Ze blog of Elias Bizannes

Frequent thinker, occasional writer, constant smart-arse

The social media police state will be its undoing

Back in 2009, I attended the Identity Common‘s annual conference and met a gentlemen who pitched me his HTML5 social networking app. HTML5 was the flashy new technology of the time and social networking was all the rage due to Twitter and Facebook. Burbn is what it was called and even though I thought it had no commercial value, it was still a memorable encounter. One year later, Burbrn would pivot to Instagram and that gentleman, Kevin Systrom, would sell his company for a billion years later.

Although I was oblivious to meeting the man who would create one of the world’s most impactful social media products, I was nevertheless aware of a coming storm. A year before that conference for example, I wrote a blog post thanking 2008 because we finally had a name for new media, “social media”. A term that was nascent back then but which now dominates our way of life. If you read that history I did, I also correctly predicted our friends would filter the world for us. What I never saw coming was how nation states would commit information warfare, where among many other things these same friends of mine were repeating propaganda which shaped our views.

30282 Super Secret Police Enforcer

“30282 Super Secret Police Enforcer” by Masked Builder is licensed under CC BY 2.0

A wakeup call

This information warfare is apparent on social media these days, suffocating these platforms. I’m currently in Russia and so I rely on a VPN to get access to things as unremarkable as LinkedIn. While this fact is not the reason why Instagram just disabled my account, it’s certainly a factor. I was trying to curate my connections as after a decade of following people my feed was crowded. Meaningful connection with everyone was not possible and I missed the content of those I did care about, making it slightly unusable. (Instagram even understood this as I would get frequent suggestions I create a new account to connect better with the people close me, which I think might be how this thought even got into my head.)

This activity triggered some type of automated alert, which appears to be part of their new way to target “unauthentic” accounts. Instagram said they are reviewing it as a security alert over the next 24 hours. And for a reasons I don’t know, I was then told my account was deleted.

(My offences if I had to incriminate myself is I used an app to help with analysing my friends as it gave better insights with my manual clean up, I’m in Russia which is not where most of my friends are and one of Facebook’s new triggers, and I have a post eating ice-cream to the tune of the anthem of the Soviet Union, which would be identified as a copyright violation to someone who doesn’t understand copyright law.)

Your account has been deleted for not following our terms. You will not be able to log into this account and no one else will be able to see it. we are unable to restore accounts that are deleted for these types of violations.
From another user but this is similar to what I first saw.

Done. Finished. No link to appeal. Never mind I’ve been a good citizen for 10 years: bye bye. And no, we won’t say why, just do not pass go, do not collect your belongings. It’s been a week with no ability to rectify it but that’s for another day because what matters is this is what I was effectively told at first. Suspicious logins, performing a few unfollowing actions and potentially copyright: my account was swatted like a fly that was categorised as a wasp when all I am is a bee trying to make some honey.

Winding back a bit and why I have a post eating Soviet ice-cream, “stories” was a transformational change to Instagram, a concept Instagram copied from Snapchat 5 years ago. When Snapchat made headlines, I’ll be honest: I could not understood why ephemeral content had value. But it suddenly came to life for me with Instagram as I learned content is powerful when generating an experience to connect with people. (A smaller portion of my network is on Snapchat, so the same functionality has less value.) Parallel to this, I saw the increased migration of my network from Facebook due to its privacy scandals. The 500-600ish connections I’ve made there over time, the hundreds of posts I had made including pictures of my children from my old phone or archived videos trying to perfect my technique on one of my hobbies, has meant it only grew in value.

But that’s not why my life was impacted. This is simply a pretext to how how the messaging system grew to become so important to me. The life sharing through stories and private messages as a result of it became a feedback loop where I reconnected with people. To the point where it even built a habit of deferring there first. In some cases, it’s the sole way of me connecting and communicating with people, like former colleagues who’s number I no longer have, former classmates for the reunion I’m organising, and even my yoga teacher in Russia where I (repeatedly) tell her when I’m running late (and boy, was I late this week). This is a utility to my life but even more so, what underlies my human connection.

And just like that, my ability to connect — and prized memories captured as content that I don’t have anywhere else — just disappeared. If you find this entertaining about how I could be so emotionally invested with a product, then consider the panic attack you may have had once in your life when you lost your phone (that had no backup). Swap this out imagine your Facebook or your phone contact list or your email account or whatever you use to maintain human connection– what if today out of nowhere, it was just deleted, terminated. How would you feel about that? Sure, you can start all over again but good luck trying to remember the surname of that dude that you really need to speak to right now that might help you get a job or give advice about going through an illness or to help you locate someone else.

Museum of Communications

“Museum of Communications” by Cargo Cult is licensed under CC BY 2.0

Who has the right to determine who you talk to?

When Twitter earlier this year made the decision to ban Donald Trump on Twitter, it set off a firestorm debate about freedom of speech which is still raging. Regardless of the reason, as freedom of speech in my eyes is a concept that is meant to protect you from oppression of the government, I felt unaffected though as a precedent it was alarming. Having someone in government lose their ability to communicate suits me fine because I don’t want to hear from them in the first place. But it raised a question that we have Trump to thank for pushing the limits on: who has power to make that decision? Twitter by law, had the right to do what they did. However, that decision may one day be regarded as a turning point. Silicon Valley, such as people in my circle who very much are leaders in the industry, and Washington, always talked about in the news, know that change to Section 230 is not if but when.

