Category Archives: Politics and Economics

Robin Hood Coop: Offshore Finance for Doing Good?

I worry about this one.  It’s probably OK so far, but I still worry.

The Robin Hood Coop calls itself a “coop”, though it operates as an “activist investment fund”, using an opaque algorithm to automagically manage the investments.  Some of the proceeds are raked off to support the operations.

Investing in a magic algorithm should be done carefully in all cases.  so it is a definite red flag that I can’t find any information about the algorithm (called, “The Parasite”, which somehow fails to reassure me very much).  There certainly nothing published or peer reviewed on their web site.

There are additional warning flags in the promotional materials.  This isn’t just a hedge fund, it is “a cooperative that bends the financialization of economy for the benefit of those who are not the financial elite”.  There are management fees plus a rakeoff to “fund projects that expand the commons”.  And, of course, it is implemented using Ethereum, which is “revolutionary technology for decentralised computing” (so what could possibly go wrong?)

Lot’s of fine sentiments, but impossible to really know what they might mean in practice.

I have to admit that my eyebrows rose at the FAQ item, “Is it Legal?” (Answer: Yes, under the laws of Finland.)  I’m glad that this is a relevant consideration, but it’s still troubling that they think people would be in doubt.

Of course, the answer is actually much more complicated than the FAQ indicates, at least for people not living in Finland. You are transferring money to this Finnish organization, which is investing in the US. If you take money out, it’s another transfer from Finland.  As they say, “When you receive payments from Robin Hood, you will be liable for whichever taxes you would pay for investment income in your country of residence and/or Finland.”  In short, who really knows?

Anyway, this is probably OK, though it seems unlikely to be a particularly profitable investment.  It may be a good way to support the “commons” projects they select, though, again, I don’t really know the implications of such international investments.

In the long run, they might be well advised to create a network of RHC affiliates incorporated in different jurisdictions.

This project has moved to a more troubling RHC2.0, which manages all shares as a private cryptocurrency (RobYns) which is used for trading in various currencies and cryptocurrencies.  This may or may not be a cost effective way to run the service, but it certainly does raise issues of trust. (Do I want to invest via a fund that has no humans in charge, and has no legal presence in my local jurisdiction?)

And if I understand their materials, they correctly are aiming to go even farther, with V3.0 called Robin Hood Unlimited.  This is a member owned (I think) “platform, where anyone could develop financial instruments, and launch them as apps for other members to use”. The goal is to offer “every opportunity to devise different investment strategies and different ways of directing profits or other funding to projects”.

Cooperative or not, this is a description of an offshore, extralegal, money hub, which is not a socially positive animal.   I this an “offshore coop”?  Do the benefits of “cooperative” outweigh the negatives of “offshore”?  Does the “Unlimited” cancel out the “member owned”?

Whether you share my own aversion to hot money in any form, you have to agree that RHC seems to take the motto “think globally, act locally” kind of backwards.  The fund is directing funds from everywhere to a few deserving projects, extracting capital and transferring it. These transactions may be ethical (though we have to trust them on that), but they certainly aren’t local for most of the investors.

The blockchain technology they use not only makes this strategic error easy, it is really the only way that blockchain can reasonably be used.  A global, peer-to-peer network is a primary affordance of blockchain technology, which is just plain the wrong model for local economies. In other words, selecting Ethereum technology is leading down the wrong path.

My basic point is that where ever the investors are, they surely could find local enterprises to invest in.  And that is what we all should do.  Shipping funds off to other continents or to untethered Internet projects is not a good way to make your own community better, which should be a top priority. In fact, it tends to move funds away from local social enterprises.

The new “RH Unlimited” project will likely be much worse. Much, much worse. Sure, it will be possible to create local tokens and local cooperatives, though we already can do that with “some guys in Finland”.  But it will also be trivial to sell and buy shares in anything, with unknowable consequences.

Making it easy for anyone to mess about with financial instruments is really not a way to promote community solidarity, trust, or sustainable development.  How will this be policed, if it even can be?  What happens if the coop is turned into a financial tool for criminals, terrorists, corporate trolls, and/or political shenanigans?

I note that even if you are satisfied that the current leadership is ethical, a decentralized organziation–cooperative or not–can be taken over by nefarious forces.  So watch out.

