Defending Humanity Against The Techno-Optimists

I've been involved in tech since the mid-90s, have experienced the rise and burst of many 'bubbles', and have been writing about SiliCon Valley's war on the human race since 2014. But the latest battles involving crypto and AI are proving to be especially dangerous. A cult of 'techno-optimism' has arisen, with a 'manifesto' asserting the dominance of their own self-interest, backed by a well-funded 'political action committee' making targeted political donations. Laws and lawsuits are pending, but humanity has to play a lot harder on defence... To chart a safe route, we must prioritize the public interest, and align technology with widely shared human values rather than the self-interest of a few tech enthusiasts, no matter how wealthy they are.

As Michael Lewis illustrated in The New New Thing, SiliCon Valley has always had its share of people eager to get rich flogging a 'minimum viable product' that leaves awkward 'externalities' for others to deal with. Twenty five years on, we are still wrestling with disinformation and other harmful content that flows from social media platforms, for example, never mind the 'dark web'.

Regardless of the potential downsides, the 'Techno-optimist manifesto' seeks to elevate and enshrine the get-rich-quick-at-others'-expense approach in a set of beliefs or 'creed' with technology as a 'god':

"Technology is the glory of human ambition and achievement, the spearhead of progress, and the realization of our potential." a16z

The techno-optimist creed commands followers to view the world only in terms of individual self-interest, to a point verging on malignant narcissism:

"We believe markets do not require people to be perfect, or even well intentioned – which is good, because, have you met people? Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.” a16z

In other words, techno-optimists aren't interested in humanity, good intentions or benevolence. They are only self-interested and believe that you and everyone else is, too. It's you against them, and them against you. In this way, the techno-optimists absolve themselves of any responsibility to care about other humans, because other humans are merely self-interested and technology is the pinnacle of everyone's self-interest. 

The cult only needs to focus on building new tech. 

The only remaining question relating to other humans is whether your self-interest is aligned with the techno-optimist's chosen technology. If not, you lose - as we'll see when it comes to their use of your cryptoassets or your copyright work or personal data where it is gathered among the training data they need to develop AI systems...

You might well ask if there are any constraints at all on the techno-optimists' ambition, and I would suggest only money, tech resources and the competing demands of other techno-optimists.

They claim not to be against regulation, so long as it doesn't throttle their unrestrained ambition or 'kill' their pet technology. To safeguard their self-interest, the techno-optimists are actively funding politicians who are aligned with their self-interest and support their technology, and attacking those who are not... with a dose of nationalism for good measure:

“If a candidate supports an optimistic technology-enabled future, we are for them. If they want to choke off important technologies, we are against them,” wrote Ben Horowitz, one of [a16z's] founders, in a Dec. 14 post, adding: “Every penny we donate will go to support like-minded candidates and oppose candidates who aim to kill America’s advanced technological future.” Cointelegraph

"Fairshake, a political action committee [PAC] supported by Coinbase and a16z, has a $73 million war chest to oppose anti-crypto candidates and support those in favor of digital assets... Fairshake describes itself as supporting candidates “committed to securing the United States as the home to innovators building the next generation of the internet.” Cointelegraph

Nationalistic claims are typical of such libertarian causes (Trump's "Make America Great Again") and invite unfortunate comparisons with European politics of the 1930s, as George Orwell pointed out in his Notes on Nationalism in 1945:

Nationalism is not to be confused with patriotism... two different and even opposing ideas are involved. By ‘patriotism’ I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally. Nationalism, on the other hand, is inseparable from the desire for power... 

A nationalist is one who thinks solely, or mainly, in terms of competitive prestige. He may be a positive or a negative nationalist — that is, he may use his mental energy either in boosting or in denigrating — but at any rate his thoughts always turn on victories, defeats, triumphs and humiliations. He sees history, especially contemporary history, as the endless rise and decline of great power units, and every event that happens seems to him a demonstration that his own side is on the upgrade and some hated rival is on the downgrade. 