As I follow Instagram’s painful process to appeal their decision, and learn about how they operate, this incident has made me reflect that because of how overwhelmed they are, they clamp down even on regular people who have done little wrong. That brute force approach might superficially solve a problem of theirs but it creates others. If I didn’t have my intellectual property in the form of photos, videos and contacts on my account and this wasn’t a primary means for me to communicate with people, I probably would not give a damn. But I do: this actually affects my life.

Instagram could be a little smarter. Rather than shut out people, revoking users posting privileges is penalty enough with little downside risk. And yes misinformation and information warfare is a whole big problem that I’m just glossing over now. But the people we meet and the technology we use to connect with them is not a gimmick anymore: it’s what underlies our humanity in the information age. Instagram shutting down my account I consider worse than someone tampering with my postal mail. (Intentionally opening, intercepting or hiding someone else’s mail is the felony crime of mail theft in the US.)

As I said in 2008: “If my social graph is what filters my world, then my ability to access and control that graph is the equivalent to the Mass Media’s cry of ensuring freedom of the press.” In 2021, I’m going to say access to that graph now underlies our human connection and any restrictions on it will result in a revolt from users or government wanting to regulate one day.

The future is decentralised

The ability to communicate interpersonally with someone, or to broadcast to a group of people, or to discuss as a group — like what Instagram offers — is too important to let any one entity be able to control. Cryptography and Blockchain offer a path to building decentralised applications which is a good way to protect against abuse (or incompetence) by a centralised authority.

2015-01-16 22-31-05 NodeXL Graph Server blockchain

“2015-01-16 22-31-05 NodeXL Graph Server blockchain” by Marc_Smith is licensed under CC BY 2.0

That’s not an original idea. Web innovators over a decade ago with a focus on open standards, including the freshly created oAuth that underpins many applications these days, proposed that the future of social networking should be based on the principles of the decentralised internet. They unfortunately gave up to move onto other projects but the vision is sound. Where your relationships to other people and your ability to communicate with them cannot be controlled by any other entity other than the people involved. We already have the technology to do it but obviously implementation is tricky. It’s also something we should not take lightly: when someone works it out, it’s going to be the stuff that will one day topple governments. You would have laughed if I said that in 2008 but it was three years later that social media did that with the Arab Spring. This would be on a whole other level.

If Systrom didn’t sell out as early as he did and went back to his original vision of Burbn, maybe Instagram would have become that. Now that it’s a Facebook product, what is more likely, is that the management of Facebook either can’t understand how this trend is a threat or understands too well because it will disrupt their monopoly but the result is the same: nothing. That almost doesn’t matter because if information warfare continues to disrupt the operation of social media, this heavy handed policing will only continue and correspondingly there will be increased backlash due to the frustrated user base (it’s already happening with the valuable content creators).

Perhaps history will repeat itself where hubris will dismiss the entrepreneurs who will disrupt their product, like how Facebook tried to do with Instagram initially. That disruption sounds like audio right now thanks to the chatter by Clubhouse. However, until we see disruption on the architectural level that can put all the components together in a decentralised way, this is all just the warm up act.

More likely it will take one random person getting disabled, to piss them off enough where they will make that vision happen sooner. But until that happens, we ain’t seen nothing yet.

Update: September 7 2021

Given the thousands of people on the Internet that this is happening to, where there is an entire cottage industry of agencies offerings to help you get your account again for a fee, I thought I’d share what happened to me.

  • After initially been shown the wall, I later could apply via a link to say a mistake had happened. I had to put my name, email, username. An email would be sent, sometimes immediately, other times hours later, where I had to take a picture with the code.
  • I did this daily and with different email accounts. The first few times, I responded with a different email account and after two times they would stop sending me an email when I requested it. But after a week and/or sending from the right email, as in the email I put on the form, it started working again.
  • However after fixing that and another issue, where I could see no reason why nothing was wrong I started tracking my emails. Here’s the interesting thing: none of my tracked emails have been opened. As I didn’t track the first few, I can’t say what happened there but this just proved to me the Facebook team is overwhelmed due to their automated fraud platform that’s shutting so many accounts

A few weeks pass and then the other day I get this email. Which I thought was weird, but when remembering my first two photos were sent from a different email, told me they must be about a month backed up clearing the queue.

And bam, the very next day — the sympathy apology email. Looks like my queue was overwhelming them.

Then a few days later, with my daily requests waning, I get this. (Notice that it was sent 2.40am, which means whoever did this is not working at Facebook HQ…which means this happens so often it’s been in or out-sourced)

Why now? Well, other than just giving it time something else happened. I started using a new Instagram account and these above emails happened around the same time I shared my first story which was connected to my Facebook account. It’s almost like the second story I shared triggered the reactivation. Maybe this is a coincidence, but given their automated spam detection platform is what shut my account in the first place, I would not be surprised if there is a correlation. Ultimately, they are just trying to prove you are a real human with a real account.

…And the real humans trying to keep up with this automated Facebook platform are getting seriously burnt out.

The Income Ratio Problem

Income inequality is one of America’s biggest problems. My issue is not with what the wealthy make — even though they are richer than ever — but those on the other side of the socio-economic spectrum. I see it on the streets in San Francisco, one of America’s richest cities, with the chronic homeless problem but also with the local crime alerts constantly buzzing my phone.

American politicians are now jumping at this issue. The Progressive Left with its self-appointed mouthpieces of AOC and Elizabeth Warren are shaping the dialogue towards higher taxes. But unlike the reason why income tax was first introduced— which was to temporarily fund war — instead, their goal is to redistribute wealth in society. A point I’m sympathetic to due to the income inequality I see daily. But that equally kills a part of me, the enterprising side, as there is nothing more demotivating than to get taxed for your work.

