Death Knell for Bitcoin?

Mt. Gox, the main bitcoin exchange, will apparently declare bankruptcy.  The exchange was robbed of 740,000 bitcoins, "worth" $350-400 million. The exchange rate for bitcoin is now about $580, down from over $1,200 a few months ago.

How did this happen? The main problem with digital currency is that it's just a string of bits that can be copied any number of times. Since you can potentially use the same bitcoin to buy stuff from 10, 1,000 or a million different people, you need some mechanism to prevent that:

HENN: In the conventional banking system - trusted third parties, like banks and credit card companies - keep ledgers to make sure I can't do that. But bitcoin solved this problem by creating a public record of every transaction. So if I buy something from you with a bitcoin, a record of that transaction is shared and recorded across the entire bitcoin network - everyone knows.

The theory is that public ledger make it impossible for me to spend a bitcoin twice. Because after I spent it, everyone would know that coin was actually yours. You know, one of the appeals of this system is that it eliminates those trusted third parties, those banks and credit card companies, and at least in theory could make moving money around the world much, much cheaper.

BLOCK: OK. But wait, Steve. If you're telling me that every transaction is supposed to be recorded in a publicly-shared ledger, right, how does it happen that thieves could apparently manage to steal, what you say, could be $350 or $400 million from this exchange, Mt. Gox?

HENN: Well, that's a great question. So sharing and recording all these transactions on the bitcoin network it turns out takes some time. So for this and a couple other reasons, the community developed kind of a short-cut: A temporary ID number that would be attached to each transaction and making tracking transactions in the short-term easier. But these temporary ID numbers can be faked.

Apparently people were approaching Mt. Gox with fake ID numbers, telling the exchange they hadn't received the bitcoins they were owed. And then Mt. Gox was relying on these numbers and giving the thieves real bitcoins. This may well have drained Mt. Gox's resources to the point were it's now insolvent.

The main draw of bitcoin is that there's no governing central authority keeping track. This is also the main drawback of bitcoin: there's no governing central authority keeping track, or protecting or insuring you. The people whose bitcoins were stolen have no recourse. There's no FDIC insurance. Unlike the Target credit card number theft, there's no Visa or Mastercard to shield consumers from losses. There's utterly no way to track down who ripped off Mt. Gox and their customers: anonymity is the entire point of bitcoin.

The impetus for using bitcoin for legal transactions is a little hazy. When you buy something on the Internet you still need it sent to your house. That's hardly anonymous: the seller has to keep computerized records of your address, so your anonymity is only protected by how careful and competent your supplier is. Even if you're buying something digital, like porn, it still has to come to you over the Internet, which after the NSA spying scandal turns out to be not very anonymous.

If you're concerned about hiding transactions from your spouse (like a surprise birthday gift, or that porn bill), you can often pay through a PayPal or similar account, which is a lot easier to keep secret than a joint credit card.

Anything you buy in person can be bought with cash, which is even more anonymous than bitcoin because it doesn't require any computers or connection to the Internet. Using it won't leave any digital footprints that lead the NSA back to your door, and your spouse won't find it in the browser history that you forgot to clear.

At this point, bitcoin is the domain of drug dealers, gun runners, money launderers and crooks. But there's another den of thieves itching to get in on the action.

Barry Silbert, of SecondMarket, is in discussions with several banks to create an exchange to trade bitcoins. Only large institutions would be allowed to join. Some of these same institutions advised their clients to invest in bogus CDOs while betting against those same financial instruments; they gambled away trillions of dollars on bad real estate deals and trashed the world economy. What could possibly go wrong when they start advising their clients to invest in the totally unregulated market of bitcoin futures?

Maybe someday there will be a reliable digital currency that has the virtues of bitcoin but none of the problems. But today's digital currencies are little different from the gold players create in World of Warcraft -- which when I checked today had an exchange rate of $12.80 for 10,000 gold. Not quite bitcoin territory, but what can you expect for killing a bunch of orcs? And the crazy thing is that bitcoins are created in essentially the same way: just crunching numbers on a computer.

The bitcoin market is like the Wild West, only there are no Earp brothers or Texas Rangers. It's just a bunch of crooks and their libertarian tech geek enablers. Since a huge percentage of Mt. Gox's customers are criminals dealing in drugs and money laundering, it's no surprise they were robbed blind.

When you sleep with dogs you get fleas.

How To Check Out Chicks in Minnesota

Best Office Guy EVER!!

If only more guys were like David Thorne...

A Massive Eugenics Program?

I was reading this conversation on the New York Times about why theists believe in gods. The first order answer is simple: the vast majority of people believe in gods because they were brought up to do so.