But finally, it is important not to confuse nationalism with mere worship of success. The nationalist does not go on the principle of simply ganging up with the strongest side. On the contrary, having picked his side, he persuades himself that it is the strongest, and is able to stick to his belief even when the facts are overwhelmingly against him. Nationalism is power-hunger tempered by self-deception. Every nationalist is capable of the most flagrant dishonesty, but he is also — since he is conscious of serving something bigger than himself — unshakeably certain of being in the right..."

Yet in 2014, Google's CEO at the time, Eric Schmidt, 'warned' us that humans can only avoid the much vaunted Singularity - where computers out-compete humans to the point of extinction - by finding things that 'only humans can do and are really good at'. Ironically, by dedicating themselves utterly to the god of technology, the techno-optimist is actually asserting the 'self-interest' of machines! 

Of course, technology is not inherently good or bad. That depends on their human creators, deployers and users. There's a long list of problems in the techno-optimist manifesto which they claim technology itself has 'solved' but self-evidently has not, either because the technology was useless without human involvement or the problems persist.

And what of their latest creatures: crypto and AI?

While 'blockchain' or distributed ledger technology does have some decent use-cases, the one that gets the techno-optimists most excited is using crypto-tokens as either a crypto-currency or some other form of tradeable crypto-asset. They insist that the technology is so distinct that it must not be subject to existing securities laws. Yet they use the terminology of existing regulated markets to describe roles in the crypto markets that are really only corruptions of their 'real world' counterparts. Markets for cryptocurrencies and cryptoassets are riddled with examples of fraud and market manipulation that were long ago prohibited in the regulated markets. A supposedly distributed means of exchange without human intervention is actually heavily facilitated by human-directed intermediaries, some of which claim to operate like their real world equivalents that safeguard their customers' funds, while actually doing the opposite. The shining example of all these problems, and the numerous conflicts with the participating techno-optimists' self-interest, is the FTX scandal. And there are many others.

As for AI, again there are decent systems and use-cases, but the development of some AI systems relies on huge sets of 'training data' that would be prohibitively expensive to come by, were they not simply 'scraped' from the internet, regardless of copyright or privacy concerns: the technological equivalent of toxic waste. The creators of several of these 'open' AI systems defend their activity on techno-optimist grounds. Midjourney founder David Holz has admitted that his company did not receive consent for the hundreds of millions of images used to train its AI image generator, outraging photographers and artists; and OpenAI blithely explained in its submission to a UK House of Lords committee:

“Because copyright today covers virtually every sort of human expression – including blogposts, photographs, forum posts, scraps of software code, and government documents – it would be impossible to train today’s leading AI models without using copyrighted materials.”

So, there we were in 2014 being warned to be creative, but it turns out that the techno-optimists believe that your self-interest and the rights that protect your work can simply be overridden by their 'divine' self-interest. 

Needless to say, many humans are not taking this lying down (even if some of their governments and institutions are).

In January 2023, illustrators sued Midjourney Inc, DeviantArt Inc (DreamUp), and Stability A.I. Ltd (Stable Diffusion), claiming these text-to-image AI systems are “21st-century collage tools that violate the rights of millions of artists.”  A spreadsheet submitted as evidence allegedly lists thousands of artists whose images the startup's AI picture generator "can successfully mimic or imitate." 

The New York Times has sued OpenAI and Microsoft for copying and using millions of its copyright works seeking to free-ride on its investment in its journalism by using it to build 'substitutive' products without permission or payment.  

Getty Images has also filed a claim that Stability AI ‘unlawfully’ scraped millions of images from its website. 

Numerous other lawsuits are pending; and legislative measures have either been passed (as in the EU and China) or regulators have been taking action under existing law (as the Federal Trade Commission has been doing in the US). 

