Category Archives: Sociotechnical

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, https://www.coindesk.com/parity-floats-fix-160-million-ether-fund-freeze/
  2. Parity Technologies, Parity Technologies Multi-Sig Wallet Issue Update, in Parity Technologies Blog. 2017. https://paritytech.io/blog/parity-technologies-multi-sig-wallet-issue-update.html

 

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. https://www.fastcompany.com/3059990/inside-a-growing-movement-of-co-working-spaces-for-atypical-entrepreneurs
  2. CoHoots. CoHoots Coworking. 2017, http://www.cohoots.info/.
  3. Enspiral. Enspiral Space. 2015, http://www.enspiralspace.co.nz/.
  4. Kane, Lori, Tabitha Borchardt, and Bas de Baar, Reimagination Stations: Creating a Game-Changing In-Home Coworking Space, Lori Kane, 2015. https://books.google.com/books?id=ybFCrgEACAAJ
  5. Liquid Talent, Dude, Where’s My Drone: The future of work and what you can do to prepare for it. 2015. https://www.dropbox.com/s/405kr9keucv97gw/LiquidTalentFoWEbook.pdf?dl=0
  6. Make Shift Boston. Make Shift Boston. 2016, http://makeshiftboston.org/space.
  7. Nebula. Nebula Coworking St. Louis. 2017, https://nebulastl.com/.
  8. Olma, Sebastian, The Serendipity Machine: A Disruptive Business Model for Society 3.0. 2012. https://www.seats2meet.com/downloads/The_Serendipity_Machine.pdf
  9. The Centre for Social Innovation. Culture | The Centre for Social Innovation. 2016, https://socialinnovation.org/culture/.
  10. The Harlem Collective. The Harlem Collective. 2017, http://www.theharlemcollective.co/.
  11. The Shift. The Shift – Home. 2017, http://www.theshiftchicago.com/.
  12. Work Evolution Labs. Work Evolution Labs,. 2017, http://www.workevolution.co/.

 

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, https://www.coindesk.com/vatican-address-highlight-bitcoin-use-human-slave-trade/
  2. Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009. http://bitcoin.org/bitcoin.pdf
  3. Darryn Pollock , Jamaican Police Take Aim at Human Traffickers’ Bitcoin Pockets, in Cointelegraph. 2017. https://cointelegraph.com/news/jamaican-police-take-aim-at-human-traffickers-bitcoin-pockets
  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. http://www.pass.va/content/scienzesociali/en/events/2014-18/resettlement.html

 

Cryptocurrency Thursday

 

Crowd Sourced Research Projects

There are many “citizen science” initiatives, and many of them are variations on crowd sourcing. One prominent example, Zooniverse, is a veritable cottage industry creating one crowd sourced project after another. These projects employ ordinary people, AKA “citizens”, in real scientific research.

These collaborations can be very effective, magnifying the efforts of our few remaining professional scientists and research dollars. Unfortunately, in most cases, the civilians are employed in routine, low skill roles. In the case of Zooniverse, the projects are almost exclusively visual (or aural) recognition tasks, asking people to look for significant objects in visual (or sound) data. These internet volunteers occupy the ecological niche that we used to pay students to fill, back when we had money for scientific research.

Is it possible to have more people participate in science in more interesting ways?


In the last couple of years, a Stanford-Santa Cruz project has deployed digital collaboration tools to create “Crowd Research: Open and Scalable University Laboratories,” [1] The idea is to involve volunteers from around the globe in the full array of research activities, including decision making, problem solving, and professional publishing.

Most important of all, the projects were not reduced to “Mechanical Turk” microtasks, but functioned more like actual science labs. The projects were organized akin to conventional university research, directed by a professional Principle Investigator, with institutional techincal support. The participants were recruited through open calls, and invited to study, investigate, propose, and critique the research problems.

The Crowd Research project uses techniques and tools familiar from virtual organizations and collaborative on-line work. Each project developed milestones, which were reviewed in periodic (weekly) meetings. These tasks might involve many familiar research activities, including reading papers, interviewing informants, generating ideas, or prototyping.

The large number of responses are peer evaluated to select a handful to discuss in the video conference. This process is essentially the same as reddit-style upvoting. It is interesting that “randomized a double-blind assignment, anonymous feedback was needlessly negative and evaluative” ([1], p. 834), so they use completely public reviews.