But why, when there's utterly no physical evidence whatsoever that gods act in the real world, are we so easily convinced of the existence of a super Santa who keeps track of who's naughty and who's nice? The answer might be found in evolutionary biology.

For literally thousands of years of humanity has been conducting one pogrom after another against people who don't believe in god. The Egyptians deified pharaohs as living gods and forced their subjects to worship them. The Romans required citizens to pay obeisance to their deities. Christians hounded pagans across Europe to convert, and killed those would not. Muslims scoured Asia, Europe and North Africa and forced infidels to convert or die.

American settlers killed countless Indians through disease and war. The remaining few had their religion, culture, and their very names stripped away when the government sent their children away to Christian boarding schools.

Many conservative Christians deny the existence of evolution. But they know from personal experience that you can breed desirable traits into domesticated animals, and eliminate the undesirable traits.

For millennia most of the world has been conducting an intensive selective breeding program to cull non-believers from their ranks. How long would it take this kind of selection to result in physical changes in the brain that predispose people to believe in the existence of supernatural beings? Some researchers believe there is a "god spot" in the brain; has that structure in the brain been bred to be more prominent over thousands of years by believers?

When you factor in the commandments of so many religions, including Catholicism and Mormonism, to have large families, the admonitions of Catholicism to eschew birth control, and Islam encouraging men to have multiple wives, it's clear that they're trying to inflate their numbers on the supply side as well.

So you gotta wonder: is religion a massive eugenics experiment?

Your Own Spaceship

Have you ever wanted to cruise the solar system, see the rings of Saturn, ride the moons of Jupiter? There's a freeware application for Windows called Celestia that lets you do that, virtually. (It's available at http://sourceforge.net/projects/celestia/, and addons are available at http://www.celestiamotherlode.net/).  

Saturn and Mimas

Celestia lets you position yourself almost anywhere in the universe and shows you what you would see. You can put yourself in orbit around Saturn, following its moon Mimas, or Mars, or Jupiter, or Alpha Centauri, or Cygnus X1, one of the first black holes astronomers discovered.

Celestia is basically a planetarium application that frees you from the constraints of the terracentric viewpoint most such programs impose. You can position yourself anywhere and easily change the angle you're looking from, zooming in and out. You can reverse time, speed it up, slow it down, watching the moon go through its phases as it orbits the earth, or the Galilean moons zip around Jupiter like moths around a flame. You can turn on your virtual spacecraft's thrusters and zoom around the solar system at the speed of light. Celestia also displays man-made objects, such as the International Space Station. It will also find the dates of solar and lunar eclipses and display the shadow of the moon on the earth's surface so that you can tell where the eclipse can be seen from.

Though Celestia feels like a game, it's rooted in science. It has been used by NASA and the European Space Agency, and several universities and schools to teach astronomy. Its graphics aren't on par with what professional artists can produce with their high-powered graphics workstations, but hey, it's free!

This photo album shows images of Earth, Mars, Jupiter, its moon IO, and the Discovery spacecraft from 2001: A Space Odyssey (but no monolith, alas), the Atlantis space shuttle, the International Space Station, Saturn and its moon Mimas, and the galaxy M83.

But the coolest part about Celestia is that you can add your own images and objects, and a lot of people have done exactly that. Celestia Motherlode is a repository of addons that people around the world have created. Enthusiasts have created addons depicting stars, planets and spacecraft from real life and scientific conjecture, as well as numerous fictional sources such as Star Trek, Babylon 5, Niven's Known Space, Star Wars, etc.

The most detailed fictional creations are from the Orion's Arm Universe Project, a worldbuilding project where hundreds of people around the world have collaborated to create a future history in which mankind has spread out across the galaxy.

To test customization out myself, I made my own texture for the moon, inspired by 2001: A Space Odyssey and The Tick. A texture is just computerspeak for a flat JPEG image that is wrapped around 3D objects by graphics programs. Here's the resulting video:


If you want to create your own addons for Celestia there's quite a learning curve, but there are a lot of resources on the Internet that give all the details. You don't really have to know orbital mechanics to make your own creations; you just have to be able to cut and paste text files. To make your own alternate surface textures for planets and moons you'll need a graphics program (The Gimp is a good freeware one, despite the name). To make your own 3D objects, you'll need a 3D editing program (Blender is an amazingly sophisticated freeware application). Be warned: making 3D objects is big job if you don't already know how to do it.