Meanwhile, the right wing UK government has effectively sided with the techno-optimists by leaving it to 90 regulatory authorities to try to assess the impact of AI in their sectors, and even cancelled plans for guidance on AI copyright licensing that copyright owners had requested. 

As the Finance Innovation Lab (of which I’m a Senior Fellow) has pointed out, the AI governance debate is dominated by those most likely to profit from more AI - and the voices of those who may be most negatively impacted are being ignored. Government needs to bring industry, researchers and civil society together, and find ways to include the perspectives of the wider public. To chart a safe route forward, it is essential that we prioritize the public interest, and align technology with societal values rather than the self-interest of the techno-optimists. 

Commercially speaking, however, there's also the point that consumers tend to reward businesses that act as 'facilitators' (who solve our problems) rather than 'institutions' (who solve their own problems at our expense). Of course, businesses can start out in one category and end up in another... The techno-optimists' commitment to their own self-interest (if recognised by consumers) should place them immediately in the second category.

You'll See The Tories' Last Stand On The Far Right...

Britain's voters need to be on guard against extremists in this year's elections, starting tomorrow. The divisive nature of British politics since 2015 has led to the collapse of the country's public services and infrastructure across the board. And we know from bitter experience that this is fertile ground for those on both the far left and far right who prey on the most vulnerable and dissatisfied. So we need a new set of politicians who focus on providing adequate public services and infrastructure rather than stoking 'culture wars' and spouting idiotic nationalism dressed up as patriotism. 

Starmer seems to have won the Labour Party's ideological battles and occupies relatively centrist ground. The polls suggest we're about to find out whether he's any more effective in government than the Tories have been. But anything can happen, so it's important to be alert to the threat of a Conservative Party in its death throes...

Last week, for example, a group calling themselves the Popular Conservatives (PopCorns) held a launch event in which speakers appeared to mimic the rhetoric from Germany in the 1920s-30s in rants against the judiciary and the courts. Dangerous stuff.

Worryingly, our Defence Secretary (who generally but not always goes by the name 'Grant Shapps') also recently attacked the British military's recruitment policies on "ethnicity, diversity and inclusivity" as part of his party's so-called 'war on woke'. This was alarming enough for the respected Royal United Services Institute to warn that neo-Nazi groups are trying to insert their supporters into Britain's armed forces and police (Evening Standard 14.02.24).

Sunak would likely have you believe that he represents the 'sensible' wing of Britain's Conservative Party (among many wings), but his sole remaining policy involves demonising asylum seekers and deporting asylum seekers to Rwanda (on which he publicly accepted a £1,000 bet) and he recently attended a far right rally in Italy. Bringing back David Cameron as Foreign Secretary was also perceived by some as a sign of centrism. But you'll recall that it was Cameron who moved the Conservatives from the centrist political bloc in the European Parliament to the far right bloc, and they've remained fans of Hungary's leader and Putin fanboy, Viktor Orban to this day. Sunak was also Cameron's go-to contact when lobbying for Greensill/Gupta, so you can see they're really a couple of peas in the same pod.

If you think I'm suggesting that Putin also occupies the far right of the political spectrum, you wouldn't be far wrong. In truth, that 'spectrum' is not so much a line running infinitely left and right as a circle that brings the far right and far left together, cheek by jowl. Make no mistake, both extremes share an authoritarian vision that results in a totalitarian regime controlled by a wealthy elite. German fascists chose the name 'National Socialists' as an appeal as much to the workers and those who leaned left as to those who preferred jackboots to sandals. Putin longs to reinstate the communist USSR or perhaps an earlier empire, but his Russia is effectively controlled by oligarchs with their own private security forces. 

Britain's politicians may have started out spouting idiotic nationalist slogans as a means of courting marginal voters, but we've seen how this ends in tears as well as outright collapse. It's time Britain's voters sobered up and elected people who want to get on with the job of governing fairly in the national interest.

Our Enemies Are Within. Choose To Deserve Better.