A small group of participants connects to the live video discussion, others can participate through digital comments and anyone can view the archived meeting. The weekly meeting discusses the top submissions, and decides what to do next. The PI may assign reading or other training activities. In some cases, an individual may be designated to lead execution of a particular milestone, e.g., when multiple efforts need to be coordinated.

I note that participating in the video conference is a “prize” for submitting a high rated response to the milestone. This converts the mandatory, “oh, no, not another meeting” situation, into a sought-after opportunity to meet the PI and top colleagues. I.e., this is an improvement over many collaborations, virtual or physical.

The project results are written up to meet profession style and standards. The contributions of individuals are visible in the digital collaborations, so the paper can assign credit as due. This is a significant opportunity for the participants to achieve visible academic credentials that usually are only garnered by students at elite schools.

The Crowd Research project created a decentralized system to assign credit to the contributions of each person. This helps the PI write letters of recommendation, even when the research group is too large and distributed to know every individual.

The Crowd Research Initiative has evaluated these techniques in a metastudy [1]. The digital infrastructure makes it possible to not only track participation, but also who did what. They document that most of the final ideas originated from “the crowd”, and most of the writing also was done by the crowd. It is important to note that this is about the same as a university lab, except the participants are not limited to selected enrolled students.

While there was little formal screening of participants, there was high attrition that filtered out the majority of initial sign ups. Many were not able to commit enough time due to other commitments, though there are also indications that some lost interest in the work as it developed.

The researchers document the relatively democratic spread of access and benefit from the experience. With publications and letters from PIs, many students gained admission to programs of study that they otherwise would not have.

The reputation system was correlated with the assignment of authorship and acknowledgement on the publications. Their algorithm (similar to PageRank) tended to reflect concrete contributions (such as checkins), though it was still possible to game the system to increase personal credit.

In their recent paper, they draw conclusions about “How to run a bad Crowd Research project” ([1], p. 838). They note the need to expect drop outs and conflict, and suggest that the project be carefully selected to match the strengths of the format. Also, as noted, they don’t recommend a competitive vibe.


This is an interesting and somewhat heroic project, harking back to the good old days when university researchers were generously supported and could tackle ambitious projects involving dozens of students.

One very important point to emphasize is that these projects were much more like “regular research”, and absolutely not the usual trivial crowd sourcing tasks. I would also say that they strongly resemble many software projects, and also collaborative non-profit projects (e.g., organizing a community workshop). I think this is not a coincidence, in that these virtual collaborations are similar social groups. As such, the lessons of Crowd Research probably should apply well to other digitally enhanced collaborations.

There are a couple of important caveats about this approach.

First, as they intimate in their anti-patterns, not every research topic or project is a good match to crowd research (or digital collaboration). A good project should “leverage scale and diversity to achieve more ambitious goals” (p. 838) I would also say that the project needs to have primarily digital deliverables. Obviously, it would be difficult to coordinate and share a single physical prototype or materials, with any digital technology.

Second, the high satisfaction of the participants, professional and non-professional, has to be taken with a grain of salt. In particular, the participants were self-selected at the beginning, and through attrition. Crowd Research is well designed to create a sense of commitment and ownership in the project, at least in those who persist. However, it isn’t possible to extrapolate these results to people in general.

Even in these experiments, more than half of the initial recruits dropped out. Whatever the reason for leaving (generally, lack of time), these drop outs did not benefit and could not have a very high satisfaction with the experience. This was a great experience for a tiny, select group of people. The successful participants were highly motivated, and had skill and interest matches. This is a natural feature of collaborative research, and crowd technology neither can or should change that.

A third point to consider is that these young (mostly undergraduate students) were surely digital natives, quite used to social media and communication media such as reddit and reputation systems. This study showed that these technologies can be used effectively, at least for a self-selected group who are proficient and comfortable with these digital interactions.

It isn’t clear how universal this sort of digital literacy may be, or whether there are different styles. The study had to deal with cultural and personal conflict, but it could only deal with them within the digital arena. People who could not or would not play the game were simple not in the sample.

Obviously, technical and language limitations could preclude effective participation. In addition, people with limited vision or motor skills would be at a disadvantage. And, of course, people who lack confidence or are just shy will be hard to get.

These challenges are important issues for all digital life and digital work. Indeed, at its best, Crowd Research is a great approach, because the PI and RAs offer positive and encouraging leadership. My own view is that the attention and leadership of the PI probably spells the difference between the successful CR project and the hundreds of failed digital collaborations. In this, CR is recreating one of the ways that university education succeeds through mentoring and exposure to professional role models.


