
  2. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009.
  3. Darryn Pollock , Jamaican Police Take Aim at Human Traffickers’ Bitcoin Pockets, in Cointelegraph. 2017.
  4. The Pontifical Academy of Social Sciences, Workshop on Assisting Victims of Human Trafficking: Best Practices in Legal Aid, Compensation and Resettlement. 2017: Vatican City.


Cryptocurrency Thursday