“Bitcoin is not the money of the internet. It is the internet of money.”
As recently demonstrated by the warning of the Chinese government and the Russian Office of Prosecution against the use of bitcoins as alternative money, many authorities see themselves coerced in making a stand on the novelty of the cryptocoin concepts.
Contrary to popular belief, money is nothing natural, and the reason we use euros in the Eurozone or US dollars in the USA are quite interestingly more legally than economically based.
In order to use money, we agree on certain conventions. Money is a store of value, it is a unit of account, and a universally binding medium of exchange. Any arbitrary token that wants to compete in this commitment requires a specific set of attributes. It needs to be scarce, uniform, transportable, identifiable, durable, and it needs to come in a predictable, steady supply. Gold has been a perfect fit for these attributes, and hence is practically unmatched. In order to understand the impositions of modern moneys like the euro or the US dollar we have to consider the legal attributes. Under scrutiny, they fail on the attribute of scarcity. Although all legal tenders are inherently inflationary, we are bound by law to use them. Hence a currency is not a natural phenomenon, nor is it set in stone.
So with the legal framework of modern money, and the alternative of rare metal coins, what makes cryptocoins, and bitcoins in particular, interesting as a money? The practical answer lays again in their attributes. Bitcoins can not be counterfeited; they are highly durable, combinable and mobile. And most importantly, bitcoins are scarce. The combination of practical and scarce produces the commodity character, and every commodity has a price. On another level the answer lays in two revolutionary concepts – their radical mobility and their unique infrastructure.
Cryptocoin transactions in the current network with standard tools are near instant, technically distributed and traceable in a matter of seconds. In the case of bitcoin, a transaction is irreversibly confirmed every ten minutes and secured by the ridiculous cost of hardware needed to crack this cycle, currently in the hundreds of millions of euros. Other comparable online transaction systems such as credit cards are commonly confirmed only after a week, and can be reversed by the credit authority.
The fee of a cryptocoin transaction is usually fixed on somewhere around 1 % of the transaction volume, which makes it cheaper than any other currently available global mode of transaction. And tools for transactions are readily available for all sorts of technical systems from a computer to smartphones, homepages, SMS text messages. Of course, if you prefer the security of a vault, a cryptocoin account does not need to be kept digitally, but can be scribbled on a piece of paper, making it crack proof.
Cryptocoin infrastructures are decentralized peer-to-peer networks. All participating members of the network (machines running a wallet program) have a proportional say according to their computing power. The only shift in network paradigms can be achieved if a majority agrees on a proposed shift (practically by making changes in the source code and updating the software).
From its first inception every single transaction of a particular cryptocoin is recorded into a public ledger, called the blockchain. This database can be regarded as a foundation for much more than only bitcoin transactions. At the moment it attaches a value in coins to a particular account, but for example Colored Coin already explores the possibility of attaching and exchanging other kinds of assets via the bitcoin network and its alternatives.
The underlying computing principles – the proof of work functions – are also in constant development. While most networks still rely on cracking hashes, more sophisticated networks are searching for prime numbers and are already challenging the efficiency of supercomputers in this category. The next generation of cryptocoin networks will provide generic programmable access, realizing decentralized computation with inherent economic incentive – SETI@home that pays.
Legal and market implications
For the first time in history a money could be successfully decoupled from any form of centralized backing authority, which in traditional money system dictates prices, but also injects counterparty risk and makes a currency an object of politics and ideology. The decentralization is so advanced that not any single party would be able to turn off the system. Cryptocoins have no physical constraints, their production and transportation are fully audible processes, yet their exchange is in principle anonymous. Thus any single person or institution could use bitcoins as legitimate means to exchange value parallel to any mainstream money. This poses interesting questions and challenges to regulation and taxation. In the light of the polar relationship of centralized authority versus decentralized networks, cryptocoins need to be understood along the concepts of the open source movement. In that sense a critical stance and suspicion towards banks and regulators is inherent in this community.
In Finland cryptocoins are treated like a commodity, Canada’s central bank rejects their status as currencies. Great Britain’s tax authority regards them as private money, but not a tender for tax. The European central bank generally shows an attitude of rejection and warning. India is warning, but also considering to tax the mining process. After a very positive start with Baidu accepting bitcoins, now China’s government officially prohibits its banks to exchange them. Recently, the Russian State Prosecutor rejected bitcoin’s status as a legal money according to the Russian law. The governments of the USA and Israel are still in the process of investigating, with the US financial authorities looking into technical and legal possibilities of regulation.
The bank of Estonia has decided to follow the ECB line of warning and rejection – although their recent comparison of bitcoin to a pyramid scheme exposes a fundamental misunderstanding of the concept. And that commodities can be lost, stolen, or be subject to volatility is not really news. However, there is yet no governmental stance on the issue.
