Cubegeek

Cryptocurrencies & Capitalism - The Mental Exploit

A couple years ago I got fed up with the self-righteousness of political hacks. And trust me if you're not Winston Churchill, Dag Hammarskjöld, Nelson Mandela and King Arthur combined, you're a political hack in my book. Which is to say I don't trust much, and I'm ok to say I have trust issues. So anyway I'm wondering in particular where Leftists get the nerve. So I read enough of George Orwell to give me a clue. You know. Wigan Pier and all that. The basic lesson that I learned was that socialists and communists got their moral impetus from the obvious intransigence of the capitalist class. What they didn't anticipate was that the capitalist class would get so much larger after 50 years or so that there would be no more bullies to bully, or as I said:

If England faced socialism because the permanent unemployment of coal miners (due to a small monoculture of capitalist investors), America would not because of it larger, more diverse class of capitalist investors. This, in turn establishes a social momentum that keeps a larger literate class - the upper middle class..

A few weeks ago I finished Kevin Kelly's book, and I have finally become convinced that I should just go with the flow of every post-industrial thingy imagined up by millennial hackers and consumed by iPhone walking dead. Here are my magic words: 

Post-industrial economy, network effects, human whuffie, decentralized distributed memetic wealth. Ubiquity is more valuable than scarcity.

What the Marxists could never see coming was that there could be a nation with a million millionaires. So they figured that the could vanguardify the means of production. They had no idea how many means means meant. What we can't see is a planet with a million billionaires. Right now there are about 1900. But what if?

This afternoon while I was chilling in Manhattan Beach enjoying a U2 tribute band, it occurred to me that I should check to see if Bitcoin has dipped under 4000 USD. While I checked out the MACD on Cryptowatch, I realized that there are some 18 exchanges where Bitcoin is traded. If I wanted stock in Hewlett Packard I'm pretty much stuck buying it on the NYSE. Bitcoin's net value right about now with 16.5 million BTC out there at 4000 a pop is worth over 65 Billion USD, which is more than double the value of HP. But I suspect, well I'm betting a lot, that Bitcoin will easily triple in price by this time next year. Once enough people get a sniff of that, and ETH and all the next coins, there's going to be a lot of money in the world. New money. Fast money. Young people's money. Digital money.

Why do we think that there can't be more markets for more things more people think is valuable? Who would have thought, even when we had Dick Tracy cartoons full of the idea, that the average American would not only pay $300 bucks for the wrist radio (on credit) but another $100 a month to watch TV on it? It would have sounded preposterous. Like the valuation of Google. Like the number of satellites in orbit. Like the number of IOT devices we'll have, like the number of warehouses of massive servers Amazon and Microsoft have for rent to anybody. 

What if the huge income inequality we're seeing right now is like the income inequality of the '49ers at Sutter's Mill as compared to the Conestoga kids still trying to make Colorado into a state. Maybe everybody gets richer and we're just second guessing, Maybe this first 2000 billionaires are really fairly brutal and simpleminded as compared to the many hundreds of thousands to come. Think about it. You played Monopoly. You pay more rent for your house now than for Boardwalk with one hotel. Why can't there be more money? Why can't there be a band better than the Beatles? Why can't there be a car better than the Ford Mustang? 

I'm still pursuing the stoic, barbell theory. I am preparing for great wealth and great tragedy. But I'm beginning to think that the upside is way more up that I ever thought, and in fact that upside only exists in the post-industrial market for intellective work, production and consumption. In other words, movies, music, text, video, graphics,  vr sculpture, videogame skyboxes and all that. That's where the next generation of consumers are going to spend a lot of time and money. Seeking experience. 

The question is whether or not all of this is sustainable. I can't answer that question. I think there will be flash markets that will bring wealth of a gig-work variety to mass market consumers, and I think that when those markets crash, they will crash in a downhill cascade across a demographic slope. When those on the Upper East Side of NYC get bored with posterized Campbell soup cans, then they will be parodied and put on skateboard stickers. Different market, different coin, same content. There will be efficiencies to be gained in feedback loops that are much more quickly and easily financed. In other words, with all of these exchanges there will be a new kind of financial liquidity than the world has ever known. Think of it as an evolution of crowdsourcing, of VC money of a shotgun variety for more businesses than VCs ever thought possible or profitable. 

With regard to that sustainability, I'm optimistic if I'm not making a fundamental economic mistake. But I think there are things that people will like to do and are quickly trainable to do that have never been called 'labor' before. And I think this new cryptocurrency liquidity will fund a greater portion of human activity than ever before, because there are new markets of human activity that have never before been considered, and ways to monetize behaviors in ways never before possible. So long as the distance between the market makers and the participants is not too great, or opaque, this can be liberating. 

