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Which cryptocurrencies could benefit if public data harvested from the Internet is weaponised?
PROBLEM REACTION SOLUTION
Inversely proportional to consumer demand in cryptocurrencies is government fear. Except they don’t call it that. They call it regulation.
Remarkably absent in recent months, fear-based cryptocurrency news is making a comeback.
Russia’s largest bank, Sberbank, has halted cryptocurrency related plans because of the negative bias from Russia’s central bank, India is proposing harsh penalties including lengthy jail time for anyone caught dealing in cryptocurrencies, and Hong Kong’s securities regulator is expressing concerns over the lack of regulation for dealing with fraud involving cryptocurrencies.
Step 1: The Setup
In Machine Gun Preacher, we discussed what motivates societal change and governmental reactions to it.
Today, more than ever, the news dished out to the general public is dumbed down, simplified, and useless. Unless, of course, you are what Aldous Huxley described in A Brave New World as an Epsilon semi-moron.
Add into the mix the problem of “fake” news, and all of a sudden, you have a problem.
And it’s not just mainstream media. It’s getting harder to find out stuff, the search engines rankings dominated by articles titled, “Three ways to do X,” or Seven things to avoid, if you do Y.”, and comment and quote articles rehashing a press release over and over. Same news said in different ways by content Spam.
The public is more confused than ever. Recently, the Guardian published an article where, according to research by the Pew Research Center, almost 70% of Americans feel fake news and misinformation have significantly affected their confidence in government institutions.
It’s clearly a problem. The only question is: has it been engineered?
Step 2: The Reaction
The government reaction is typically to form committees and wheel in the big guns to write a report, and that is precisely what they’ve done, but despite 500 page reports and committees set up in the US and the UK, and Facebook and Google being hauled up in front of official panels, nothing has been done.
What’s this got to do with cryptocurrencies?
In an era dominated by fake news, in an age where the general public is rapidly losing faith in their governments, and in an environment of rising populist thinking, something needs to be done. A solution needs to be found.
Step 3: The Solution — a.k.a The Internet They Always Wanted
In the beginning, in the 1950s, the concept of connecting computers in physically different locations, across a so-called “Wide Area Network,” was developed by computer scientists in the US, the UK, and France.
Then, in the early 1960s, the US Department of Defense started awarding contracts for the ARPANET project. The first message was sent over the ARPANET in 1969.
During the 1970s, work on ARPANET led to the development of rules for how computers could communicate with other over wide area networks. These rules or protocols became known as the Internet Protocol Suite or TCP/IP for short.
In the 1980s, the NSF, the US National Science Foundation, funded the connecting of supercomputing centers at university sites, and by the mid-1980s the NSFNET project, connected supercomputer sites from research and education organizations.
In the late 1980s, commercial ISPs, Internet service providers, began to appear, giving limited access to new services like email, but unrestricted access to the network was not yet available to the public. This changed in March 1991, when the NSFNET changed their usage policy to allow for commercial traffic.
Then, boom! With the last restriction to commercial access gone, ISPs were springing up everywhere.
Because of the cryptocurrency demographic, there’s a chance you weren’t old enough to care in 1991, or even born, but if you were, as an outsider, an ordinary member of the public, you almost certainly would not have understood the implications of NSF unrestricted access.
But someone did. And that someone was Tim Berners-Lee. Originally Berners-Lee’s idea was to help scientists share information from any node connected to the network, but others saw the commercial viability of the hypertext document browser-based system that we now take for granted.
Considering the value of commercial companies like Google, Facebook, and Amazon, who together now have a value of over 2.1 trillion US dollars, Berners-Lee gave the world the Internet we use today for nothing. Nada — zero - nil. He gave it away for free.
Governments are reactive and not proactive, and by the time they realised the potential, the genie was out of the bottle.
Berners-Lee’s philosophy was to give away a tool that would serve humanity, but now thirty years later, he’s on record as saying we have to be concerned about what is being built on top of it.
What Berners-Lee saw as serving humanity, has, in his own words, become anti-human. The Internet has become centralised with Google, Facebook, and Amazon owning almost all the traffic, controlling what we read and see, manipulating the masses to such an extent that could, if pushed to the limits, place democracy at risk.
In March 2018, the Guardian exposed the British data mining company Cambridge Analytica, who used data on 87 million Facebook users — without their permission using data that was originally harvested from a specific app user base of just 270,000.
You, in other words, democracy is at risk from data manipulation. That’s the problem. That’s the setup. The reaction is the focus you see in the media in bringing the centralised behemoths of the Internet to heel.
The solution is the Internet governments always wanted. Decentralised infrastructure with centralized control — their control.
In 1905, when Albert Einstein came up with his Special Theory of Relativity, he theorised that a large amount of energy could be released from a small amount of matter. Einstein, a life-long pacifist, is on record as saying the possibility of an atomic bomb never entered his mind, and that he never even thought about it.
Irony plays no small part in our history. Einstein, a pacifist, who gave the world his special theory to aid mankind, is indirectly responsible for creating the most destructive weapon we have ever developed. The atomic bomb.
In 2019, half the world’s population is online. Posting, sharing, tweeting, clicking. Data gathered from Likes, views, uploaded resumes, and clicks, will be complemented in the future with data from iris scans, fingerprints, facial impressions, and even DNA.
How is all this data going to be managed?
In thirty years, the Internet has been given away. What was intended as a decentralised platform to serve and empower us, a democratic system that had no central power to ask permission of, has been giving away by the general population who didn’t, and, still, for the majority, do not understand how and what is going on behind their Facebook and Google accounts.
