Tag Archives: Joon Ian Wong

Killer App for Cryptocurrecy: Spam Suppression

Finally!  Someone is taking a crack at the absolute killer app for cryptocurreny:  email postage.

Think about it. Even a micro payment of a billionth of a penny would kill off most spam (and probably a lot of phishing, too).

Joon Ian Won reports at CoinDesk on Composed, an email service that charges postage (in bitcoin)  before the message is delivered.  Cool.

So, when you send email to me at:

remcgrath@getcomposed.com

you will get a reply demanding that you pay postage.  (Please use bitcoin–if I get any, it will go to charity.)  Then the original email will be delivered.

This service is far from perfect.  At the moment, there isn’t any way for me to send email from this address, which means that any mail I send exposes a non-metered address.  This can be fixed.

It seems to me that, in the long run, I’d like to have this automated, so I can effectively attach postage when I send it to someone.  This way, I can exchange with friends and colleagues, recycling the postage automatically.

I’d also like this integrated with filtering, so I can charge different rates, e.g., for family (zero), business (a contracted rate).

Alternatively, it might be interesting to let me attach as much postage as I want, indicating my urgency/interest in reaching you.  This is sort of a bidding process, where I might be willing to read you spam if you paid enough to get my attention.  This kills off mass mailings, and gives me a way to indicate that I really want to contact you, specifically.

Finally, I’d love to use Dogecoin for this.  It’s just the kind of thing Dogecoin is meant for.  In general, it should be possible to specify what currencies you will accept for postage, and maybe the system can automatically convert.

My real “composed” address is:

remcgrath@getcomposed.com

Try it.

 

Cryptocurrency Thursday

Reports Highlight Need For “End-To-End” Thinking About Bitcoin

I have commented in the past about the need for “end-to-end” thinking in sociotechnical systems, including cryptocurrencies.  There has been a lot of chit-chat about the Bitcoin “ecosystem”, which is partly about these end-to-end questions, and partly about the need for actually sustainable business models.

In the case of cryptocurrencies such as Bitcoin, there has been a lot of shallow (and wishful) thinking, leading, for instance, to claims that the anonymity and security of the blockchain mean the system is secure and immune to regulation.

I have argued that it is necessary to consider the whole system, not just the ledger and payments.  In the case of Bitcoin, this must include the human interfaces and  exchanges–which operate on the same principles whether you use cryptocurrency or not.

This week CoinDesk had several articles that support my point.  There are, of course, several stories about hacked or bankrupt services, which illustrate that using Bitcoin certainly does not mean you can do away with all the infrastructure of the conventional financial system.  There are also stories about trials and government actions that show that Bitcoin sure as heck can be regulated, just like anything else.

That’s all old news.

It is interesting to see two other stories.

One is about a report by Stephan Verbucheln, which shows that even highly secured, off-line Bitcoin wallets can be hacked.  I can’t critique the technical details myself, but the general point that whatever you do, as soon as you touch the Internet you can be hacked.

To paraphrase an adage ascribed to General Patton, these “fixed fortifications” and a “monument to the folly of man”. I expect many more holes to be found.

As Joon Ing Wong notes in Coindesk, this is a real blow to people who imagined they could salt away Bitcoins where noone could get them.

In another article in Coindesk Pete Rizzo reports on a company whose business is fraud detection for merchants and services using Bitcoin.

If the “inherently secure” Bitcoin algorithm were fraud proof then Vogogo would have no reason to exist, no?

As far as I can tell, they are providing the same services used by any online service, using any payment scheme.  Amazingly enough, fraudsters will figure out tricks and games to rip people off via Bitcoin, just the same as without Bitcoin.

These developments are a sign that cryptocurrency technology is maturing, and reality is setting in.  The magic bullet ain’t so magic, and there is a ton of work to do to make cryptocurrencies work well enough for ordinary users to use them.

Bitcoin Startups: Surprisingly Little Activity

Joon Ian Wong reports in Coindesk this week on “Venture Capital Funding for Bitcoin Startups Triples in 2014“, with an account of dozens of publicly announced investments.  (I’m sure there are other kinds of investment not counted in these numbers–but this is probably proportionate.)

Whenever I see numbers like this, it inspires me to do some sanity checks.

First of all, the “tripling in 2014”.  That reflects an increase from about $100M to $300M, and probably an increase in the number (rather than the size) of the investments.

The article recounts a number of cases which include a handful over $30M, with many more in the teens or even $5M or less.

Let’s get some perspective on this.  Sure, $5M or even $2M is a lot of money for me, personally.  But for a software project that is good for a handful of full time workers, depending on exactly what you are doing and how much equipment, etc., you need.  (For instance, if you need a lot of cloud resources, or a significant test lab, that’ll burn some cash for sure.)