And as much as I like that Jesuit heading up the Catholic Church these days, I disagre that inequality is the root of social evil. Consider this instead:

Income inequality in substance is the problem but framed the wrong way. It’s housing, health, nutrition, travel cost reduction that’s needed (not the penalisation of those who strive).

May 04 2019

The basic principle with a hypothetical

Let’s say Donald makes $1000 a month and Elizabeth makes $10 a month. And for Elizabeth to live a good life, with affordable housing and abundance to meet her nutritional needs, she needs $11 a month. If we tax Donald 70%, then Elizabeth can share with other low income people the $700 from Donald. But the cost of this, is that Donald will not be motivated to make $1000 or more realistically, he will find a tax scheme that reduces the chance he will pay the $700 which defeats the purpose of the tax.

Let’s look at it from another angle. Let’s say that Elizabeth still makes $10 a month. But it turns out, to cover her lifestyle costs, she only needs to pay $1. Why do we need to tax Donald if Elizabeth has what she needs?

Education is leading the charge

Of course, this sounds obvious but it’s not to politicians or papal leaders for some reason. Consider the explosion of online learning platforms like Udacity, Coursersa, Khan Academy to name a few — it’s a golden age of learning which previously was monopolised by universities and schools that charged expensive tuition to fund their expensive real estate. What’s happened in the world of MOOCS is that the cost to produce and distribute educational content has almost fallen to zero. We are in the midst of a transformation in society where a Stanford level of education is, quite literally, becoming free.

How to make housing cheap

Now let’s consider housing. San Francisco is one of the most expensive real estate markets in the world. Rent control, despite good intentions, has distorted the market and amongst many other issues is the reason why over 30,000 units sit vacant as landlords would rather not rent their properties (property values are also higher if without a tenant). The neighborhood groups prevent high rise apartment complexes from getting built, reinforcing the fact this is a big city acting like a small city. Add restrictive zoning controls like PDR that prevent residential development due to the politics of protecting blue-collar votes (and institutionalized with the ill-conceived Proposition X which prevents the cheapest way to create mass housing through the conversation of warehouses) and not to mention transportation and sewerage systems that cannot sustain population growth — and voila, you have a city that will always be too expensive. And will only get worse.

If Silicon Valley is grounded in San Francisco and there will be always jobs which is what’s largely driving demand to this global cultural city, then how else can we solve for limited housing supply? Here’s a hint: people drive to work…
Imagine the day when flights from Sydney to London will go from 24 hours to 4 hours, which is not a matter of if but when as the technology already exists (rockets going up and down versus planes flying sideways). Investments in transportation allow people to work from different cities, states and countries.

Or imagine if companies can support remote workforces where they don’t have to physically go into an office. Progressive Silicon Valley startups are now making this the defacto standard as the war on talent is settling in that direction.

Let’s change how we view the problem

Ideas like Universal Basic Income sounds great in concept, but also makes me nervous because higher average wages leads to demand-push inflation. But flip the idea — don’t give people more cash, give them cheaper access to goods and services they need. As you can see with the examples of education and housing, it’s already happening in the market.

We need government policies and investment in what will drive the cost down of life and human growth. Income redistribution due to higher taxes are almost as foolish as the wars that they were originally created to fund. Let’s start thinking about income inequality instead as a Income Ratio Problem, where improving the ratio of costs to income can be solved not just by increasing income but by more intelligently through reductions in cost. This can be done with capital investment, smart policies, and human ingenuity and not by eating the hand that feeds us — human incentive.

We shouldn’t own land

Should we abolish ownership rights over land?

It’s a crazy thought but it’s actually very logical.

Consider the factors of production. Classically defined, as land, labour, and capital. Along with entrepreneurship, which organises the factors, you have the building blocks of economic activity. Therefore, any controls on the factors leads to a limitation to the usage of the resources.

Remember how not so long ago, slavery — the ownership of humans over other humans — was a thing? Back then, it was an “economic” necessity but which fell apart when technology did the work of humans cheaper and led to the political revolution that now, thankfully, requires the treatment of all humans as equal in dignity. Less talked about is we’ve also seen a boom in economic output as well since slavery was abolished, as people are now free to use their time as *they* see fit (not another person). Slavery still exists, and economic slavery is more of an issue these days in developed economies, but my point remains: free the people.

It sounds not just absurd, but down right shameful, to suggest we own humans for economic reasons. And so I want to posit to you, that after years of trauma — like the micro issue of overpriced property where few can afford to buy a home especially the big cities or the macro issue like the wars caused by nationalism — that the ownership of “land” is one of the most damaging things we are doing to our economy (and society, if you ask me). Not just damaging, just out right wrong even.

Well that’s just ridiculous. How can the world function without ownership of land
This concept already exists: it’s called leasing. With leasing, you have a temporary control on the economic value and usage of an asset. The British had a 99 year lease with China before they had to give Hong Kong back to the communists. More relevantly, the Chinese communists themselves forbid foreigners from owning land, as its owned by the state and the collectives. Just because you don’t “own” the land, doesn’t mean you can’t own a home you build on top of it. It simply means that no one human has control of this factor of production indefinitely.

“Property rights” still exist….you just can’t sell the land as an asset and it’s a finite right you have.

So the government owns all the land?
I hope not. I’d rather say “society” does. Every few years, we allow an individual or a group to bid for a lease capped at a certain amount of years. At each bid, a group of independent people can assess what is the best usage of the land. The lease owner then gets to control the land like a land owner does and on the face of it, society will not have changed. But under the surface of it, we’ve changed the way we think about the world. We let creativity, demand and supply determine outcomes…and because nothing is assured, it keeps lease owners on their toes. It kills the concept of inheritance of land, which damages the dynamism of the economy.