When the British Prime Minister attended a fascist rally in Rome on the weekend, he crossed a line. When he claimed in his speech at that fascist rally that "our enemies... will use migration as a weapon, deliberately driving people to our shores to try to destabilise our societies," he crossed a line. 

In the year to June 2023, the British government allowed 1,200,000 people to come to Britain, of whom 40,000 arrived on 'small boats' seeking asylum. In the previous year, the figures were 1,100,000 and 35,000 respectively. To pretend that the 3% of all immigrants who come to Britain as asylum seekers in small boats are 'deliberately driven by our enemies to destabilise British society' is a very convenient scapegoat for a Prime Minister eager to distract from the many failings in British society. It is the Prime Minister's claim that has the deliberately destabilising effect.

Asylum seekers were not responsible for Thatcher, Major, Blair, Brown, Cameron, May, Johnson, Truss or Sunak himself.

Asylum seekers were not responsible for the need to bail out our banks during the financial crisis or the crippling austerity budgets that followed. 

Asylum seekers were not responsible for Britain's disastrous decision to leave the EU Single Market and Customs Union.

Asylum seekers were not responsible for perpetrating the vast financial waste and fraud during the Covid19 pandemic.

Asylum seekers were not responsible for ministers and officials partying while everyone else obeyed their Covid restrictions.

Asylum seekers were not responsible for sexual assaults by police officers or MPs.

Asylum seekers are not responsible for the sewage in our rivers or on our beaches.

Asylum seekers are not responsible for our crumbling hospitals, schools and courts, or the potholes in our roads.

Asylum seekers are not responsible for the lack of funding for legal aid, social care, education or social housing.

Asylum seekers are not responsible for our declining incomes, higher taxes and inflation.

Asylum seekers are not responsible for our bankrupt councils or the lack of government in Northern Ireland.

We were, and we are, responsible for all those things.

We elected the people responsible for those things and we keep electing the people who are responsible for those things.

Our enemies are within.

And we have a responsibility to put those things right. A responsibility to defeat the enemies within. 

Not to blame vulnerable people in rubber dinghies for the problems that we created, that we tolerate, among the politicians and their donors and cronies.

We get the government we deserve. It's up to us to choose to deserve better.

Why The British Government Wants You To Pay For Fraud, Not Stop It.

Through its own efforts and inattention, the British government has made fraud one of Britain's largest industry sectors. But it's chief response is to make you pay for it, rather than stop it, because the boom in fraud is also reflected in a boom in political donations, even while the rest of the economy is flat... 

In 2021, the financial cost of fraud was £137bn, making it the UK's sixth biggest industry sector. There were 3.7 million incidents of fraud in England and Wales in 2022, yet 86% of incidents are estimated to go under-reported. Virtually all UK adult internet users say they have seen fraudulent content. The UK was third internationally in the growth of attempted digital fraud between 2019 and 2022. The UK government's own contribution to fraud has been enormous, but not in a good way. According to the National Audit Office:

Most public bodies do not know how much fraud they face and cannot demonstrate that they have the correct level of counter fraud resources... 

The amount of fraud in government expenditure that was reported in the accounts audited by the NAO rose from £5.5 billion total in the two years before the pandemic (2018-19 and 2019-20) to £21 billion in total in the following two years. 

Of the £21 billion, £7.3 billion relates to temporary COVID-19 schemes. These estimates are in addition to an estimated around £10 billion of tax revenue lost to evasion and crime every year. The Public Sector Fraud Authority (PSFA) ...estimates that in 2020-21 there was between £33.2 billion and £58.8 billion of fraud and error in government spending and income unrelated to the pandemic. 

These figures likely understate the scale of the problem because they exclude any amounts that are too small to be reported in the context of any one set of accounts and no estimate was made of the level of fraud in the Department for Health and Social Care’s COVID-19 spend.