For perspective, a small city will have a budget in the range of $5-10M or so.

And, of course, something like Uber got investments in the billions in that same period (for a business model that appears to be ‘make everybody mad at us’.)

And my impression is that $5-10M is mad money for a lot of VC’s.  So small compared to their big ones that they can scatter their chips over a lot of ‘who knows’ bets.

Considering the amount of chatter about cryptocurrency, the data in this article is not terribly encouraging.

Of course, there is much more action within companies (e.g., IBM and Microsoft) which doesn’t show up here, and is probably more significant anyway.

Finally, The Killer App for Blockchain Technology

Cryptocurrencies like Bitcoin have been hearalded as the future of money and generally the next big thing.  And the underlying ‘blockchain’ is potentially useful for many things besides payment systems, including ‘smart contracts’ (this usually means ‘executable’ contracts) and various kinds of public registries.

In fact, the consensus algorithm is much like a ‘scratch off lottery card‘, and Bitcoin as an asset behaves pretty much the same as ‘Pokeman cards’.

So now we see the emergence of the ‘killer app’ for the blockchain:  collectable cards.  As Joon Ian Wong reports at Coindesk, this makes it so much easier to make tradeable collectables that link to digital content, such as games, and makes it easy for pretty much anyone to mint their own collectables, e.g., for an event or charity.

I predict this will be a growth area, with lot’s of companies jumping in.  This won’t solve all the problems with cryptocurrencies, but it may give us an example of a how ordinary people might actually use a blockchain.

 

Published Paper on “Who Uses Bitcoin”

I’ve written quite a bit about cryptocurrency narratives, including some pseudoscientific “semantic analysis” and pseudo-historical analogies.

There is clearly interesting stuff happening, and  I’m surprised at the relative scarcity of academic interest in these topics.

One recent effort (our of my own alma mater, I’m happy to say) looks at (self reported) characteristics of Bitcoin users–very much grist to my mills.  Bohr and Bashir analyzed data collected by Liu Smyth (I think this is from the 2013 survey–ancient history in Bitcoin terms.)

This dataset leaves a lot to be desired.  Not only self report, but self report via the Internet.  No information about the representativeness of the sample.  No way to cross validate from other sources.  Etc.

Boor and Bashir have sifted through this material, along with text analysis of the now ISO standard “140 character” free text from the respondents.  They report some generic characteristics of the responses, and try to relate patterns to Bitcoin ownership (“wealth accumulation”?)

The description of the community are not too surprising, they match the impressions one gets from perusing the on-line sources.

The analysis of Bitcoin accumulation is somewhat off target, IMO:  the critical factor is everyday use, not the rare and aberrant hoarding behavior that dominates the reddit and other forums.

The authors are well aware of the weakness of the data and the fact that is it quite out of date.  The latter can be addressed with newer data, the former is a challenge.

I would note that it is highly likely that “the Bitcoin community” is no longer monolithic, as it splits along fault lines involving government regulation and populism vs. elites,  to name two.  Lumping billionaire VCs with enthusiastic P2P contrabandists can yield only confusion:  all they have in common is interest in Bitcoin.

Naturally, I would like to see similar information about various alt coins.  My own unsystematic studies indicate that there will be significant differences.  Liu Smyth has reported a shred of data on the supposed politics of the communities, including many coins.  I’m not sure why this is important, except as a proxy for supposed complexes of cultural beliefs.  As noted above, these aren’t necessarily homogeneous “communities”, so this kind of study needs careful scrutiny.

But it is a start, and I’m glad to see activity in this area.


 

Bohr, Jeremiah and Masooda Bashir. Who Uses Bitcoin? An exploration of the Bitcoin community. In Privacy, Security and Trust (PST), 2014 Twelfth Annual International Conference on, 2014, 94-101.

Pushback On Bitcoin, Manx Edition

An interesting report from the Isle of Man, where despite the “government” of this pseudo country, the financial powers (who really run the place) are not going to support Bitcoin companies.

I don’t really know what is going on there, but I suspect that the powerful interests who basically own the Isle of Man are not interested in being “disrupted”, “transformed”, or “innovated” by Bitcoin upstarts.  Who’d have thunk it?

Actually, I’m pretty sure this is not the end of this story. We see an announcement from a blood sucking usurer bold Internet risk taker willing to step into the gap.

I’m pretty sure this is a harbinger of things to come:  Bitcoin has had an easy ride so far, but it’s getting serious enough to attract the attention of real capital, the big boys who will not hesitate to crush the nerds and take all their lunch money.

Just in passing, I would note that one of the actual positive benefits of hated financial regulation is to prevent this kind of anti-competitive behavior by the big boys.  Kind of ironic to see Bitcoin struggling because of the lack of government regulation, huh?