My model is television. There is a new vocabulary of television across hundreds of channels that could never have been envisioned even 30 years ago. MTV changed everything. That was just the beginning. 

Crackhead Barbie: A Data Story

(True Story circa 1991)
I have spent the past 30 years building Business Intelligence systems. The very basic idea is that there are some things humans do well, and there are things computers do well. The magic is found when you make them work together.

The management at Mattel had a problem, which is that on any given Christmas, nobody knows what the hot toy is going to be. For all of their years of successes, it’s very hard to predict which product is going to win and which will lose. But some time around November, things get crazy, and the execs had better decide which set of all of their thousands of products should get the green light for full manufacturing blast.

As with every business, especially in consumer markets, making supply meet demand is sometimes art, sometimes science and sometimes pure guesswork. So how can you get 50 managers, each pulling for their own favorites to come to a consensus about what’s best for the company? Well, it’s almost easy. You tell them to put their money where their mouth is.

So I was hired to integrate the list of products into a system that allowed managers to create syndicates and present those syndicates to the execs who would then make wagers (with votes) to gather a consensus. So you had maybe 300 different Barbies 400 different Hot Wheels and yoyos and slime and monsters and who knows what else. I got all of the product SKUs and put them all on a menu that managers could select some combination of products they expected to win. We then integrated that with sales data that came in on a day by day basis and gave a custom aggregation of the product mix.

So instead of saying 1/2 Barbie 1/3 Hot Wheels or something like that, we got into a level of granularity for which they had never been able to plan. In time, leading syndicates began to be more obvious and instead of shouting matches about seniority and “I know this business like the back of my hand”, the senior management of Mattel had real data.

In every business in every industry, there are things that management does because they guess and there are things they do because they know. You would be shocked and amazed at how much guessing there is. And even where there is good guessing, you would be stunned to find how how much resistance there is against executive decision-making, not to mention sheer inability to distinguish rumor from actual policy (if and when policy is clear). Making business data-driven is a very big deal and most of the time, very difficult to accomplish. Even companies with the right data at the right time delivered to the right people can fail to execute.

If every business were data-driven, only few would fail. And of course if anyone could do it, we’d all be rich. You should never assume that management knows everything it needs to know about the operations of their businesses. They assume. They suppose. They engage in wishful thinking and they hope. Parents of teens understand this.

PS. You would think that when the company hired me as an expensive consultant, they’d have all of their data ready for my development work. Ha! It took a while for me to get access to the actual database with the product names at Mattel. In the meantime I had to make up names, thus Crackhead Barbie.

 

Back on the Chain Gang

It has been a while since I've updated the blog on what's been percolating in my noggin on the blockchain front. Here's a rundown.

First off, it turns out that my new friend Mark Jeffrey is putting together folks and had a really good turnout in Santa Monica. The oven is warm, and although what's baking for the most part is only half-baked, it does smell delicious. I met a few really sharp folks to bounce ideas off of and this has turned out to be a really good workout. I'd say there were about seven rows of seven seats across at MetaX meat space and a lot of good questions and energy was maintained by the half dozen speakers that entered the lightning round. I would say that I'm prepared to give a shout next time as I review the following paragraphs with my crew at Full 360. 

So what's new and big in my mind about the blockchain technologies has more to do with what kind of database a distributed database essentially is and why that would be advantageous over a centralized database. What we do every day is create multi-tier data-centric applications. So we have an idea of what it means to manage data across 'platforms' as it were, using specialized data stores on a purpose driven basis. But still it operates as one system in a secured private space belonging to one entity who is extracting value from its use and control. But why use a decentralized data store? That's the big question. When I answer it, I will naturally be drawn to build a hybrid. Why not control an analytic portal against public blockchains? That's my inclination.

Eric Chung is the founder of the Dapp Developer's Bootcamp. I intend to spend a day learning EVM and all that in the beginning of September just before the launch of Destiny. I will also be attending Big Data Day this summer and BlockCon in the fall. But what my first instinct told me about Solidity, the new Dapp language that I expect is edging out Geth (dunno really) is why we should trust entirely new languages to write smart contracts. Why not simply write extensions to better known languages to promote adoption? So I hope to answer that question by the fall. 

Beyond that here are a few idea areas.

