Month: February 2021

Categories
Real-World Crypto

Tether as parallel US Federal Reserve

I posted this on my bitcoin and crypto Whatsapp group on 20th Feb:

Tether, or USDT, is supposed to be a ‘stablecoin’, always valued at USD 1 because it’s supposed to be backed by actual USD cash reserves. That’s been under question for years now. But it hasn’t stopped the token from being widely traded exchanges and used as part of financial products based on crypto. From a Bloomberg article:

“It has a market capitalization of about $34 billion, according to CoinGecko — but in a sign of how much it’s used in the system, the 24-hour trading volume on Friday was about $107 billion.”

I’m posting this today because of news from earlier this week about a settlement that Tether and Bitfinex, the crypto exchange closely associated with it, reached with the state of New York. The statements made by the state’s attorney-general are pretty damning:

Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie,” she added. “These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

The investigation found that, no later than mid-2017, Tether “had no access to banking, anywhere in the world, and so for periods of time held no reserves to back Tethers in circulation at the rate of one dollar for every Tether, contrary to its representations.”

Regardless of this, its trading volumes didn’t fall much (down to USD 93 billion from the high of USD 107 billion in the Bloomberg article above). The price is still ~ USD 1, meaning buyers and sellers still treat it as the stablecoin it claims to be but cannot prove. Here are stats from the industry monitor CoinMarketCap. Blue is price, green is trading volume.

Essentially, if USDTs are simply created out of thin air without needing to be backed by anything, unlike other crypto tokens that need to be mined, and people are fine with pricing it at one dollar, then the company behind Tether is simply a parallel US Federal Reserve – printing money not backed by anything and (implicitly) pricing it at one dollar to every dollar.

Categories
Data Custody Products and Design

Notion as read-it-later app

I’ve recently begun using Notion as my read later app.

I’ve created a page with a basic database, and Notion’s excellent Share Sheet extension sends web pages from Safari to this database perfectly. Same for the Notion extension for Firefox on the Mac. I just wish both extensions had the ability to edit properties inline so I could add tags right there. This is what my reading list page looks like (the earlier articles have better tagging):

I’m impressed with Notion’s ability to extract text from a web page – it seems to work as well as Instapaper and Pocket, my main read-later services so far. It’s also a pretty good reading experience:

And just like with Instapaper and Pocket, I can export my database to a CSV so I have my URLs in an open format on my hard drive, and not locked away in a closed service. This limitation was what kept me from using Evernote for this:

Categories
Real-World Crypto

Crypto’s time has come

You can resist an invading army; you cannot resist an idea whose time has come.

– Victor Hugo

Governments’ reactions around the world to cryptocurrency remind me of this. Everything about bitcoin, by design, was intended to run outside of the existing monetary system. Not merely untouched by it, but also untouchable.

Short of a total internet shutdown, it’s difficult to cut off a region from global blockchains. Even then, tokens in offline wallets will survive indefinitely, like seeds, until they are reconnected.

Bitcoin – and many other cryptocurrencies – have no concept of a central issuing authority, no need for KYC or other identification, no need for a custodian like a bank, no vulnerability to being unilaterally devalued or demonetised.

In short, they strike at any government’s ability to distribute value and tax gains, the one thing more important to it than its monopoly on legitimate violence.

Yet, countries around the world are creating regulatory frameworks for cryptocurrency. Many have created separate agencies to work with the cryptocurrency industry. And it’s not just tax havens whose competitive advantage depends on them being not just receptive but ahead of the curve on financial innovation. It’s major economies whose government departments are learning to live with cryptocurrency.

The USA SEC is creating a standalone office to deal with digital assets.

“Our action to establish FinHub as standalone office furthers our commitment **to facilitate the introduction of new technologies for the benefit of investors **and the efficiency and resiliency of our markets,” said SEC Chairman Jay Clayton.