For a long time it seemed that the dream of mankind going into space was dead. But the reach for space is finally getting rolling again: countries like China, India, Japan are joining the United States, Russia and Europe with serious space programs that are conducting real science. Companies like SpaceX and Orbital Sciences are pioneering private launch services. Entertainment ventures like Richard Branson's Virgin Galactic and the Mars One project (the one-way trip to Mars planned for the 2020s) may never come to fruition, but the dream is alive and people are taking space very seriously.

And Celestia will give you a little preview of what we'll see out there.

Keynes and Hayek A Go Go

A recent discussion in comments reminded me of this piece from a while back that I never posted. There were a couple of good points in it.

The problem with the Hayekian position is that it’s relentlessly negative: spending doesn’t work, stimulus doesn’t work, all we can do is suffer a nasty bout of deflation and trust in the invisible hand to eventually get us back to work again. 

Right. Then, there was this highly familiar point...

For the Hayekians, the Manhattan Institute’s Diana Furchtgott-Roth was particularly revealing: she would take a question about rescuing the financial system and duck it by talking about how rescuing the auto industry was a bad idea. Or she would ridicule high-speed rail by saying that no one wants to take the train from New York to L.A.—a route that precisely no one is proposing. In other words, the Hayekians were more comfortable with straw men than with messy reality. 

Pretty much sums up every discussion I've every had with these sorts of folks. 

But I remembered that the main reason why I didn't is that is seemed far too bipolar. The answer isn't always simply "Keynes" or "Hayek." In fact, in the current age of globalization, neither fully apply. I've always been one to take a more constructivist approach to any issue of the day. New ideas that are people driven, not "school of thought" driven. For example, both liberalism and realism completely failed to predict the collapse of the Soviet Union. They didn't figure that Gorbachev would simply give up and call it a day. Is there an economist out there or world leader who will finally leave behind both Keynsian economics as well as the theories of Friedrich Hayek? In my view, it's long overdue. How does one stimulate aggregate demand when we have a world economy? This implies that all of the world's governments would have to act in concert to achieve this end and, given the reality of the international stage and conflicting interests, this hardly seems likely.

And there are far too many misconceptions about John Maynard Keynes that have sadly taken root. The thing that people forget about Keynes is that only called for increased government spending in times of contraction. When economies were doing well, he did call for austerity and reduced spending. The anti-spending anaphylactics tend to forget that. These same people also forget that Ronald Reagan was a Keynsian by both cutting taxes (which increases aggregate demand) and increasing spending. "I'm not worried about the deficit. It's big enough to take care of itself," he once quipped. Richard Nixon famously said, "We are all Keynsians now" and, to a certain extent, he was right.

My biggest beef with Hayekians is that can't point to a real world example of how his theories work in practice. Like the libertarian fantasists, where was the utopia of which they dream? How would it work today, given globalization? Certainly, they can point to austerity measures taken during boom times but that's honestly Keynes, not Hayek. The reality is Hayekians just don't like the government. Their emotions about it have clouded their judgment and inhibited them from seeing that different circumstances dictate different paths of solutions.

Sometimes you can't plug a square peg into a round hole. Shocking, I know!

Snow Swimming

Yes, the snow is that deep in Duluth. It's about the same here in Minneapolis.

Spokesman For Science

Great piece in the Times about how Alan Alda is working to improve the way scientists communicate with us ordinary folk. Why?

That scientists often don’t speak to the rest of us the way they would if we were standing there full of curiosity. They sometimes spray information at us without making that contact that I think is crucial. If a scientist doesn’t have someone next to them, drawing them out, they can easily go into lecture mode. There can be a lot of insider’s jargon. If they can’t make clear what their work involves, the public will resist advances. They won’t fund science. How are scientists going to get money from policy makers, if our leaders and legislators can’t understand what they do? I heard from one member of Congress that at a meeting with scientists, the members were passing notes to one another: “Do you know what this guy is saying?” “No, do you?” 

Agreed and exactly why we have the problem we do with climate change.

Of course, that's why I think more scientists should run for Congress! 

Subdividing the Denial Camp

The video Mark posted divides the American people into six camps on climate change. One of the camps, however, needs to be broken up into two distinct subgroups: those who deny climate change but know it is happening and want it to happen, and the suckers who believe them.

The first subgroup is lying about it because they stand to rake in trillions of dollars in oil and gas revenues. This group includes oil company executives like the Koch brothers, people like Sarah Palin and anyone in Congress who gets money from oil companies.

The Koch brothers aren't stupid. They understand and appreciate science (David Koch is a major funder of the PBS program Nova), including climate science. They know that the ice is retreating from the arctic more and more each year. They know because arctic warming is melting the permafrost under their roads, oil rigs and pipelines, raising havoc with the foundations of their drilling operations.