Now, the devil is in the details. Replacing private ownership of land with a committee that approves land usage can be a slippery slope of sliding into horse shit again, but as long as the principle of ‘freedom’  is upheld for the resource that is land and it’s dynamic usage towards the best ideas, I think we’re good.

You could never convince existing land owners outside of China
No kidding. But that’s ok. I like to think of what we do on earth as a petri dish, where the best ideas will lead the way. What matters more is that we recognise this is the best way, so that when in the next century we begin a new phase of exploration as humans colonising other planets, moons of planets — and one day exoplanets — we have this principle down pat.

An evolving manifesto for earthlings

The evidence behind the Big Bang can explain how our universe developed from 10-43 seconds. Anything before “the bang”, however, science has no evidence and its reserved for the philosophers.

Following our own personal ‘bang’ into this world and as we grow as humans, we learn a fact that we spend the rest of our lives ignoring. That being, we all die some day.

But despite this mystery and gift of life, there is another fact that would pay dividends to be more consciously aware. That being, the human species is evolving, like how a stronger lit light fills a room more fully. We take our gift of life for granted, and it’s only when we lose it — ‘it’ being our health — that we can truly appreciate life. Building on those ideas, let me get to the point: the survival of our species is constantly under threat and we have no time to waste.

Meteoric objects that wiped out the dinosaurs are one good historical reason why we need to rush as I don’t think we’ll have much time to plan for it. For me, it’s more exciting: there’s a whole multi-verse out there for us to see.

Whilst we are destined to all die one day, our life shouldn’t be wasted.
We all should contribute to the future of humanity. I believe there are seven broad areas, from my vantage view, that could do with more engagement.

(1) Automation
Metric of success: percentage of the population that is able to work in the other sectors I list below. The more, the better.
Automation is a hot topic in industry and government alike, and for good reason: it’s happening, fast. But while industry is focussed on creating the automation, everyone else is fretting about the impacts it could create, which is mass structural unemployment.

Let me focus on why automation matters first. If we can automate any process, we should. The reason is for every human performing a service, we are wasting our collective opportunity by not having those people focussing on building our future (more on that below).

The issue of jobs disappearing is a temporary issue but it’s real. I prefer to call it “friction” as we retrain people to work on new types of jobs. Keep reading.

(2) Learning
Metric of success: structural unemployment rate is nil
Education is the institionalisation of learning (but it doesn’t have the monopoly on it). Learning to me is all encompassing, about the acquisition of knowledge and skills. Automation is one good short term reason where we need to rethink how we can retrain and reskill the workforce to reduce the friction. If automation will advance us, which it will, the speed bump will be our educational system and we — and by extension our economy — will only be as dynamic as our ability to learn and relearn.

School curriculas, learning methods, chips that we can implement in our brain and that query the internet. Whatever gets us to learn anything faster, is where we need to be.

(3) Sustainabilty
Metric of success: we have the ability to terraform another planet and/or can control Earths environment
It doesn’t matter what side of the climate change debate you’re on, logic dictates if it displaces one thing (such as the environment), it will end up costing us in other ways (ultimately our health, or our security!). Our ability to learn how to create sustainable ways of living — eliminating pollution as a by product, new types of food, methods that will allow us to habitate outside of earth— will underpin our ability to survive as a species. What we fine tune now on earth will be the model we can replicate across the universe.

(4) Healthcare
Metric of success: all disease is eliminated. Forever.
If we could eliminate human disease — and I include aging as part of that — imagine how different life would be. There would be less suffering. There would be more knowledge that we retain (by people staying alive) and less opportunity cost (by distracting our focus due to sickness). There would be more “resources” in the form of people working on problems.

Until we achieve this goal, humanity will be limited, like how a car is limited by its fuel to operate (worsened by it’s fuel tank suffering a leak).

We have the means to one day eliminate all disease. There is absolutely no good reason why we shouldn’t (and that includes the arguments supporting disease to solve ‘over-population’: we need as many humans possible to colonise space). Why aren’t we moving faster towards this goal?

(5) Transportation
Metric of success: we can travel from point A to B, instantly
With new ways of moving humans, we create new lives. When a city implements public transport, new parts of a city become accessible which allows a spreading out of the population and which in turn reduces housing demand and gives more cash in the hands of the communters. It allows different types of people to mingle to promote social cohesion, much like how NYC has more diversity than any other city I’ve seen.

Development of transportation leads to improved methods which reduce pollution.
In the long term, our ability to explore new planets gives humanity a capacity to grow our population and uncover new resources, such as asteroid mining for minerals and beyond, to enrich our society.

Whatever promotes the goal of transportation in this broad sense is arguably one of the biggest activites we can perform to grow the economy.

(6) Society
Metric of success: statistically absent percentages of harm and death caused by other humans
There is a lot of division in humanity. Nation state divisions, religious divisions, and racial divisions to name some of the main offenders. It won’t be until we come into contact with the first alien species, and especially one that threatens humanity as a whole, before we collectively wake up and willingly collaborate as a shared consciousness.

Compassion. Communication. Controlled violence. Power structures that optimise for the utilitarian goal. Whatever promotes social cohesion so as to leverage our collective consciousness rather than divide it, is the activity that will allow us to grow quicker as a force in the universe. To keep with the car analogy, it’s stepping on the accelerator rather than the break, in order to go forward. Technology is after all the faustian bargain: once we know how to do something, someone else will use it against us. The only insurance agains that, is by developing our society to prevent abuse.