I probably shouldn’t be too hard on RHC.  There are dozens of variations on these “non-extractive investment” ideas and Ethereum is a favorite technology for these concepts.  To me, this looks like a hammer in search of nails.  We have a technology that lets people build their own financial systems, so obviously we should tackle the problem of ethical finance.

My own view is that the harder problems are social, and they need to be solved by talking and working together, face-to-face, in our own communities.  Imagining that faceless, soulless Internet technology will help in this ground campaign is misguided.  In fact, blockchain technology is antithetical to the personal human contact essential to actual ethical economics.

I’m willing to be proved wrong.  I will leave this as a challenge to RCH and other similar projects.  Let’s see what kind of sustainable “non-extractive” economic activity is actually possible.


Cryptocurrency Thursday

Blockchain support for local solar power generation

Let’s combine two of my interests, Solar Power and Blockchains. The use case here is a peer-to-peer microgrid, buying and selling power from local small scale solar generation. This idea is scarcely new, power cooperatives and co-generation schemes have been around for a long time, and there are a lot of contemporary variations on this theme (and not just for electricity). <<link>>


The blockchain wrinkle is to use a blockchain to track the transactions among the participants.  The idea is that the distributed ledger is an inexpensive and robust way for people to buy and sell power they generate in tiny amounts.  In addition, the decentralized blockchain protocol kind of matches the decentralized group of generators and consumers, so neighbors can share without the overhead or interference of third parties.

This approach has been going for a while in at least a few cases, such as the Brooklyn Microgrid. TBM uses some proprietary technology to connect the solar generation hardware to the software accounting and trading system.  Much of the work is community organizing, recruiting people in the local community to participate and invest.  (This kind of thing is not really a good use of kickstarter or something to dabble in from afar.)

I’ll note that from the start the Brooklyn Microgrid has boasted that it uses blockchain technology.  But you would never know that from the web site, recruiting materials, and mobile apps.  And that is how it should be!  Normal humans should never see a blockchain!  TBM is a good example of just how little the blockchain matters to ordinary users—you could take away the blockchain and no one would know or care.

This summer, the Power Ledger is launching another such effort,  down under [1].  Actually, Power Ledger is more equivalent to the proprietary technology the BM is built on.

PL is actually built on top of Ethereum, which seems like a very plausible technical strategy—Ethereum’s executable contracts are just the thing for this use case.  PL plans to create their own tokens and run markets for electricity.  This would be one of many such token/market systems built on Ethereum, so again, a plausible engineering decision.

(While Ethereum has grievous problems, and is far from idea; for any serious long-term business, it’s better than making up your own blockchain solution from scratch.)

Power Ledger isn’t even in beta yet, so it’s impossible to say how well it might work.  Given the not-particularly-innovative technical path, we can be confident that they will have working software.  But how well will they deliver the dozens of use cases they are excited about, particularly, peer-to-peer solar production?

They seem to believe that what people need and want is some way to sell their excess production in a more or less open market.  Presumably, this is supposed to incentivize installing your our solar panels, and/or help defray the cost.  It’s not obvious how well this will work, or if there would be enough demand to matter.  (Is there really a use for lots of little dribs of electricity?  Is there much use to receiving tiny payments for such dribs?)

It’s not totally clear, but it looks to me like they intend to use the conventional grid, just as previous negative metering systems have done.  This concept depends on political action and, blockchain or no blockchain, is not popular with grid operators.

At this point, their most developed case seems to be aiming to operate charging ports for electric vehicles.  This sounds like a possible business, but doesn’t really require the full generality of the distributed ledger, or create a local microgrid.

As the BM project illustrates so well, the more important part is building the community of users.  And this effort needs well designed services and consumer apps, where “well designed” generally means no visible blockchain.  And, more than anything, it requires community organizing.  PL’s technology is neither here nor there for this part of the solution.

Worse, the project started with an ICO, which raised millions of dollars.   This has absolutely nothing to do with solar power at all.

Reading the tea leaves of Power Ledger’s materials, they call attention to a number of interesting possibilities down the road.  If the distributed ledger can do negative metering and trading among neighbors, then it might also do accounting for a Carbon tax or other offset system.  That would be a neat feature for a “smart meter”, and a blockchain might be a plausible way to do it (maybe).