  1. Rajan Vaish, Snehalkumar S. Gaikwad, Geza Kovacs, Andreas Veit, Ranjay Krishna, Imanol Arrieta Ibarra, Camelia Simoiu, Michael Wilber, Serge Belongie, Sharad Goel, James Davis, and Michael S. Bernstein, Crowd Research: Open and Scalable University Laboratories, in Proceedings of the 30th Annual ACM Symposium on User Interface Software and Technology. 2017, ACM: Québec City, QC, Canada. p. 829-843. http://hci.stanford.edu/publications/2017/crowdresearch/crowd-research-uist2017.pdf

 

Government Blockchains Coming This Year

Around the world, various governments are experimenting with Blockchain technology. The classic use case is for public records, such as property titles (e.g., the Swedish Lantmäteriet), where the blockchain serves as a cryptographically secured bulletin board.

The general use case is to make these records easy (and cheap) to access via the Internet, while maintaining the integrity of the information. In the classic case of the land registry, the government agency performs its traditional role as authenticator, certifying the record, date, and identities of the parties and assets. Blockchain replaces (more likely duplicates) other forms of records, including databases. In principle, this could be really cheap and really reliable (assuming the records are correct to begin with).

Many governments are trying similar ideas, including my local government in Illinois. (Heaven protect us from these clowns! If anyone can mess up blockchain technology, it’s the Illinois state government.)

Amy  Nordrum reports in IEEE Spectrum about the different approaches in Dubai and Illinois [1]. Both jurisdictions are looking at a variety of uses, generally involving public record keeping. One big hope is that a blockchain can be a really fast and cheap way to publish these records, redusing both public expenditure and friction on commerce.

Nordrum calls attention to the different approaches. Dubai is building a single system (using Ethereum and Fabric from Hyperledger). Illinois is floating multiple pilots, and letting the projects select what technology to use. Illinois is in a “try anything” stage, and explicitly assumes that integration can be done later with no particular cost or problems. (Does Illinois have the remotest clue what it is doing?)

What impact are these innovations likely to have?

Robert Charette, an expert in IT risk management, doubts blockchains will prove to be more effective than a simple cloud database in most cases. “It’s kind of like solving a problem that’s already been solved,” he argues.


First of all, the imagined benefits are pretty unambitious. They are tackling easy problems (for example, land registries have been around since Babylonia, the Lantmäteriet itself is 390 years old), and the main goal is to reduce overhead from existing systems, which maintaining or improving “transparency”. Thus, as long as a blockchain based system at least ties the performance of conventional system, and costs less for all parties, it will be called a success.

On the other hand, the problems are not only already solved, they are scarcely a choke point in the economy or everyday life. Having a property deed appear on line in 30 minutes instead of 30 days matters little to most transactions. Sure, this will make property flipping a bit easier, but why do we care about that? Why do we really want to do that?

Much will depend on how the cost accounting is done. Most governments, and Illinois for sure, will be interested in the reduction of expenses for IT infrastructure. If a blockchain based system eliminates the need for leasing servers and IT support, that would be an important advantage.

Just how much will blockchain technology reduce IT requirements?

It’s hard to predict precisely. The blockchain itself replaces a networked database, e.g., running in a cloud. That’s a good thing, because public facing databases are a significant security risk and also quite costly. Blockchain technology also uses cryptographic signatures, which is a very good thing. Of course, you could use cryptography the same way in any system, but blockchain is a quick and easy way to get this technology deployed more widely.

On the other hand, the rest of the infrastructure will still need to exist. The blockchain records themselves would be used by lots of other software—that’s the whole point.  There will have to be network forms and APIs for getting data in and out of the system, and these run on conventional infrastructure with concomitant risks and costs. In fact, if the blockchain is working well, users will not know that the blockchain is there—everything else will look the same as before.

It seems to me that the blockchain replaces one cloud database and concomitant APIs. This might actually be one part of a larger centralized system. Replacing the database will mean that at least some software will have to be replaced to use the blockchain.

Note that the agency still needs to do its non-digital work, such as  certifying identities, verifying records, and so on.  Publishing the results in only one part of their work, and frankly, it’s the easy part.

If, as seems likely, the organization needs to keep the database (e.g., for auditing and other internal activities, or simply out of caution), then the blockchain software is actually duplicating code, not replacing it. Worse, the parallel systems have to be kept in sync, which is extra code.

However cheap blockchain may be, the cost savings could be quite complicated to assess. I’m sure that politics will simplify the assessment, providing rosy assessments.