(7) Exploration
Metric of success: the amount of people we have engaged in exploration.
I define exploration of the physical, mental and spiritual.

By exploring our world and our solar system, we create new opportunities for humanity to habitate for our survival or new resources to grow society.
By exploring ideas that lead to scientific answers or philosophical questions, we develop opportunities in the same way, if not more, as physical exploration.
And by exploring the spiritual; by acknowledging our sight, hearing, touch, taste, smell and cognitive capacity is limited in the same way a smaller antenna is limited in what radio frequencies it can capture, we can open up new worlds. Bats can see infrared light but we can’t. What else can’t we see that prevents us from understanding?

I’m not saying if you’re working on something that’s not the above, its not a good thing. I’m just saying you’re wasting our time. This list is not comprehensive, but it’s also fairly broad and encompasses multiple approaches to solving our problems. But it harks back to one idea: what are you doing to propel humanity forward?

Why Bitcoin (or another deflationary currency) will lead to an economic revolution

In the 1500s, a turning point occurred in humanity. The British and Dutch empires adopted a new concept, that enabled them to take over the world and change it in the process. Their powerful new weapon? The notion of credit, where they abandoned the idea that the old was sacred. By “borrowing” against future prosperity — through credit — they overtook their rivals.

In our lifetimes, we are about to see another transformation. And ironically, due to the opposite reason: where borrowing against the future will be stopped. What’s that got to do with Bitcoin? A lot.

Every man and his dog is talking about Bitcoin and crypto currency. But one thing few people seem to talk about, let alone understand, is that Bitcoin has a fixed supply — specifically, 21 million. Which means that one day, unlike fiat currency, there will be no more “Bitcoins” printed out for the world, which makes it deflationary. If Bitcoin becomes the Store of Value in the world like I optimistically predict,  what will a deflationary world look like? A world where prices, like what you pay for in shops and what you get paid as salary, are decreasing? What’s that going to do to the economy? Four years ago, I made an attempt at saying deflation was a good thing (or rather, didn’t matter) but I didn’t get to the meat. I’m going to make another attempt at it this time (although many other people are still convinced it’s a problem).

Let’s unpack it. First let’s start with the concept of inflation itself.

Inflation
Here’s a question most people don’t seem to be able to explain. Why do governments, like my tax masters the US and Australia, make 2% inflation a “target”.

Inflation is basically when prices rise and there is a corresponding decrease in value of your cash to purchase — so the US and Australia have it as official economic policy to see prices rises by 2% each year. Short term, it means producers of output get more money, which makes economic output higher. But eventually, labour costs catch up so it’s a neutral impact on the economy. That is, in a best case scenario.

If expectations are managed, this can help jump start an economy short term, useful for elections. But really what’s happening is that long term inflation erodes the value of people’s savings (as their purchasing parity drops) while at the same time it reduces the effective value of debt (for a similar reason). So basically, for a long term “neutral impact” on the economy, debt holders are rewarded and hoarders of cash are penalised.

Debt funds consumption and investment, which grows output in an economy. Savings are a leakage from the economy which do the opposite. So in this sense, this political philosophy broadly speaking, is aligned with growing the system.

Meaning, inflation is evil, but in a good kind of way so we encourage it if we can control it.

Let’s now look at the real question: what’s economic growth?

Economic output
How do you grow an economy? The easy answer is that exports bring cash into an economy, but what about actual global output? If we take out this artificial growth, which is a transfer of cash between economies through trade, what actually creates net growth?

It basically comes down to two things: productivity improvements, which is doing the same thing cheaper (so that extra cash can go to other things), and population growth, which means there are now more people to consume in the economy. More people also means more workers, and remember, labour is a factor of production so the more available people (and time we have), the more we can produce. If we can pair productivity growth to population growth, we get economic growth: as we have more available cash to hire more people, they in turn can produce more output (if we assume the marginal output of labour put to work is higher than the marginal saving from productivity). By the definition of GDP, which is based on consumption, more goods being output and more people consuming means voila: more economic activity.

But that’s not the only thing that can brings cash into a system to fund consumption. Enter debt.

Debt
The invention of credit created the world we know today. But a thing that makes me scratch my head is how every government and citizen in this world seems to be in debt. If you look at the estimates, there isn’t one “bank” — every government seems to be in debt. Which basically implies one thing: we are borrowing money that will be paid by future tax, or the future income of citizens.

In the present, this is great: we have another form of cash injection into the economy, but for the future generations, this is effectively a leakage as their earnings are taxed.

Which brings us to the magic of inflation: that debt will get eroded, by a compounding amount, so that it’s practically non existent 2-3 generations from today. Assuming of course, the highway robbery from cash holders continues and inflation is constant.

But not with Bitcoin.

Bitcoin’s economic impact
With a deflationary currency that rules the world, cash holders will get rewarded for saving, as sitting on their economic value will increase with time. Inflation targets will now become deflation targets, but for the same goal of price stability. Instead of prices creeping up each year, they will creep down each year. More significantly,  debt will no longer be in the equation: as debt will only get more expensive over time (due to its purchasing parity) and it’s utilisation will drop.

Shock! Horror! The Kenyesian’s approach by Governments around the world to boost the economy will be eliminated! However, not all is lost. If investments can return a higher rate than what a saver would get hoarding their cash, then investment will still occur in the economy. And with investment, comes not just more cash into a system but also innovation, which might spark productivity improvements. This increases economic output.

Governments will be forced to stop abusing their position to borrow money to be paid by future generations, and instead, investment managers and entrepreneurs who can execute a higher return than deflationary returns, will instead be the custodians of increased economic output.