But in the long run, they see global warming as a good thing: the warmer Alaska and Canada get, the easier it will be to extract the oil from the Arctic. Right now extracting oil up there a real bitch: they only have a couple of months a year for exploration because the seas get so rough and the weather gets so bad. But they know that the deposits elsewhere in the world will quickly run dry, what with countries like China and India increasing demand, and they want to get in on the ground floor in the Arctic regions. Gotta beat the Russians!

And an ice-free Northwest Passage would be great for commerce: it'll be so much easier to send Canadian oil to China!

Sarah Palin lives in Alaska, so she should know as well as anyone that Alaska is getting a lot warmer fast. But living in such a cold place is not a lot of fun, despite what she says on her TV shows, so she'd really prefer it 20 degrees warmer.

Other mining concerns stand to benefit hugely if the ice sheet on Greenland melts: there are massive deposits of minerals, including aluminum and uranium, in Greenland, and potentially a great deal of oil. The people of Greenland, all 50,000 of them, would like to get money from that mining, be able to grow their own food, and be independent of Denmark.

How can these guys reconcile the fact that they know they're trashing the climate, hurting billions of people in the next several decades? First and foremost, they just don't care. This is the typical reaction you get from a lot of people — but especially conservatives — when you point out terrible injustice or serious consequences of what they're doing.

Tell them that voter ID will prevent minorities, the elderly and students from voting: they don't care. Tell them that polar bears will go extinct: they don't care. Tell them that Kiribati will be drowned: they don't care. Tell them that Florida will lose all those beaches: they don't care. Tell them that higher sea levels will cause storm surges on the Atlantic coast to drastically increase storm damage: they don't care. Tell them that Manhattan will be inundated: they don't care, and would love it if all of New York disappeared.

They may say they don't believe that the ill effects you speak of are happening, and they may rationalize it away by saying "we need to increase confidence in the integrity of the voting process," or "species of animals go extinct all the time: just look at the dinosaurs,"  but the reality is that they just don't care, or they want it to happen.

They should care in the case of global warming, because it will hurt this country in the pocketbook with increased insurance rates, decreased crop yields, higher food prices, more tropical diseases, more powerful storms, bigger defense budgets trying to deal with the warfare that droughts, floods and famines in other countries will produce.

But climate deniers are like smokers. "Yeah, I know smoking will kill me eventually. But since I like smoking and I don't want to make the effort to quit, I'll just take my chances. Maybe I'll get hit by a bus before lung cancer kills me. So why bother to quit smoking, or get daily exercise, or eat right?"

Replace "smoking " with "climate change," "lung cancer" with "drought, famine, floods, and war" and "quitting, exercise and eating right" with "developing renewable energy sources" and you have encapsulated the mindset of the climate change deniers.

Another coping mechanism is rationalizing that we'll just adapt. "People can just move. We'll find a way to stop if it does happen. Human ingenuity trumps all." They just don't seem to get that using ingenuity sooner rather than later would save a whole lot of trouble, money and lives.

Perhaps the most foolish rationalization possible is that "God won't let it happen. He promised." Yeah, and every football team that huddles in prayer before the big game wins, right?

Then there are the "we can't be the first" and "it's not all our fault" rationalizations. This argument goes: since China is emitting the most CO2 now, we don't have to do anything -- even though in 2009 we burned four times more fossil fuel per capita than China.

Then there's uncertainty: some climate change deniers like the Koch brothers are well-versed in science. They know that climate change predictions are difficult, and any number of things could cause the planet to cool if they happened. There is natural variation in climate, and maybe we'll luck out and it'll kick when we need it most. If a giant volcano blows up, the planet would be cooled down. If a sizable asteroid hit the planet, we'd have a nuclear winter. If solar output mysteriously drops, the temperature could plummet.

But doing nothing because such unpredictable -- and terribly destructive -- things might happen is the worst kind of wishful thinking. It's like speeding toward an intersection and closing your eyes when the light turns yellow.

The last refuge of these scoundrels is not patriotism, but money. "Even if everything you say is true, it'll cost too much to do anything about climate change." This is essentially what the few reputable climate scientists that the Koch brothers' claim as their own have said. They admit it's happening, but there's just too much political and economic inertia to do anything about it. "We'll just have to make the best of it."

The climate change deniers of today are like the smokers of the Sixties. They know what they're doing is bad, but can't kick the habit. But as the scientific evidence that smoking caused disease kept piling up, and more people got tired of breathing second-hand smoke, smoking started to be banned most everywhere: planes, restaurants, bars, even outside public buildings.

The problem is that climate change deniers can't smoke in the privacy of their own homes: their CO2 winds up in the same atmosphere that shapes the climate that we all live in.