In the end, though, these are neat ideas but it is far from clear that blockchain technology is the only or best way to implement them.  Yes, the distributed ledger is philosophically simpatico for the desire for peer-to-peer power trading.  But a real peer-to-peer system, a la BM, is about trust, and good service (which is about trust).  Making that happen doesn’t need a blockchain, per se, and, to the degree that the blockchain is “trustless”, it probably doesn’t help.  I’m pretty sure that happy Brooklynites are happy with TBM people and service, not with whatever software lies inside.

So, we’ll see.

  1. Jennifer Bisset, Blockchain helps us take green power into our own hands, in cNet – News. 2018.


Cryptocurrency Thursday

FOAM: Decentralized Localization Using Ethereum

FOAM is a technology that seeks to use blockchain and Ethereum contracts to create mapping and location based services.  The project wants to address a complex of perceived problems: GPS is spoofable, maps are owned by big actors, and location services aren’t private.  In addition, they think that “people lie about their location,” (Ryan John King, the co-founder and CEO of FOAM, quoted in Coindesk [3])  The solution deploys blockchain technology and Nakamotoan philosophy [2].

Looking at their materials, it is clear that FOAM is mainly focused on replicating Internet location-based services, not on navigation or engineering or geoscience.  The geospatial model is a two-dimensional map of the surface of the Earth.

The location service depends on many local low-power radio beacons instead of satellites. They imagine an ad hoc mesh of locally operated beacons, which are recognized and validated via Nakamotoan style consensus rather than a central authority (such as a government space agency). These beacons are used to trangulate positions.  Good behavior and trustworthiness of the beacons is supposedly assured by cryptocurrency tokens, in the form of incentives, notably buy in and security deposits.

They imagine this to be used to construct datasets of “Points of Interest”, which are “where are the stores, cafes, restaurants and malls, where a fleet of vehicles in a ride sharing program like Uber should be anticipating if demand is shifting or surging, or which traffic bottlenecks drivers should avoid on an app such as Waze.”  These are stored and validated through a decentralized protocol. “[G]ranting control over the registries of POI to locally-based markets and community forces, allowing the information provided to be validated by those who contribute to the relevant locality.

These datasets are to be created through bottom up efforts, presumably incentivized by desire to operate local services. “FOAM hopes that the Cartographers and users will contribute the necessary individual work, resources, and effort themselves to contribute to the ongoing community-driven growth and supplement this important cartography project.

Interestingly, the crypto token-based incentive system relies on negative incentives, namely buy ins and “security deposits” that can be forfeited by consensus. I’m not sure I’ve seen another Nakamotoan project with this sort of punishment based (dis-)incentive.  (I’ll note that psychologists generally find that the threat of punishment does not engender trust.)

Obviously, this entire concept will depend on the development of the localization network and the datasets of “Points of Interest”.  As far as I can see, realizing this is based on “hope” that people will contribute. I’d call this “faith-based engineering”

We can pause to reflect the irony of this “trustless” system that appears to be entirely based on “hope” and the threat of punishment.

As far as the actual technology, it is, of course, far short of a “map of the world”.  The local beacons are fine for a dense urban setting, but there is little hope of coverage in open space, and no chance that it will be useful at sea, up in the air, inside significant structures, or underground. Sure, there are ways to deploy beacons indoors and other places, but it isn’t easy, and doesn’t fit the general use cases (Points of Interest).

Ad hoc networks aren’t immune to jamming or interference, either, and are essentially defenseless against determined opposition.  In classic fashion, the protocol “routes around” interference, discarding misbehaving nodes and corrupted data. Unfortunately, this means that the response to a determined and sustained attack is to shut down.

The incentive system is somewhat unique, though the notion of a “security deposit” is widely used. How well will it work?   (How well do security deposits work?)  It’s hard to say, and there doesn’t seem to be much analysis of potential attacks.  The notion that the loss of security deposits and other incentives will guarantee honest and reliable operation remains a theoretical “hope”, with no evidence backing it.