Which puts creativity, risk taking, and ingenuity, as the sole creator of economic prosperity. Which is how it should be: it’s making the competition of good ideas the thing the drives us forward.

In the process, this will make creativity the new scarcity, which is a powerful concept because it is less scarce than gold or fiat currency today. If Bitcoin or another currency with a fixed supply becomes the Store of Value in the world, this will usher in a new economic age that will be more pronounced than what the invention of credit did for the world.

Contrary to what people say, Bitcoin doesn’t have a deflationary problem: it’s actually got a built-in feature to unlock human potential, by strapping a rocket ship to our economy.

Gay marriage is asking a deeper question about humanity

In Australia right now, there is a intense debate about legalising gay marriage. The outcome of it will be significant. Although Supreme Courts and legislatures around the world have made it legal since 2003 (starting with Belgium), only Ireland has voted for it by the citizenry through a referendum. Australia isn’t doing a referendum, it’s a survey instead. It’s not binding, but it’s doing a good thing: creating debate.

I think this debate is a good thing because it will explore the issues, helping educate people. But I don’t think its going far enough. This is a debate that we will see again, thanks to the marvel of technology — and how Australia votes, actually helps establish the parameters of the future debates which is why it’s significant. However, before I go into that, I need to establish some assumptions with you.

(1) There is only one way to make humans without technology
(2) More humans is a universal goal of most institutions
(3) Marriage is about family

Now let me explain the assumptions

(1) There is only one way to make humans without technology

Whatever your views are on gay marriage, I hope you accept that the idea of creating a human, has long been through a male and female reproducing.

If it sounds ridiculous that I’m even pointing this out, it is because we have forgotten how much technology has changed our lives, starting with the test tube baby. For the first time in history, we could conceive a human outside of the body. In the years that have followed, we can now (almost) engineer sex cells so that two women or two men can have their DNA combined. Whatever your beliefs, you have to admit that’s a remarkable feat of science.

But the point remains, without technology, there is only one way to create humans.

(2) More humans is a universal goal of most institutions

There are two ways that an economy grows: through productivity improvements, or through population growth. This is a topic in itself, because in the next 50 years I believe there will be a crisis around economic growth as we’ve always taken for granted its growth due to population growth — with Japan, Italy and other western nations now declining in population and transioning to this new reality.

Population growth, for most countries (China being the notable exception) for most of history, have wanted more people for economic reasons. However, not just economic: if you’re fighting a war, pre 21st Century technology, you needed more people. If you’re running a institution that exists off its members contributions (like religions or nations), more people means more resources to advance the institution.

I could go on with this, but my point is simply this: let’s just take it as an assumption that human creation is built into nearly all human institutions as a positive thing.

(3) Marriage is about family

You don’t need society to have a loving relationship (other than freedom from persecution). You also don’t need society to make babies, as a man and woman. But if you’re going to have children, you want to be an integrated economic union with a partner, you want to be treated as a unit. You want to capture the tax benefits as well as the property rights to protect your progeny.  Marriage-lite, is about sharing a life with another person; but marriage full-blown, is about incubating new life into the world under the sponsorship of a couple.

(Which actually, is a point most people don’t realise about the US Supreme Court decision on gay marriage. It was about removing discrimination from couples, who were denied the same federal benefits in tax, pensions, and legal transfer as heterosexual couples.)

OK — that’s a lot of ground work. Argue if you wish on the above, but that’s not the interesting bit — let’s now get into the meat of the topic.

Gay marriage will be an issue in future about children thanks to technology and adoption rights

The US Supreme Court argument is intellectually a valid one around discrimination. But what it also does, is open up the can of worms on other issues, which I believe is at the core of resistance of gay marriage. Specifically, the rights of homosexual couples to bring up children.

If you are a progressive today, the question of gay marriage is “how could you deny people this benefit”. And for the true progressive, this would extend from not just relationships rights, but children rights — such as the right to adopt children, and engineer embryos in a test tube with the DNA of two people.

But to the progressive 50 years ago, they would have been befuddled. Because outside of adoption, the technology didn’t exist to create embryos outside of the body. Technology is now creating options we previously didn’t have available to us and it’s reasonable that we are taking time to consider its consequences.

Being against homosexual child rearing isn’t logical

If you can accept my second assumption, it can help you understand the resistance to homosexual unions and gender types beyond male and female. Because if you believe (as some people do) that being gay is a choice, then sanctioning against it is a way to preserve the growth of the population. However, technology is changing this.

If we can create a normal functioning human in a test tube, why does homosexuality matter any more?  I’ve heard the pain of gay people come out to their parents, and I assess the root issues is due to embarrassment but also a sense of loss: the parents won’t have grandchildren. However, we are nearly at the point where any two people can have their DNA recombined to form an embryo. And with the assistance of surrogates (currently banned in Australia: the ability for someone else to bring to term your baby) and a third person’s sex cell (you need a woman’s egg as a shell and for the critical mitichondia), we can give birth to a human of any combination of people.

Which, funnily enough, actually supports the goal of population growth. Homosexual couples, with technology, can be like heterosexual couples now. If we could just get over the embarrassment bit, which I think we’ve seen a sea change this decade but still not enough, we probably will see more families in future — a thing people are mourning to be in “decline”.

The bigger question

All this is actually a debate on a much bigger issue: are we ready to play God, and evolve into a new human species?

The moment we can engineer sex cells, is the moment we can decide what DNA we want in that embryo. We are using technology to create human life with precision. Allowing gay couples to create their own baby is simply an insight into the much bigger debate of should we even be playing God?