Not only is the UK government careless with how much taxpayers' money is lost to fraudsters, it is finding new ways to distribute the burden among consumers: in other words, you are paying for industrial quantities of fraud through both your income and expenditure while the government actively contributes to the problem. The Online Safety Act is designed to shift the burden of addressing online fraud onto tech companies, whose only means of recouping their costs is via consumers. Similarly, the Payment Systems Regulator has been tasked with ensuring that banks and payment service providers - and ultimately their customers - pay for increased 'authorised push payment' fraud.

In these circumstances it should come as no surprise that the UK government is also resisting checks on the sources of political donations. By creating a boom in dirty money, and leaving key loopholes for dodgy donations, the politicians have experienced a boom in political donations:

"...donations have almost trebled... rising from £41 million in 2001 to £101 million in 2019... with 60% of donations in 2019 coming from private individuals. 

The increases in donations have favoured the Conservative party, which had £27 million more in financial resources than Labour in 2019, even when taking account of the public funding received by Labour (known as ‘Short Money’) that is designed to balance resources across the parties."

You see what they did there?

Machine Unlearning: The Death Knell for Artificial General Intelligence?

Dall-E and toppng.com

Just as AI systems seem to be creating a world of their own through various 'hallucinations', Google has announced a competition between now and mid-September to help develop ways for AI systems to unlearn by removing "the influence of a specific subset of training examples — the "forget set" — from a trained model." This is key to allow individuals to exercise their rights 'to be forgotten', to object to processing, restrict processing or rectify errors under EU and UK privacy regulation, for example: Google accepts that in some cases it's possible to infer that an individual's personal data was used to train an AI model even after the personal data was deleted. But what does machine unlearning mean for the 'holy grail' of general artificial intelligence?

Unlearning is intended to be a cost effective alternative to completely retraining the AI model from scratch with the "forget set" removed from the training dataset. The idea is to remove  certain data and its 'influence' while retaining the accuracy or fairness of an AI model and its ability to generalize in ways that have already been held out as examples of what the model can achieve.

A problem with approaches to 'machine unlearning' to date has been inconsistency in the measures for evaluating their effectiveness, making comparisons impracticable. 

By standardizing the evaluation metrics Google hopes to identify the strengths and weaknesses of different algorithms and spark broader work on this aspect of AI.

As part of the challenge, Google will offer a set of information, some of which must be forgotten if unlearning is successful: the unlearned model should contain no traces of the forgotten examples, so that 'membership inference attacks' (MIAs) would be unable to infer that any of them was part of the original training dataset. 

Perhaps unlike the problem of hallucinations or fabrication (from which humans also suffer) - the advent of 'machine unlearning' provides another reason why 'artificial general intelligence' - a computer's ability to replicate human intelligence - will remain elusive, since humans often forget things only to recall them later, or are unable to recall events or aspects of them that we witnessed firsthand and/or were 'supposed' to remember (like an accident or a birthday or wedding anniversary).

Russian Invasion Of Ukraine Coming To A Head?

Events of the past 24 hours suggest Putin is either about to back out of Ukraine or spark a war with NATO...

The Ukrainian President warned yesterday of intelligence that suggests the Russians are about to blow up the nuclear plant in Zaporizhzhia.

That prompted an immediate bipartisan effort in the US Congress to send Putin/Russia a clear statement that using a tactical nuclear weapon, or blowing up a nuclear powerplant, in Ukraine would cause harm to NATO countries, especially Poland, in the form of radiation; and that would trigger a NATO response under Article 5 of the treaty. 

Meanwhile, Prigozhin, oligarch and owner of the brutal Wagner mercenary group, suddenly reappears with a 30 minute monologue presenting Putin's assault on Ukraine as effectively a coup by local Russian military/authorities and oligarchs who've been plundering Eastern Ukraine since 2014 and triggered the 'special military operation' as a cover for further personal gain. That would certainly set up a basis for he and Putin to back Russia out of Ukraine and pin the whole disaster on those 'culprits'...