The system depends on a “proof of location”, but it isn’t clear just how this will work in a small, patchy network. In particular, assumptions about the security of the protocol may not be true for small, local groups of nodes—precisely the critical use case for FOAM.

Finally, I’ll note that the system is built on Ethereum, which has had numerous problems. To the degree that FOAM uses Ethereum contracts, we can look forward to oopsies, as well as side effects from whatever emergency forks become necessary.

Even if there are no serious bugs, Ethereum is hardly designed for real time responses, or for datasets at the scale of “the whole world”.  Just what requirements will FOAM put on the blockchain, consensus, and Ethereum virtual machine?  I don’t know, and I haven’t seen any analysis of the question.

This is far from an academic question.  Many location services are extremely sensitive to time, especially to lag.  Reporting “current position” must be really, really instantaneous.  Lags of minutes or even seconds can render position information useless.

Can a blockchain based system actually deliver such performance?

Overall, FOAM really is “a dream”, as Alyssa Hertig says.  A dream that probably will never be realized.

  1. Foamspace Corp, FOAM Whitepaper. Foamspace Corp, 2018.
  2. FoamSpcae Corp, The Consensus Driven Map of the World, in FOAM Space. 2017.
  3. Alyssa Hertig (2018) FOAM and the Dream to Map the World on Ethereum. Coindesk,


Cryptocurrency Thursday

Tracking the Gig Economy

This month the US Bureau of Labor Statistics issued its first ever report on “Contingent and Alternative Employment”, AKA, “The Gig Economy” [2]. The BLS survey found a relatively small proportion (circa 10%) of US workers are “contingent”.  This number contrasts sharply with the most widely reported number to date from the Freelancers Union, which claimed over 30% of the US workforce, including more than 60% of “millennials”.

In an earlier posts, I criticized the FU survey for its overly broad definition of “worker”.  (For example, they count people who have a full time job and moonlight as “freelance workers”—which is at least double counting, if not conceptually wrong.)  My own reading of the FU survey gave numbers not that different from the BLS survey, when I excluded some of the categories I questioned.

The new official survey suffers from the same problem of definitions.  Who should count as a “contingent” worker? The relatively low numbers of contingent workers reported by the BLS in part stems from their restricted definition of who should be counted in this classification.  The BLS does not count moonlighters (which I think is correct).  They also appear to not count independent workers who are employed as “sub contractors”, e.g., of an employment service.  These workers really should be counted as freelancers, in my opinion.  And so on.

Caitlin Pearce of the Freelancers Union (which produced the earlier reports) raises these and other issues [1].  She also points out that the BLS survey specifically asked workers for how they worked in the last week, which might well will miss many workers with irregular schedules.

Pearce (and the FU survey) argue that “diversified” workers, i.e., people with multiple jobs, should be counted as independent workers.  The FU tends to count them as freelancers, no matter what their mix of work is.  (They project that more than half of all workers will be “freelancing” soon—though since this includes more than one part time job per worker, this number is hard to interpret.)  The BLS is probably biased to counting workers only once, generally for their “steadiest” job.   (This would seem to include at most one job per worker, which does not capture the real diversity of independent work.)

Clearly, there is a tricky counting problem here that deserves some thought.  In particular, there needs to be some concept of “an adequate income”, regardless of how many separate contracts or days of work a given worker puts in to achieve it.

Overall, it looks to me like the BLS and FU surveys are fairly consistent on the fundamentals.  The contracting headlines reflect different decisions about how to classify and count workers.  These differences stem from the reality that independent or contingent working is a complicated way of work.

And I completely agree with Pearce that getting a clear picture is important.

Building a better future for freelancers starts with learning as much as we can who freelancers are and what challenges they face.

  1. Caitlin Pearce, The government must do more to understand the freelance workforce, in Freelancers Union Blog. 2018.
  2. US Departmen of Labor, Contingent and Alternative Employment Arrangements Summary. Economic News Release, 2018.


Blockchain Use Cases For A Real Sharing Economy

From the very beginning, Nakamotoan blockchains have inspired dreams of a better world.  In the ensuing decade, many use cases have been floated, though many of the most successful are hardly socially beneficial (e.g., supporting dark markets, extortion, and new flavors of financial scams).