The use of substitute currencies is not very uncommon, i.e. the Deutsche Mark has been a longtime substitution for any other practical currency in European countries with weaker currency systems. In the short term, there is no foreseeable need to substitute the mainstream use of the stable, accountable, usable euro.
Interesting overlaps can certainly be found between communities that have experience in the use of alternative currencies, i.e. the Paide Pai, the Brixton Pound and many others. Complex ecosystems can evolve around those, existing along or even in interaction with mainstream money. Currently, a private initiative is planning to establish a cryptocoin Auroracoin for Iceland, which will be pushed by handing out an initial amount to every citizen. Other coins like dogecoin are advancing along edge communities like reddit and surfing the media hype, trying viral ways of creating value based on attention.
When assessing new possibilities of use, it is essential to understand cryptocoins in Andreas Antonopoulos’ terms: “Bitcoin is not the money of the internet. It is the internet of money.”
They provide a platform with the protocol, the transaction language and the network – in short the full technological capacity to develop services which intensify the connection of the digital and the material world.
The cryptocoin ecosystem is in its very early time. It is very rare that a completely new money/commodity is established and economized (in some ways comparable to the introduction of crude oil to world economy in the early 19th century). Although its market capitalization and influence is still negligible, bitcoin’s niche is already challenging both regulatory and banking systems.
Currently the public narrative tends to be driven by the negative aspects, for example the associations with criminal activity. However, scenarios like the closing of the Silk Road and similar online trading places is only a would-be scandal compared to i.e. the involvement of the US dollar in criminal activity. Nobody would think of blaming the currency.
The problem of insecure environments (operating systems, software, devices) is something that needs to be addressed as part of a more general strategy to promote information awareness, technology training and best practice examples how to properly cater for your data. Yet again, it is not the tool, but the problematic context in which it is used.
I strongly believe that cryptocoins are here to stay. Money is prone to development, and the attractivity of near instant movement at low cost, and the independence from a central third party certainly will give room to at least one main and probably a handful of specialized coins in the long run. It might not be the bitcoin network prevailing, but as a contemporary digital alternative to cash money, cryptocoins are just too convenient.
Andreas Wagner – Bitcoin and beyond
Bitcoin Cryptocurrency Crash Course with Andreas Antonopoulos – Jefferson Club Dinner Meetup
#layers of the full stack:
##Server, Network, and Hosting Environment.
- This involves understanding what can break and why, taking no resource for granted.
- Appropriate use of the file system, cloud storage, network resources, and an understanding of data redundancy and availability is necessary.
- How does the application scale given the hardware constraints?
- What about multi-threading and race conditions? Guess what, you won’t see those on your development machine, but they can and do happen in the real world.
- Full stack developers can work side by side with DevOps. The system should provide useful error messages and logging capabilities. DevOps will see the messages before you will, so make them count.
- If the data model is flawed, the business logic and higher layers start to need strange (ugly) code to compensate for corner cases the data model doesn’t cover.
- Full stack developers know how to create a reasonably normalized relational model, complete with foreign keys, indexes, views, lookup tables, etc.
- Full stack developers are familiar with the concept of non-relational data stores and understand where they shine over relational data stores.
- The heart of the value the application provides.
- Solid object oriented skills are needed here.
- Frameworks might be needed here as well.
##API layer / Action Layer / MVC
- How the outside world operates against the business logic and data model.
Frameworks at this level should be used heavily.
- Full stack developers have the ability to write clear, consistent, simple to use interfaces. The heights to which some APIs are convoluted repel me.
- Full stack developers: a) understand how to create a readable layout, or b) acknowledge they need help from artists and graphic designers. Either way, implementing a good visual design is key.
- Can include mastery of HTML5 / CSS.
- Full stack developers appreciate that users just want things to work.
- A good system doesn’t give its users carpal tunnel syndrome or sore eyes. A full stack developer can step back and look at a process that needs 8 clicks and 3 steps, and get it down to one click.
- Full stack developers write useful error messages. If something breaks, be apologetic about it. Sometimes programmers inadvertently write error messages that can make people feel stupid.
##Understanding what the customer and the business need.
- Now we are blurring into the line of architect, but that is too much of a hands off role.
- Full stack developers have a grasp of what is going on in the field when the customer uses the software. They also have a grasp of the business.
###Other Pieces of the Puzzle:
- Understanding of repeatable automated processes for building the application, testing it, documenting it, and deploying it at scale.
- An awareness of security concerns is important, as each layer presents its own possible vulnerabilities.