The general public has created through their ignorance a centralised system where the many are controlled by the few. Like Caesar throwing bread and wineskins at the crowd as a pacifier at public games, today’s tech giants have platforms and apps.
Facebook and Google, in 2019, control over three-quarters of all Internet traffic. Back in 2012, Facebook conducted psychological experiments on 700,000 users, apologising two years later, the company said the experiments were “poorly communicated.”
One way to build a picture of what’s coming next is to view patent databases, searching for clues and hints on the future direction of a company, product, or service.
For example, Google and Amazon have both published patents for features related to their “smart” speaker products. (Amazon Echo and Google Home)
Swirling around in the same primordial soup as blockchains, and the Internet is 5G and AI.
For now, only a rough outline of what will become tomorrow’s standard is identifiable. The patents filed by both Google and Amazon hint at a future where AI can detect via a device like the Echo or Home speaker when you’re coming down with the flu, or even a serious illness. And it’s not just early diagnosis. The new features of tomorrow’s products will also be able to use AI to manage the medication, even seamlessly ordering the correct drug and dosage.
The onset of Alzheimer’s could be detected by subtle changes in your voice, and advanced warnings of heart disease would be identifiable from changes in your skin tone.
Everything from diabetes to high blood pressure, all controlled and managed by a “smart device.” Benefit, benefit, benefit. What’s not to like? Few consider the cost.
And it’s not just centralised control from companies like Google, Amazon, Facebook, Apple, and Microsoft. In 2001 President Bush signed an executive order giving the NSA, the US National Security Agency, permission to initiate a domestic spying program. In January 2019, the US Senate voted on a bill to allow the continued mass surveillance of the public.
The interplay behind upcoming technologies is at first glance impossible to predict, and while 100% guarantees are not available, it is possible to use techniques like Bayes theorem and Game theory to compute a likelihood.
In the Smart Dust series of articles, podcasts, and videos, we talked about likelihoods.
The advantage of likelihoods over probabilities is that they are not bounded between zero and one hundred. Likelihoods are useful because using them allows you to compare two states. A previous state and the previous state with new information added.
To demonstrate the use of likelihoods, let’s use a coin toss. What is the probability of getting 6 heads and 4 tails in 10 tosses with a fair coin with the probability of heads P(heads) = .50, or 50%?
Since this is binomial, we can use Pascals Triangle to obtain the probability.
In this case, it’s 21%.
Let’s say some new information becomes known and so we adjust the bias on the coin from 50% (fair) to 75% heads.
Next, ask the same question except this time replacing a 50% bias with a 75% bias: What is the probability of getting 6 heads and 4 tails in 10 tosses where the probability of heads P(heads) = .75?
In this case, it’s 15%.
The likelihood ratio is the quotient of 21% divided by 15% — in this case, 1.4.
And this means the result is 40% more probable under a fair coin hypothesis than under the unfair coin hypothesis.
Comparing likelihood ratios is the basis of Bayes Theorem. Bayes Theorem, Game Theory, and Complexity Theory are tools used by the 5%, the most consistent group of investors and speculators to help them quantify their investment ideas.
Like Einstein, whose special theory was supposed to benefit humanity, has Tim Berners-Lee’s ideology been bent out of shape and turned into a weapon even more powerful than the atomic bomb?
While that might sound a little far fetched, as more and more data is gathered, the danger of it being used as a weapon increases.
Minitrue, Minipax, Miniluv, Miniplenty, or Amazon, Facebook, Google, and Apple?
Yes, the Internet has become centralised, and yes, the data gathered and given away for free has accelerated the centralisation problem as more than half of the global population is connected to the Internet, but is the game up for companies harvesting data using, some might say, reckless and even devious methods?
The days of easy, low effort data harvesting are coming to an end, and from now on, the companies that dominate our digital lives are going to have to come up with more ingenious methods to get hold of our data.
Amazon’s Alexa and Google home are only the beginning. They are the Altair 8000 of what’s coming next.
In previous articles, podcasts, and videos, we discussed Gartner, a research consultancy company who track the probability of the emergence of new technology using their hype cycle model.
Another place to start, when guestimating probabilities is to ask who is motivated to support your idea.
Take healthcare. Is the current infrastructure able to cope with an increasing age demographic? Can the government afford it with the current levels of debt, and what’s in it for healthcare providers. How can they profit from it?
If you do a little research, the opacity will decrease.
So, what has all this got to do with cryptocurrencies and blockchains?
As more and more people come online, as the data gathered by the big tech giants get ever more granular, the amount of data held is about to go parabolic. According to an IDC, Independent Data Corporation, report, sponsored by Seagate, data growth is going to increase from 33 zettabytes in early 2019 to 175 zettabytes in 2025 — that’s a 71% growth rate over the next six years, and all this data has to be stored.
Blockchains are databases.
While there are many different blockchains powered by different type of algorithms, the most common are PoW — proof of work, and PoS — proof of stake.
There are plenty of articles out there explaining that blockchains, while having an advantage over traditional databases in some areas, like the centralised cost of security, have no particular advantage when it comes to the storage of data. And that point of view is a good thing. Why? Because, if they did, PoS blockchain algorithms that power cryptocurrencies would not be selling for pennies.
When looking for long term investing ideas in the cryptocurrency and blockchains ecosphere, remember the Internet of tomorrow, driven by the problems of today, will be always on, always tracking, always monitoring, always listening, and always watching.
Because it will always be learning.
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