Aaron Fernando writes in Sharable about “Blockchain as a force for good” [1], by which he means implementing a real sharing economy.

here’s a deep dive on blockchain applications in our niche: social impact.

He notes that the term “blockchain” is now used for a variety of systems, not just the original open, decentralized Nakamotoan design [2].  He also points out that use of a blockchain may or may not require a cryptocurrency, and for currencies, there are alternative mining protocols with radically different ecological implications.  In short, the meaning of the term “blockchain” isn’t simple.  it is vital to understand the precise technology in use to match the technology to the goals of the users,

But watch out—Nakamotoan developers are not oriented toward “social impact” in the way that Sharable readers want.

“If you can come up with something that is easy to bootstrap, that does have some incentives built in for the people operating the schemes, and also makes the world a better place — then we’re talking.” (quoting Emin Gün Sirer)

The article visits examples of this sort of “social positive” projects using blockchain technology, and links to a half dozen interviews with some example projects.

There are variations on the theme of crowd funding and peer-to-peer credit, generally aimed at investments at a local level, such as within a city.  This may be done with digital tokens or conventional currency. These systems compete with or replace conventional banks, and potentially provide financial services to the “unbanked” and credit starved.

Other variations involve managing assets and certificates, independent of a central repository.  This might manage human resources (a la a time bank), physical resources (e.g., locally generated solar power) or legal status (such as so-called “self-sovereign identity”).  In all cases, the blockchain serves as an unhackable, digitally programmable, global bulletin board for these exchanges.

Other services are variations on crowdsourcing, offering shared knowledge and decision making.  In these cases, the blockchain serves as a secure repository for digital artifacts (e.g., shared documents) and also supports distributed discussion, voting and decision making, which is the heart of both organizations and democracy.

The common thread among all these efforts is probably user and local ownership, “tools in the hands of the workers” in the twenty first century.  Blockchain technology offers a way for people to share data without relying on centralized servers, which are run by organizations that try to control the activity and rake-off profits—and which may be shut down.

It is also true that blockchain technology is pretty cheap, which is critical for many of these services. One reason conventional financial institutions do not serve small scale enterprises and poor people is that their overhead costs are too high to allow it.  Blockchain based systems that pare down costs can successful serve these cases.

Finally, I’ll point out, as I have many times before, these services are all about trust. While Nakamotoan blockchains are described as “trustless” (because the computers do not need to trust each other), these “socially positive” use cases all work by enabling individuals to work together and trust each other.

The clearest example has to be something like “self-sovereign identity”.  The idea here is to post cryptographically signed credentials on a public blockchain, where they can be accessed and cross-checked anywhere in the world (without government permission).  Even if conventional authorities can’t or won’t certify a person’s identity, they may still be able to get along.

It is clear that this scheme scarcely eliminates the need for authorities, it just makes it possible for people to utilize whatever certification they choose or can obtain in their given circumstances.

But the principle remains the same: whether it’s a printed ID card or a cryptographically signed entry on the blockchain, what matters is who signed it, i.e., who vouches for this information.  When I need an identification for someone, I’m not going to pay any attention to any record, blockchain or not, from a source I don’t trust.

Think about it:  there is nothing to stop anybody from creating their own identification service on the blockchain. I’ll be able to buy whatever credentials I want.  So it will matter even more that there are trusted issuers out there.

All these services depend on establishing trust between parties, one way or another.  The systems are designed to make this as easy and reliable as possible, and, importantly, without requiring only one overriding authority.

When I say these systems are not actually “trustless”, it is not an indictment of these systems or of blockchain technology.  In fact, it is really an explanation of what is hard and what is significant about these concepts.

First, I don’t think that blockchain technology itself is essential to any of these ideas, it could be replaced by other low cost digital technology. Some form of blockchain technology may or may not turn out to be a good way to do it, though, as the article says, there are a lot of permutations of the basic idea of blockchain and its related public key cryptography.

However, these concepts are extremely significant for blockchain, because they provide examples of how to build trusted networks of people using this “trustless” technology. That is the interesting part, in my view.

There are so many not very innovative blockchain “innovations” (think, Initial Coin Offerings, which are nothing more or less than unlicensed securities), it is good to see some truly innovative ideas being tested.