Creative and enthusiastic people are the lifeblood of the smartness and richness of Tallinn. They provide the ideas and initiative for the layer of contemporary culture that will ultimately save this city from becoming a pure office plantation or medieval theme park. Acknowledging this, cultural institutions, educational centers, private businesses and the city administration have already put it on their banners to nurture and comfort the development of this fragile branch. In this context it is especially disturbing how the attitude towards this group by the Kultuurikatel reminds more of common exploitation than supportive encouragement. Continue reading
Next time in Lasnamäe
by Andreas Wagner
The LASN is an architecture exhibition displaying materialised professional opinions on the future of the built environment of Lasnamäe. Unfortunately, the curator fails to contextualise the results and to put them in perspective as adequate contributions to this complex discussion.
The LASN exhibition is timely placed on the background of the ongoing struggle of Tallinn’s professional elites and administration about how to deal with this part of the modernist legacy and the celebration of Mustamäe’s fiftieth anniversary this year. Lasnamäe is the notorious modernist extension to Tallinn, the idealist’s solution of strains produced by an overcrowded inner city and the continuous influx of people. The models on display visualise burning questions about this district in very different forms. The teams involved point towards different spatial questions, for example, of boundaries (Salto), administration and form (Järving / Pihlak), resource management and re-/upcycling (Kavakava), perspective and shared space (b210), co-creation (Alver). They offer thought-provoking impulses to the audience.
Lasnamäe is reduced to a screen for all kinds of projections and judgements, and as the lack of precision in the design and catalogue of the exhibition show, this attitude is not likely to change very soon. One of the reasons why modernist planning has been judged as a failure has been its elitist planning paradigm. I wonder how we can hope to overcome this fault, if we do not discuss the matters of Lasnamäe in the necessary scope and seriousness on the ground and with the actual subject.
I got the feeling that the curator creates a rather exclusive “ivory tower” image of the architect’s profession, that does not overlap with other professions, such as historians, sociologists, physicists, economists, political or environmental scientists. But are not architects and planners doing the best job when they acknowledge and incorporate opinions of experts from other fields – thereby communicating and promoting their own?
Tallinn is by far not the only place where districts like Lasnamäe, Õismäe and Mustamäe have to be reinterpreted and reinvented due to faulty design and changes in history. If you look not as far west as the curator, but just to the estates in central European cities, there are many feasible examples of adjusting buildings and districts under very restrictive financial and social conditions.
Maybe one of the answers to the question of why architects have not been involved in Lasnamäe’s development during the last two decades might be the lack of a broader discussion and dialogue. A representative body such as the Union of Architects is expected to play a strong role by moderating constructive criticism of the mission and responsibility of architects in our society. I had the impression that during this particular event this role was forfeited.
Following that thought, should it not be the responsibility of the curator to orchestrate the contributed models and ideas not only in context to each other, but in the wider reality of the city? Is it not in the best interest of the Union of Architects to mediate the work and interest of its members to a wider audience, including other professions?
The first impression I got during the vernissage did not follow these principles. We are talking about Lasnamäe, why are we then in the city center? Why is the second language of the catalogue English, and not Russian? Why is the exhibition design so irresponsible and sloppy (i.e. the unapproachable position of model captions, uncommented chops of statistical data, errors in the catalogue)? These questions are in stark contrast to the catalogues conclusion: “All the changes have to be co-produced with the local populace. The inhabitants of Lasnamäe have to be able to say – ‘I made this!’”
The impression that I carried home did stir up my thoughts, but certainly not on the subject of Lasnamäe. The curator speaks of opinions, but fails to sketch out a particular problem. He is quick with judgements such as “The houses are there, the urban environment is not.” Where is the argumentation for that? Are annual statistics enough to draw up such a universal conclusion? What is the character of the desirable urban environment that the curator is imagining in contrast to the one certainly existing in Lasnamäe? Should a new generation of architects find solutions to the problems produced by their professional predecessors in the very same manner?
Some models did raise questions beyond the scope of plain structural architecture. Lasnamäe, like any other urban district in Tallinn, is defined through its mixed population, the quality and quantity of its built structure and the image and meaning applied to it from the outside. And like all its neighbouring districts, it is continuously changing. It is in the interest of professionals involved in city development and planning, the political administration and the people living there, that this discussion is being held with the seriousness and on the scope that it deserves. Thus the display of opinions of architects must reflect dedication by placing itself inside the particular surrounding it discusses. Furthermore, the involvement of the local population and expertise is a fundamental precondition. Finally, accumulating constructive criticism on the presented opinions and incorporating it into a continuous feedback loop should be the ultimate goal of such a dialogue, rather than the climax of a single event.
I believe that realistic visions for Lasnamäe can only be constructed with the authentic and professional dedication of the people involved. This includes the necessary respect of past efforts, continuous adjustment to the present obstacles, and an attitude that includes Lasnamäe in the urban discourses of Tallinn in as many levels as possible. To say it with the words of one guest of the vernissage: “Next time you should come to Lasnamäe, maybe your ideas will then be even better.”