In the UK, a recent report commissioned by the Chancellor of the Exchequer in 2020 and led by the businessman Ron Kalifa, recommended “a new UK regime for the regulation of cryptoassets”, saying that

The UK has the potential to be a leading global centre for the issuance, clearing, settlement, trading and exchange of crypto and digital assets… the UK needs to act quickly to preserve its position.

The EU recognises that existing regulation “predated the emergence of crypto-assets and DLT. This could hamper innovation.” and is developing something called Markets in Crypto-Assets Regulation – MiCA – which “will support innovation while protecting consumers and the integrity of crypto-currency exchanges”

I think most governments, left to themselves, would simply like to ban crypto, likening ownership, distribution and use of cryptocurrency to that of drugs. They’d wage a War on Crypto and drum up public support. This is already happening in India, China and Nigeria where governments have raised the spectre of cryptocurrency being used to fund terrorism and other anti-national activities and have banned it.

But around the world, cryptocurrency has already reached critical mass (which doesn’t need to be very large). More importantly, financial institutions have seen it as an opportunity to create wealth and generate new buseiness In today’s finance-dominated era, these institutions are politically important enough for cryptocurrency to gain, if not outright legitimacy, then at least a guarantee of survival.

It is the idea whose time has come. At least for those that matter.

Categories
Real-World Crypto

Cryptocurrency Whatsapp group

Over the weekend, I started a Whatsapp group on bitcoin and cryptocurrency. It’s going to be non-technical – in fact, I began it specifically to cut through the hype and focus on the genuine excitement around cryptocurrency as a world-wide financial asset.

Here’s the chat URL: https://chat.whatsapp.com/BnoKrjH8hrHAtCQbE0F5f1

The idea is to share a link or two around a particular development and write a ~100 word commentary around it.

So far we’ve discussed Bitcoin as insurance, the controversy around Tether or USDT, digital collectibles or non-fungible tokens, Bitcoin ETFs that have just been launched in Canada, the fate of Bitcoin in growing economies with young populations, like Nigeria and India, China’s plans for its digital currency the e-yuan, and a few other topics.

Since Saturday, it’s grown to over 120 subscribers from many countries. Here’s part a recent message I sent out:

The group has since added people from Hong Kong and Singapore

I plan to cross-post from the group here often, so I can expand on the topic a little more than what’s appropriate for a message group.

Categories
Products and Design Real-World Crypto The Next Computer

Nvidia limiting its graphics cards’ ability to mine Ethereum cryptocurrency

This is rather interesting.

Graphics card-maker Nvidia says it will deliberately reduce the efficiency of its latest card by 50% when it is used to mine the crypto-currency Ethereum.

Crypto-currency enthusiasts have contributed to a shortage of graphics cards by snapping up supplies to use for non-gaming purposes… Nvidia said it had intervened to make sure its products “end up in the hands of gamers”.

But it will also sell a bespoke crypto-currency mining processor.

– Nvidia limits crypto-mining on new graphics card

Nvidia’s stock has had a great run in the past year. It’s not only produced extremely popular gaming cards, but its hardware has also found use in the artificial intelligence/deep learning and cryptocurrency spaces:

I’m still reading about this, and I may update this post or add a new one about my thoughts. I thought the act of deliberately modifying one’s hardware to cripple a specific function was interesting enough to document. No value judgements yet.

A part of my reading queue:

NVIDIA’s own announcement

Nvidia is nerfing its RTX 3060 GPU to stop crypto miners from buying them all – Polygon

Nvidia May Restart Production of Crypto Mining GPUs if Demand Sufficient – Coindesk

I’m also looking forward to this being discussed on Nvidia’s earnings call for last quarter, scheduled for 24th Feb 2021.

Categories
Data Custody

Dropbox’s value proposition versus Microsoft 365 and Google Workspace

I didn’t know Dropbox launched a password manager in 2020. This is their product page as of this writing

I used to be an ardent user of Dropbox, with my entire Documents folder stored and synced in the service. I had referred so many people to Dropbox that my initial free 2GB had ballooned to 16GB through rewards. That changed with Dropbox limited the number of devices that you could use with its free plan to three. That made it untenable for me, since I use a variety of computers, tablets and phones and want my data to just be there when I want it. So I haven’t followed Dropbox for a while.