  1. Aaron Fernando (2018) Blockchain as a force for good: How this technology could transform the sharing economy. Sharable,
  2. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009.


Cryptocurrency Thursday

Seldon on AI and the Future of Work

Sensei Tyra Seldon generally has her head screwed on right.   I hate to disagree with her, especially since she is usually right [here, here, here, here, here, here].

But this month she blogged about AI and the job market [3].  Don’t be afraid, “The future won’t be automated,” she says.

Uh, oh.

Actually, I’m afraid it will be.

Of course, Sensei Seldon is hardly naïve.  She knows that digital technology (AI or otherwise) has and will continue to change life and work.

One point she wants to make is that being afraid of these changes isn’t the right approach.

“There is no need to panic, but there is a need to be prepared.“

She draws lessons from industrial automation.  Panic, denial or resistance isn’t effective.  Embrace and make the best of new technology.

“Many of my friends in the automotive industry have shared with me that the key to their job security isn’t competing with technology, but it is learning how to leverage technology more effectively to accomplish an end goal.”

Seldon herself works with words, and hopes to continue to get paid to work with words. Taking this model of auto workers, the question is, what will AI be able to do, and what will humans be able to do better than–and alongside–AI?

Seldon argues that “there are certain things that AI cannot do and that revolves around uniquely human traits that make us, well, human.”  In short, we puny Carbon-based entities should understand their own strengths, and let our Silicon-based masters do the rest.

What are humans uniquely good at?  Seldon quotes Frida Polli, to say “Creativity. Empathy. Compassion. These are uniquely human traits that no AI guru is claiming are going to be automatable anytime soon.”

Here I have to disagree, at least partly.  Our intuitions about what can and can’t be automated have proved to be wildly inaccurate over and over again. Personally, I still don’t believe that it is possible for computers to generate and understand speech.  But they do.

Depending on the definitions and context, there is no reason why digital systems might not provide adequate “empathy” and “compassion”.  They already are giving puny mortals a run for the money in “creativity”, at least in certain contexts.

Basically, I never bet against AI.

So let’s refine this thought.  I think the thing that AI can’t match is embodied intelligence, and face-to-face interaction.  On the internet, noone can tell if you are a dog, a human, or an AI.  In the flesh, everyone can tell, and everyone cares about the differences.

The implication is, whatever you do, make it personal and, to the degree possible, in person.  Match that, Siri!

So: don’t try to compete with computers for speed or price or even language skills; but do try to challenge them on being there, right now, in person.

Unfortunately, there is another aspect of this issue, and that is the “making a living” part of it. Whatever the competencies of humans, can they be monetized or otherwise turned into food and shelter?  It’s not just what can humans do that computers can’t, it’s what can humans do and get paid for in a decent way?

Here, the challenge is capitalism, not technology.  And here, you should be afraid.  Siri isn’t after your job, but Apple sure is. It’s nothing personal, they’re just interested in the money. All the money.

This is why there needs to be a Freelancers Union and other efforts (such as Platform Cooperativism [1, 2].)

The future will be automated.  The question is, how will we run the future.

  1. Trebor Scholz, Platform Cooperativism: Challenging the Corporate Sharing Economy. Rosa Luxemburg Stiftung: New York Office, New York, 2016.
  2. Trebor Scholz and Nathan Schneider, eds. Ours to Hack and Own: The Rise of Platform Cooperativism, A new Vision for the Future of Work and a Fairer Internet. OR Books: New York, 2017.
  3. Tyra Seldon, AI and the job market: Why we shouldn’t be afraid, in Freelancers Union Blog. 2018.


Disclosure:  I have been a client with Seldon Writing Group in the past year.  Opinions expressed here are my own.

What is Coworking? The Book Launch!

The long promised book, “What is Coworking?” is finally available.  See details here.

It’s been a gradual rollout, so I am having a ‘Book Launch’ on June 1, to mark an official release date.

Book Launch Pop Up!

Come in and help celebrating the launch of a new book, “What is Coworking?” by Urbana author Robert E. McGrath.

Friday June 1, 2018
5 – 9PM
[Co][Lab] Urbana
206 W. Main St., Urbana


What is Coworking?