Which is why I think more debate is needed. This isn’t just a debate about relationship equality, but about homosexual child rearing. But actually it’s not even that which matters: this debate will be seeding the battle of the future, which is human-designed embryos, where we will also be able to decide what genes we want.

This is an emotive topic. It’s complicated. But if we apply a purely rational, logical approach to this issue, what would it be?  Well, let me help with this and phrase it another way: I believe this evolution is inevitable because it won’t be practical to have the activity restricted. We would need every country in the world to ban it, but you only have to look on drugs as an example of how even that doesn’t work, a $360 billion industry.

Consequently, you will have a choice: where you can choose to remain a Homo Sapiens Sapiens, much like how the sibling of our shared ancestor chose to stay in the trees as monkeys and apes, or accept this evolution of the human species.

The irony being this isn’t actually a vote towards this future or not, because it’s going towards one outcome anyway. What it is actually is, is a vote of how ready you are for it.

And that’s ok if you’re not ready…because I’m sure if you ask the monkeys and apes, they are very happy.

Bitcoin as Store of Value

JP Morgan Chase CEO Jamie Dimon, on the back of China’s announcement to throttle cryptocurrency, made comments yesterday that shook the market.  (It’s not the first time he’s done this.)

He supported blockchain technology for tracking payments but then goes onto to say it’s illegal to trade Bitcoin at the bank and that’s it’s a currency that is associated with criminal activities.

It’s comical to hear this. How can the CEO of a Bank, both support Blockchain (the thing that Bitcoin invented) but trash Bitcoin? To me it points to one very obvious fact: Bitcoin itself is a threat and he’s on a consistent PR smear campaign.

Why Bitcoin is a threat
Customer deposits, where people store their money for protection, is the basis of banking. Banks use those deposits to then do lending activities that actually make them money, such as lending up to 10x what they hold as deposits in the forms of mortgages. Those same lending activities, not only make them money but can also be packaged into new financial products, such as mortgages bundled into securities (like the ones that created the 2008 credit-crisis).

Why is Bitcoin a threat? Because it has the potential to fulfill a function that only government fiat currency and gold have every achieved and that now banks are the custodians for: store of value.

If Bitcoin becomes the Store of Value in the world, people would move their customer deposits to Bitcoin. And the affect of that would be catastrophic to today’s banks.

Does Bitcoin have a fighting chance to be this?
Well, first of all its achieved an adoption that I think is irreversible. The only thing that could stop Bitcoin now is if governments make it illegal — but even then, it would require every government around the world to act in unison. Because all you need is one island nation, acting an a clearing house, to fulfill the needs of Bitcoin. (And the nation that realises this will become a new financial centre of the world.)

Secondly, the characteristics of Bitcoin are remarkable. What’s going on right now is real work is being generated, to create a hash. That hash and encryption function, will continue to be generated until 21 million Bitcoins are created. And then the supply stays constant!

The significance of this is there is a fixed supply: which means inflation will not exist (rather deflation), a pretty critical feature of where you want your Store of Value. Real work, and hence, value is behind it; and the token itself has a real use beyond being a string of characters — such as acting as a token to authenticate a Blockchain network which will underlay the future Internet.

I agree that there is a bubble right now: the hype driving it makes the price unstable. But I also believe that Bitcoin itself will get to $10,000 in value, without a doubt purely due to human psychology. But that’s not all, it should one day equal in my opinion  all the narrow money of the world which is $29 trillion  (if you want to be conservative, I’ll accept Gold which is $7.8 trillion). So if Bitcoin right now is worth $64,406,377,384 on 16,563,637 coins in supply, it’s price should be $3,888.42 but calculated on all the coins it will ever issue (21m), it’s $3066. But if the market value reaches $29 trillion, then 1 BTC will one day be worth $1, 380, 952 which is a 450x multiple on current prices ($371k if you use gold).

The question about Bitcoin is not about should it exist or not: the truth is, no one can control it. If you believe all the governments of the world will ban it, then maybe — but I believe human’s aren’t that capable on something that isn’t life threatening.

The question about it being a better store of value in the world is also not really a question: by design, it’s superior. (But admittedly the governance mechanisms behind it to create a secure system, are still being worked out and being tested– such as the SegWit2 rollout in November which put this question in doubt.)

Which leads to  the ultimate question, in light of the above:  do you accept it to be the Store of Value in the world? And that is the million dollar question (or, ahem, $1.381m question).

Is this the f—g button?

Islamic terrorism distresses me just as much as the nationalistic movements that Brexit, Trumpism and the rest of Europe are working towards for the same reason: it’s not progress towards future.

Islamism bothers me because it crushes individual freedoms. Nationalism bothers me because it kills open trade and travel, which has underpinned the stability the world has seen post world war two. Truthfully, both repulse me as forces because they divide humanity.

I’ve often half-joked to friends that the only time human’s will finally unite is when we get a door knock from an alien civilisation wanting to take us and our planet over. But we don’t need to wait for that either.

One day, an asteroid could wipe out all living species on earth like it did with the dinosaurs. And if that does not happened, then the next ice-age will give us a run on our gas bills (like how we had remarkably as low as 40 “breeding pairs” of homo Sapiens 70,000 years ago, and ice ages happen more often than you realise like the last one which happened 12,000 years ago). If we have any  hope of surviving as a human species, to not consider the need to colonise other planets, develop technologies to survive from our own earth’s changes, or address the need to one day eliminate all disease which is, quite literally, killing us — is short-term (human species) thinking. Life is a magical mystery but the survival of our species depends on further exploration and technology — but we can’t get there until we start thinking like this. 