On their most recent earnings call, the CEO talked about “evolving the core Dropbox experience to become the organizational layer across all of our users’ content”.

The CEO described other products:

“We also introduced Vault, an additional layer of security for our customers’ most valuable content, where that content is accessible with a unique PIN code. Users can also grant emergency access to their Vault to trusted friends or family, so they can access the protected content when needed. And finally, we introduced computer backup, which automatically backs up users’ local desktop, documents, and downloads folders to Dropbox for secure access on the go”

This is interesting, because it’s clear now that Dropbox sees itself as another full-featured cloud for people, families and businesses, alongside Microsoft 365 and Google Workplace aka G Suite aka Google Apps.

Nearly a decade ago, they were questioned about being “a feature, not a product“. Since then they seems to have diversified their product from storage and grown enough to become a publicly traded company.

But Dropbox’s weakest proposition might be that its competition has ‘office’ apps – Word, Excel, Powerpoint and Docs, Sheets and Slides (Dropbox’s Paper is interesting but doesn’t hold a candle to office apps). Both Microsoft and Google also offer the sort of storage organisation and sharing features that Dropbox does.

Their pricing also starts at USD 12 per user per month, just like Dropbox’s Business/Standard plan.

For that price, businesses get not just storage and storage management, not just office apps but also mail infra, email clients (Outlook and Gmail) and video conferencing (Teams, and an integrated Meet/Chat/Gmail).

If businesses are paying one of these two companies for their office apps, what’s the case for Dropbox? Put another way, is there a particular segment of the market that Dropbox is chasing?

Categories
The Next Computer

The release treadmill as a weakness

The question is not how we can evolve towards a circular economy, but instead why we continue to evolve away from it.

– “How and why I stopped buying new laptops“

The writer makes several solid points about using old, used machines. I’m am no stranger to this way of thinking. I use a nine year old Macbook Pro and a ten year old Macbook Air as my main laptops. Both, especially the Pro, have had several components upgraded and work more than well for my needs.

The most important part is the writer’s reflection on why his behaviour is the exception, not the rule

Although capitalism could provide us with used laptops for decades to come, the strategy outlined above should be considered a hack, not an economical model. It’s a way to deal with or escape from an economic system that tries to force you and me to consume as much as possible. It’s an attempt to break that system, but it’s not a solution in itself. We need another economical model, in which we build all laptops like pre-2011 Thinkpads. As a consequence, laptop sales would go down, but that’s precisely what we need. Furthermore, with today’s computing efficiency, we could significantly reduce the operational and embodied energy use of a laptop if we reversed the trend towards ever higher functionality.

Significantly, hardware and software changes drive the fast obsolescence of computers, but the latter has now become the most crucial factor. A computer of 15 years old has all the hardware you need, but it’s not compatible with the newest (commercial) software. This is true for operating systems and every type of software, from games to office applications to websites. Consequently, to make laptop use more sustainable, the software industry would need to start making every new version of its products lighter instead of heavier. The lighter the software, the longer our laptops will last, and we will need less energy to use and produce them.

These are all sensible points. The tech industry’s incentives have evolved to a point where this sort of thinking is quaint, even naive. New machines – phones, tablets, smart watches, headphones – are expected to have annual refreshes, and companies will be punished by the ‘market’ if they don’t abide.

I’d like to see a company shift their business model to one where they only released a phone every three years, but had such a strong, sticky subscription model around it for annual revenue.

Subscriptions are hard to pull off but not terribly difficult to imagine. Apple and Google both have successful subscription models around their devices. That their scale is such that they have to release new phones and increase sales every year could arguably be their weakness, not always a strength.

Apple and Google and other gadget giants are on a treadmill; an upstart need not.

End note: I think there was a point in 2013-14 when Xiaomi came close – at least outside of China they had a large yet closely-knit community, a small set of excellent phones and accessories, and their innovative, well-designed (although in many cases copied) software. They’ve since become like every other phone manufacturer.