The Battle of Wisconsin

Three years ago, Wisconsin become Ground Zero for the battle over public sector unions. There were two sides drawn with Scott Walker and austerity supporters on one and the unions on the other. The former prevailed and the public sector unions were not allowed, by law, to bargain collectively (except for the police and fire department).

The results from this change in policy are muddy at best. Scott Walker promised 250,000 jobs as a result. The state has only netted just over 50,000. Of course, that's a politician's promise so a boulder of salt should taken with it. Wisconsin's unemployment rate sits at 6.5 percent which is about the national average. The state government has a surplus (yippee!) but that's not really saying much. As I have mentioned previously, Wisconsin illustrates how austerity policies do not work.

That being said, this recent article in the Times shows how there are many sides to this story. For instance,

Ted Neitzke, school superintendent in West Bend, a city of 31,000 people north of Milwaukee, said that before Act 10 his budget-squeezed district had to cut course offerings and increase class sizes. Now, the district has raised the retirement age for teachers and revamped its health plan, saving $250,000 a year. “We couldn’t negotiate or maneuver around that when there was bargaining,” Mr. Neitzke said. “We’ve been able to shift money out of the health plan back into the classroom. We’ve increased programming.” 

A good thing for students but not so great for the teachers. Now, they have to contribute more out of pocket and, as a result, they don't have as much money to spend in the economy. The rest of the piece looks at examples of all the different angles and fallout from Act 10. It's very much worth a slow read because what is seen on Fox or MSNBC is very simplistic.

Here's something else from the article I found interesting.

James R. Scott, a Walker appointee who is chairman of the Wisconsin Employment Relations Commission, which administers the law regarding public-employee unions, said that “as a result of Act 10, the advantages that labor held have been diminished.” He added: “It’s fair to say that employers have the upper hand now.” 

But the employers are the government. Doesn't that add power to "Big" Government? What power does the individual now have if they are a public employee?

Global Warming's Six Americas

The President's Approval Ratings Rise

Rasmussen has the president at 50 or above for the last four days. Disapproval is dropping as well. I wonder why?

Pizza That Lasts Years

It's stories like this that give me hope.

MILITARY NEARS HOLY GRAIL: PIZZA THAT LASTS YEARS

Imagine it....a pizza that takes this long to go bad...so wonderful!

Another Reason To Hate MSNBC

 Really?

U.S. Economic Activity, Split in Half and Mapped

Check this out...

The orange represents 50 percent of the economic activity of the entire country whereas the blue represents the other half. Looks like my hometown is pulling its weight quite well. Of course, it's hard to go wrong with 3M, General Mills, Target, Best Buy, Cargill and UHC in one spot, just to name a few.

Hmm...I see a whole lot of blue in red state areas. What a bunch of freeloaders...must be the fault of Obama and the federal government!;)

Arizona Gaydar

Arizona passed legislation Thursday that would allow businesses the right to refuse service that violates their religious beliefs. The main intent of the law is to prevent the gays from gaying up "Christian" businesses with their fag germs. I'm wondering if these same businesses can refuse service to anyone now based on religious beliefs. In addition, how can they tell if someone is gay? Smell? Looks?

It will be interesting to see if Jan Brewer signs the bill. I get that Arizona has a lot of frightened old people that are becoming more irrational by the minute but this law seems preposterous. I think the most detrimental effect will be on the economy of Arizona. Why are gay people's money less green than straight people's money?

Global Parents

A recent discussion with my daughter's principal regarding the image below

ended up going a lot longer than I expected (nearly 30 minutes!) and produced a term that I'm going to be using a lot on this site: Global Parents.

The biggest challenge in education today are the parents. There isn't even an issue that comes close. Our schools aren't collapsing. In fact they are doing much better these days (more on that in a future post). It is the parents that are collapsing. Crappy parents, far too many crappy parents, are the reason why our country's education system has problems. At the crux of their shittastic personalities is the flaw of being in constant negotiation mode over the grades their child receives. This, in turn, leads to the much larger problem of not understanding what globalization truly means.

Many parents thinks their child deserves a better grade and they constantly whine about how they think their child did enough for an A. They are essentially fighting for and rewarding mediocrity. Ultimately, this type of approach works against the future of their children as they are inadequately preparing them for the future. If we are going to be competitive in the global marketplace and continue to be a superpower, it must start with excelling at the core subjects. They have to think globally, not locally. In the moment of trying to finagle a good grade for their son or daughter they miss the bigger picture. Do they honestly think that Chinese parents are bartering for a better grade when their kid did average work?

We always talk about demanding more of our children and our education system. But what about the parents?