Worryingly, this is far worse than the Cuban Missile Crisis, since that stand-off involved ships with warheads nearing a port, while this involves some random Russian soldier with a hand on a detonator...

How this ends depends on who's really in charge and how insane they are.

Not encouraging, based on what we've seen the Russians do since February 2022! 

The Tories' Love Affair With Boris Is Over... Isn't It?

The UK's Parliamentary Privileges Committee (a majority of which are Tories) has found that Boris Johnson so completely misled Parliament that they do not even want to allow him a former member's pass.

Of course, assuming Parliament votes to endorse the findings and the result, this won't be Johnson's first divorce.

And he quit as a Member of Parliament, anyway, so why does it matter?

Because, like the Terminator and his Orangutanian friend in the US, he'll be back. 

And he has plenty of people he hasn't fucked fans and flunkies lurking to support him despite years of fraudulent electoral promises designed to advance his own career. Sunak fears it too, hence the recent tug-of-war between he and Johnson over the release of ministers' and officials' WhatsApp messages from during the pandemic to Britain's Covid Inquiry; and the more recent round of 'dishonours' that the pair hastily agreed in advance of Johnson himself leaking the Privileges Committee report and resigning as an MP in high dudgeon, claiming that he had been hoisted by his own petard 'ousted'.

Good riddance to the man, I hear you say.

But, sadly, we'll be hearing a lot more from him, whether or not he ever slithers back into public office...

Financial Crisis: Death By A Thousand Cuts

Speaking 10 years after the Global Financial Crisis of 2008, Hank Paulson worried that, while banks were not over-leveraged, governments had no room to stimulate growth because they were already spending and borrowing record at record rates and interest rates couldn't go any lower. Another 5 years on, and the era of cheap money is over, inflation has rocketed and suddenly there's a crisis of confidence in banks, not governments. What the hell happened? Well, it's the same old problem: greed and stupidity are winning, but this time it's everywhere, all at once. 

The result is a broader crisis in confidence - or the lack of it. No matter where investors turn unexpected holes are appearing. A string of crypto collapses culminating in the discovery of a vast fraud in FTX and the ensuing crypto-contagion that bled into the banking system via Silvergate; the SEC finally calling time on numerous unregistered crypto-securities programmes, again stressing real world investors and funding providers; the Truss-Kwarteng 'mini-budget' producing unaffordable mortgages and declining property prices amid flat-lining business investment and other trade problems in Brexit Britain, now the basket-case of the G7; Russia's invasion of Ukraine driving energy price explosion and rampant inflation, to which central banks have responded with rapid interest rate rises that in turn cut the market value of long term bonds held by banks with needy depositors, like SVB, First Republic and other lesser US banks that Trump exempted from proper scrutiny. And then there's the perennial doom-spiral that is Credit Suisse. 

Where will it end?

Who knows. Buckle up and try to enjoy the ride.

Behind Every Major Public or Political Decision Is A "Private" Message... Release Them All

From FauxFoxNews' 'coverage' of Trump's "stolen election" claims to a seemingly endless list of British government decisions to police officers' own misconduct, access to the participants' "private" messages has revealed gross dishonesty on issues of critical importance to the public they are supposed to serve. WhatsApp launched in 2009. Given the evidence of such outrageous abuses of public trust can be found on that service (and no doubt others launched since), it's vital that government ministers and senior public officials should be prepared to publish their private messages on such platforms.

Of course, those in public office may - and must - hold opinions, but they must also be genuine champions of truth and honesty. The mere fact of the revelations cited above underscores the point. So, too, the consequences of the rampant dishonesty that many public officers seem to privately share. Witness the attempted slaughter on Capitol Hill on January 6, 2021 or the degree to which Britain's care homes unwittingly became a killing zone during the pandemic or the extent to which the country's police prey on women and minorities. 