Categories
Audience as Capital Discovery and Curation Making Money Online Products and Design Startups

Rewarding affinity, not transactions

We’ve discussed before the increasing population of what I call CoCoCo – content → community → commerce, and what’s also been termed Linear Commerce.

Infinite reach, micro-brands and linear commerce – Part 1

Now, a recent Harvard Business Review article touches on this in the context of loyalty programs: “Want More Loyal Customers? Offer a Community, Not Rewards“

True loyalty is emotional and irrational and leads to customers feeling like they’re part of an exclusive membership group which then leads them to become loyal subscribers or consumer network participants.

as opposed to

some companies allow you to earn points for following them or writing a product review. This sort of bribery usually attracts the least loyal and least valuable audience — people mostly interested in claiming the reward not invested in the brand… [things like this] have more to do with an economic transaction than with true affinity for a brand.

I have been part of great communities, and they are everything that the first quote talks about. I’ve also seen such communities decline as the company behind the brand failed to convert this loyalty into commercial success. And I’ve seen referral rewards dressed up as loyalty programmes that ultimately attracted the sort of people the second quote describes.

At its core, the most influential customer-facing person at a brand need to be genuinely interested in engaging with customers and understanding what they want, in the context of the brand. Creating products and solutions does not automatically beget a community.

Categories
Investing Real-World Crypto

Bet against the ruling class

About five months ago, the VC Chamath Palihapitiya made the case for Bitcoin as the ultimate insurance:

If the government itself just continues to make a string of bad decisions that then have rising consequences… Bitcoin to me is the only think that I’ve seen so far that is really fundamentally uncorrelated to that decision making process and to that decision making body. Because at the end of the day, any other asset class – equities debt, real estate, commodities, they’re all tightly, tightly coupled to a legislative framework and an interconnectedness in the financial markets that brings together many of the governments that are… behaving in this way.

So [Bitcoin] is almost like a bet against the ruling class in some ways and making sure you have a small amount of insurance because… insurance is not something that pays off 50 cents to the dollar, insurance is something that pays off… 1000 bucks to a buck. You want these massive, massive asymmetric payoffs because you want to be sure that a small amount of insurance can basically make you whole…

that’s why I just think that… you should take 1% of your portfolio, put it in Bitcoin, never look at it. Don’t look at the price. Don’t look at anything and hope that that 1% goes to zero. Then you have the 99%. But in the case where that 99% goes to zero, that 1% will probably be worth 120%. And you’ll feel like a genius.

Categories
Data Custody

Open source means you don’t need to worry about your data

The arguments for open source software and free software are many and well articulated.

In addition to those, open source software is also important in the context of what we discussed yesterday: the risks of having your data stored in the Cloud, often in proprietary data formats, with your access to it subject to the terms and conditions of a small set of increasingly dominant tech companies.

Cloud islands

Open source software inherently deals with open source formats. It’s difficult to imagine an open source (or free software) project with its own proprietary data format. Perhaps such software may be able to work with data formats from other proprietary software, but that’s a plus. For instance, LibreOffice being able to read and edit Microsoft Office files and GIMP being able to work with Adobe Photoshop files.

Open source and free software projects may offer to host your data in the Cloud, usually for a fee. But there’s almost always the ability for you to host the software on your own server. Bitwarden offers a hosted version, which I use. But I can always host it myself. Likewise, you can either download and self-host Wallabag, the open source read-it-later service, or you can use the Wallabag.it service run by the developers. The choice is yours.

On Mac OS, I try to use open source software unless it’s inconvenient. Over time, I expect to move most of my everyday software to its open source equivalents. For now, here’s a subset.

From left to right, the highlighted ones are

  • In addition, in my menubar are
  • Flux to ‘warm’ my screen colour to mitigate the ill effects of blue light
  • Caffeine for when I want to keep the computer from sleeping
  • Shiftit for window management

None of these is a compromise versus a proprietary equivalent. All of them use open formats natively. With them, I’m confident of my access to data.