My own guess is that the blockchain solutions will no worse than what they replace. They may be better (e.g., because they have newer technology), though they could be worse (e.g., if quality control suffers).

But I guarantee you that the governor of Illinois will declare it a success no matter what.


  1. Amy Nordrum, Illinois vs. Dubai: Two Experiments Bring Blockchains to Government, in IEEE Spectrum – Features. 2017. https://spectrum.ieee.org/computing/networks/illinois-vs-dubai-two-experiments-bring-blockchains-to-government

 

Cryptocurrency Thursday

What is Coworking? It Can Be A Cutthroat Business

In the last couple of years, a number of coworking operations have developed into large chains, offering consistent service in cities around the world. The biggest of the bunch is probably WeWork, which has attracted headlines with million dollar infusions of capital and splashy openings.

WeWork talks about the sharing economy, and hires “community managers”, and so on, but it is definitely a for-profit operation.

What are they selling? Community.

this is a movement toward humanizing work

they are playing the Facebook game: selling customers to each other, raking off a profit from their donated time and attention.

But dropping 20 billion dollar valuation on these neo-hippies surely has an effect: WeWork appears to trying to monopolize the rental office business, with brutal tactics.

In recent months, there have been many reports of straightforward anticompetitive practices by WeWork, using their bankroll to drive out competitors.

Dateline London: “Coworking space Rainmaking Loft is shutting down in London after WeWork moved in above it

Dateline Brazil: “Desperate Times Call For Desperate Measures: How Low Will WeWork Go?

Dateline: California: “Is WeWork Cannibalizing The Industry With The Classic Bait-And-Switch Tactic?

And so on. There is clearly a deliberate strategy here, though Amador’s question about desperation is a good one. Is this a move from strength or weakness?

Many of these tactics are probably illegal, though I’d be surprised if conservative controlled governments will act. Certainly, in a low margin business like this, competitors will be out of business long before any legal remedy could be found. The coworking industry is going to have to deal with it.

It is certainly the case that any coworking business should not try to compete directly with WeWork. WeWork are selling large scale sites, and a particular brand of coworking that emphasizes low costs and shiny spaces.   If you try to be a WeWork clone, you’ll be out of business—WeWork is cloning itself as fast as it can, and they will be better clones than you. Plus, they have insane amounts of money to burn in the effort.

However, I think it is obvious that there is plenty of room for coworking operations, but they need to aim at different marks than WeWork. I’d recommend going local, ideally with a core of local creative people on board. Be more interesting than WeWork, would be my advice. And that means have more interesting people, and do more interesting things. You can charge for that, and they can’t steal it.

WeWork may or may not get rich from their tactics. Given the low margins in this business, I have to wonder whether they really can wring enough income out of shot term rentals, even if they were to control 100% of the market. They certainly aren’t going to be able to raise rents astronomically, the customers can’t pay.

Personally, I think coworking is like the restaurant business. Sure, there can be huge chains, and then can offer consistent service and a low price. But there will also be local eateries, which thrive by offering something unique and interesting.

The food industry works this way because people have a range of tastes, and want a range of choices. Furthermore, there is no barrier to entering the game. If the only restaurant in town is McDonalds, it isn’t particularly difficult to open your own joint to compete. There are just too many “right ways” to serve food for a monopoly to cover them all.

My own guess is that WeWork will burn through a ton of money, kill off a lot of competing spaces, and create a lot of unhappy customers. Other operations will boot up, many of them advertising that “we are not like WeWork” or “Cwororking the way it was supposed to be”, or even, “we would never lie to you”. And WeWork could be out of business, possibly within a few years from now.

We shall see.


  1. Cecilia Amador, Desperate Times Call For Desperate Measures: How Low Will WeWork Go?, in AllWork. 2017. https://allwork.space/2017/09/desperate-times-call-for-desperate-measures-how-low-will-wework-go/
  2. Cecilia Amador, Is WeWork Cannibalizing The Industry With The Classic Bait-And-Switch Tactic?, in AllWork. 2017. https://allwork.space/2017/10/is-wework-cannibalizing-the-industry-with-the-classic-bait-and-switch-tactic/
  3. Sam Shead, Coworking space Rainmaking Loft is shutting down in London after WeWork moved in above it, in Business Insider – Tech Insider. 2017. http://www.businessinsider.com/rainmaking-loft-is-shutting-down-in-london-because-of-wework-2017-10

 

 

What is Coworking?