(There is nothing wrong with short term thinking: putting your right foot ahead of your left foot as you breathe is critically important. I just hope you appreciate, that equally, you’re an idiot if that’s all you do when there’s a pot hole with a sleeping alligator two steps ahead of you.)

I get what’s going on with all the politics and why the actors are doing it. The cost of it, is they are just wasting our potential (and survival) as a species. That potential will only eventuate when we don’t squander our mind space and energy. Which is why I’ve decided I don’t have the headspace for it any more (outside of entertainment). Unless your survival as an individual human is at risk — and for some of you, that’s more pressing that others and I respect that — I’m going to ask you join me and start thinking about what really matters, as humanity. When you start thinking like that, hopefully that will follow with the doing which is what we need right now.

If you need help to get into this frame of mind, let me help.  Just ask yourself this question next time you catch yourself reading the news or getting into a debate with someone: how does this help us — and what are you doing — from not getting frozen by aliens or injected with a deadly disease and while we are at it did anyone remember to make a fucking eject button to get us to Mars?

Why automation excites me

Most of human society was engaged in farming once upon a time. Slavery meant richer nations (or classes in those nations) moved to others work as slaves focussed on farming — and then one day, after thousands of years, slavery was abolished. Ignoring the human element to this, what drove this economic change? Technology. No coincidence that this happened in the same hundred years of the industrial revolution starting. Machines are simply more efficient than humans — and yet I think you would agree wth me that we are working more than ever since this transition in the world happened. 
This is a good thing. It’s just the transition isn’t good — it’s friction. This is happening again and will continue to happen.
In the current form of friction, I believe automation is likely going to be one of the biggest political issues in the coming decade. The politics should be centered on how do we manage the friction (or if a country wants to fall behind, ignore it).  There is a trend toward nationalism in America and Europe especially, and foreign labour is the catch cry but truthfully, it’s also largely due to technology, or rather the automation in manufacturing replacing jobs. We need to realise this is a permanent trend and this will extend to other sectors of the economy like services in future (as we saw with farming in the last 200 years).
For those scared of a future where the machines replace our jobs or even for those who think profit is a bad word, you just need a different perspective. Let me try to do this in just four sentences.
  • Economic theory suggests that we can make money either through rent (land ownership), wages (your time), interest (tool ownership), or profit (creativity).
  • However, unlike the first three factors of production (land, labour, capital), entrepreneurship (creativity) is limitless.
  • (Well, almost unlimited — it’s limited only by our imagination and our time.)
  • Which is why we need machines to replace jobs that have us rent our time by the hour to survive, as instead we need to be unlocking human creativity.

How any country can leap frog in technology

What if I told you we could time travel to 1989 — and be given a forecast of what a new implementation of the Hypertext technology (called the World Wide Web) could do. Would you jump at doing whatever you could to be on top of this trend? Smart phones (Apple’s came out 10 years ago), a technology like Hypertext, also made us rethink how we can use the Internet and recreated the world. Well, it’s 1989 and there is a technology that is poised to do this again.

I’m passionate about the future of health, and I can’t ignore what’s going on with cryptography, artificial intelligence, Internet of Things, and Virtual/augmented reality. But if I had to pick one thing right now, which is ripe for government leadership to leapfrog even silicon valley, it’s this: Focus on blockchain.

It’s a specific technology that’s matured unlike most of these other trends. Its got a hacker community innovating like how I can only imagine when the web started. Its got significant investor interest. It has consumer awareness. It has all the things ready for this to blow up.

This is how you do that:

  1. Make cryptocurrency the same status as any currency. For example, in the US  Bitcoin’s are considered a capital asset which makes it impractical to use unlike regular currency which is treated on the income account. We need to remove this impediment as it makes it not practical.
  2. Offer incentives to businesses working on blockchain. Create a tax free corridor: anyone that that operations in an area is exempt for any taxation. This isn’t to just get the world’s best employing people locally and building technology which will together create an economy of agglomeration, but it will have a flow on affect on other cryptographic matters, such as cyber security which has now become the scariest frontier of warfare right now. Silicon Valley prospered because of technologies building off technologies. 
  3. Force the adoption of cryptocurrency. Require banks to offer it as a service and make all EFT terminals compliant. The moment the economy offers blockchain integrated into the economy — first with currency — we will see an acceleration of blockchain’s potential on the things that are truly exciting (such as Smart Contracts and Distributed Autonomous Organisations)

Implement these three simple policy concepts and it will make that economy the ground zero for blockchain innovation.

As I have already alluded, I don’t think Bitcoin is long term the goal of doing this: it’s the infrastructure that Bitcoin provides that is the exciting thing (ie, the block chain technology which is one of the four technologies that make Bitcoin outside of peer-to-peer, PGP and proof-of-work). The use cases go far and wide: not just for currency, but for things we take for granted like how websites are resolved (like DNS), contracts likes wills, voting, and anything else involving trust (such as simple but critical title deeds).  Blockchain is basically a decentralised database which is in line with the original design goal of the Internet. Efforts like Ethereum are effectively building a computer on top of the Blockchain concept. It’s a whole new paradigm in computing that goes far beyond currency.

But leave that to the entrepreneurs, who are already working on that — I could write many more posts on those ideas alone. But with leadership, anyone one of the three suggestions I’ve made could be legislated into law this year and overnight make that territory a global leader. 

This is what any  country could do to create the world’s best environment to foster this disruptive technology, which I am convinced will create a transformation like what the web did less than 30 years ago. 

 

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