Decentralized Organization
This is going to be huge and falls naturally in my management consulting wheelhouse. I'm going to work with Marc Danziger to flesh this out, as soon as he liberates some time away from the Drama in NYC he must deal with in his new gig. As that settles down, we'll be able to brainstorm a good deal of powerpoint and charge a fee. I'm looking forward to associate myself with this chitlin circuit, because I hella know how to present. Don't believe me, just watch.

The Dark Side
Another good friend of mine knows very well what happens to bad actors who get busted. So I will like to help out when he too gets less busy. Whatever sidechains can do for train of custody looks to be a brilliant application for the court system and registry of bad actors. 

Common Adaptation
There are fewer than 20 ATMs in Los Angeles from which one can buy and sell bitcoin. I'm not sure about other cybercurrencies but if this technology is going to take off, then somebody is going to have to dare the 13 year old boy to eat the first oyster. Talking about eating the first oyster sounds like an act of desperation if you're not thinking specifically of 13 year old boys. We will have to find the daring youth in this. Where are they. What do they want? Also, how does anyone valuate labor markets? There could be a laborcoin. 

Loyalty Exchanges
eBay was a no-brainer. But how do you ebay all of the various coupons and pseudo-currencies of the world? There used to be something I think called 'Belly' in the Hawaiian restaurant I used to go to. I gathered a bunch of Belly points and now they have disappeared. There's got to be a better way to establish a market for marketing loyalty. It just happens that Full 360 knows a lot about loyalty systems. I think we can do something here.

If this gains adoption, one idea is that a charity portal would be useful for metered giving to non-profits. Of all the things that need transparency and proper care and feeding of contributors, that whole ecosystem of charitable organizations could most definitely benefit. At some point if the right legislation is passed, providers of blockchain transparency will have a sinecure similar to those companies who provide core banking software.

Triple Entry Ledger Accounting
This is, to my lights, going to be the future auditor's best friend. So good in fact, that it is reasonable to expect a great deal of resistance as well as off-books trickery. In any case there will be IOT gas costs for which bot-farmers will not tolerate cheating. So there are certain accounting for latency in transaction that will be very useful to understand, a redefinition of suspense accounting, if you will. Fast suspense. Along with this comes high speed inter-transaction accounting. I wish I could remember where that paper was that I read. Damn me for not putting it in Evernote.

Reference Data
When I was at the New York Banking Summit a couple years ago, the hot topic was the new regulatory requirements for risk accounting. Banks that are not hedge funds, if my guess is correct owing to my time on Wall Street, make some ballsy moves without fully accounting for what might be the blowback. Big partners roll that way. At any rate, these new regulations forced them to consider Spark over their sluggish HDFS. They clearly were not doing daily reviews of their portfolios but running on the guts of the masters of their universes. Clever perhaps but not wise - the equivalent of running corporate books off Excel which is a lot more common than anyone would think. At any rate, the smartest guys there said public, reference data would be a goldmine if somebody could figure how to do it. You guessed it. The answer is blockchain. 

Tax Coins
You and I both want transparency in government spending. The enemies of sloth are ever present. But we just might chase them down.

McLabor Coins
So the idea here is that you firstly can make coins behave like shares in an ETF. The  intellectual property then is the masterminding of the algorithm that prices those puppies against this or that option on this or that indicator. Same as it ever was, except allow the public to trade themselves, and then take the gas money as your reward. In the case of McLabor, somebody needs to index that which is human labor vs bot labor by industry by manual function. A global index of manual labor would be a wonderful thing. It will modernize the third world and make the infrastructure advantage of certain western countries more obvious than it already is. But I like the idea of working from home in some other real estate market with a climate similar to Los Angeles. Perhaps off the Agean. 

That's a head full of ideas. You heard it here first. 

Side Burners

I'm somewhat liberated and doing more heads up work these days. Taking an opportunity to do a bit of coding reminds me that I have gotten rusty. So I will be burning more time doing the tech thing because as much as I think I can remember, there is no substitution for muscle memory. So it's time for me to flex a bit more. I'm also becoming convinced more and more that a ridiculously large portfolio is more than the sum of its parts. And so that gives me license to code in Rails and Javascript, two frameworks I have long considered beneath me. And yet what has gone on with HTML and a dozen other things has caught me flat footed. So better for me to stick to pushups, as pedestrian as that may be, than worry about buying the wrong size kettlebell. In otherwords, I'm just doing, and will let the doing speak for itself. Glad I remembered this. It has been more than ten years since I've uttered the word 'scaffolding'. My bad. I'll be prototyping, because that needs doing.