 

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

Yet Another Blockchain Use Case: Sharia Compliant Transactions

Blockchain technology, like classical bookkeeping, is generally culturally and morally neutral. Smart contracts, a la Ethereum, are technical expressions of contract conditions, which can refer to pretty much any body of law or custom.

A new initiative is setting out to develop Sharia compliant contracts on top of Ethereum. The general idea appears to be to encode Islamic principles in the logic of the programs, to ensure that proper rules are followed. These rules are supposed to prohibit charging interest, gambling, and speculation, among other behavior.

The compliant contracts will presumably structure transactions and trades in ways that do not cross the line. Furthermore, the public nature of the contracts and the distributed ledger will make the compliance (or any slippage) visible to anyone—a significant motive for good behavior.

I’m no expert on these topics, but I gather that there are centuries of practice that defines ways to get business done without straying from Sharia. This framework will encode these practices in formal logic and executable code.

That’s pretty neat.

One advantage of using this kind of executable contract is that there are likely to be cases where a transaction needs to be very carefully structured to achieve the goal that might have been achieved by, say, an interest bearing loan, without violating Islamic principles. The digital technology will make it possible to create, validate, and execute even complicated transactions easily and quickly. There should be no performance penalty for complying with Islamic principles, even if there should be extra hoops to jump through behind the scenes.

Of course, there are some interesting challenges.

It’s one thing for programmers to create a logical framework, but its quite another thing to show that it truly, accurately, and completely complies with any given legal principles, Islamic or other. A significant part of this work will surely be careful review and documentation of the logical framework’s compliance. Just what needs to be proven about the logic of the contract, and just what kind of proofs would be adequate? That will be an interesting body of literature, indeed.

Overall, this could be a ground-breaking effort. To date, much of the work on smart contracts has been from a non-Islamic perspective (and sometimes without any legal framework at all). It will be interesting to see how the deep historical principles of Islam are expressed in this a-cultural medium, and it may inspire other religious and ethical frameworks. I am not aware of any other similar efforts.

(For one example, how about encoding the various Creative Commons licenses into standard smart contracts? Perhaps that has already been done.)


This project also makes me think.

I wonder if it will be possible to automatically translate between different executable contracts. Can I have a button to “make this ‘smart contract’ be Sharia compliant”?  Perhaps tools could have a high level specification of what is intended, and then options for creating concrete contracts within one or more legal frameworks.  That would be kind of cool.

One huge caution I would have for this project is to look carefully at the blockchain software and protocol. While any given executable contract might be Sharia compliant, if the transactions are executed and recorded on an open system, the other data there is almost certainly not Sharia compliant. The ethical records will be in the same data blocks with everything else: on-line gambling, speculative bets, interest payments, and so on. And the transactions will be processed by software that also processes all these other activities.

The question will be whether this approach is acceptable or not. Is it OK to handle, at least indirectly, all these other transactions?  Or should the software only be used for compliant transactions?

This concern could be mitigated by a private blockchain that only handles Sharia compliant transactions. (Perhaps Ripple might be a better match than Ethereum, since it already is designed after a Halawa network, and let’s you control who you trust.)

I would also urge that the consensus mechanism be examined carefully. Nakamotoan consensus depends on mining that has an incentive system that may or may not be consistent with Sharia. The Nakamoto block reward strongly resembles a lottery or slot machine, which seems problematic to me.

Ethereum may be moving to a proof-of-stake method, and there are other possibilities. These alternative ‘math problems’ might have significantly different ethical implications.


This project is quite interesting, and will bear watching as it develops. I’d like to see blockchain technology put to socially positive use.


  1. SettleMint, SettleMint to create Sharia compliant financial products for the Islamic Development Bank member countries. 2017. https://www.settlemint.com/project/2017/10/15/settlemint-to-create-sharia-compliant-financial-products-for-the-isdb-member-countries/
  2. Sujha Sundararajan, Islamic Development Bank to Research Sharia-Compliant Blockchain Products. Coindesk.October 20 2017, https://www.coindesk.com/islamic-development-bank-research-sharia-compliant-blockchain-products/
  3. Bernardo Vizcaino, Saudi Arabia’s IDB plans blockchain-based financial inclusion product, in Reuters – Fintech. 2017. https://www.reuters.com/article/us-islamic-finance-fintech/saudi-arabias-idb-plans-blockchain-based-financial-inclusion-product-idUSKBN1CP08W?il=0

 

Cryptocurrency Thursday