There's an endless list of issues in relation to which ministers and public officials seem to have been less than frank with the public and I will not list them here. But I'm willing to bet that sustained pressure to release their private messages during the periods when they were deliberating on those issues will, if they survive in public office at all, help deter dishonesty when it comes to their next important decision. 

This Tory Gang Is A Repressive Regime, Exploiting Britain For Its Own Gain

The British government's recent attacks on public sector workers' pleas for fair pay and the right to strike have shocked only those who have not followed the plans of Boris Johnson and a cabal of Conservative Party members, donors and cronies...

Since early 2016, when Johnson and Gove hatched their Brexit plans at a dinner with the wealthy son of a Russian KGB officer, Britain's Conservative Party has been transformed into a vehicle for bending Britain to the will and benefit of a far right cabal under a false banner of 'liberty' and other lies. At stake is power and the ability to allocate vast amounts of public money to their plans, starving everyone else of wealth and power in the process. This is the very opposite of 'liberty' and 'democracy' and has most in common with Orban's regime in Hungary and Putin's regime in Russia. There is hope for ordinary Britons, just as far right experiments have been defeated for now in the US, Australia and Brazil. Yet ultra conservative forces continue to lurk even in those countries. 

The first step was to persuade the masses to decouple Britain from the world's largest trade bloc, not only the UK's biggest external market for goods, services, labour and capital, but also a source of trade rules and standards - many designed by Britain itself - to protect consumers and workers and ensure a level playing field among members of the bloc: all standing in the way of this Tory cabal and their plans. The inevitable blow to Britain's economy (while their hedge fund donors made billions) was key to weakening potential sources of resistance to their plans.

As soon as this gang had a public mandate for destruction, they were able to root out from their ranks anyone who stood in their way. The 2019 election saw the removal of all centrist Tory Members of Parliament who were not prepared to kow-tow to the Enterprise Research Group and a web of conservative 'stink' tanks. 

Once country and party were fully in their hands, Johnson and his gang were free to unlawfully award vast fortunes in contracts to cronies, break international asylum and trade laws, behave as they wished even in the grip of a pandemic while requiring others to follow their rules, threaten any source of resistance in the media; and begin their assault on workers rights (proposing laws only seen in Russia and Hungary), food and other product standards, financial constraints and other checks on greed and corruption, recklessly introducing legislation to rip-out any laws adopted from the EU by the end of 2023 without adequate assessment of the impact. 

That process is still playing out before our very eyes under the false flag of 'liberty' and libertarian ideals that are actually authoritarian in nature and designed to bend Britain's economy and people to the Tories' self-serving whims.

Make no mistake. Sunak and his crew are of the same stamp as Johnson and Gove (mostly the same people). And as Sunak's failure to rein in Johnson's own lucrative speaking tour while still an MP has perfectly demonstrated, they are all in government purely and simply for themselves.

Yet none of the alleged benefits of leaving the EU has ever surfaced. Only the downsides for everyone but the Tories and their donors and cronies. 

It's the biggest electoral fraud in Britain's history, and the most repressive regime this country has seen in modern times.

Why Is Fishy Rishi Flogging The Crypto Dream?

"We're looking at politician who has a lot more direct exposure to the Crypto industry than most world leaders".  Yahoo! finance

While he was Chancellor, Rishi Sunak - the wealthy hedge-fund guy who sold us Boris Johnson - met crypto-asset manager Bitwise and Solana Labs, and leading tech/crypto venture firms Sequoia and Andreessen Horowitz, among others. Then he committed the UK to be a "global hub for cryptoasset technology" and commissioned the Royal Mint to "issue a non-fungible token (NFT) by the end of the year “as an emblem of the forward-looking approach the UK is determined to take.” [my emphasis on the weasel words]." Of course, that NFT thing never happened. But Sunak did drive plans to regulate 'stablecoins' as a means of payment - in a way that gave him (as Chancellor) the ability to change the qualifying definition. 

To give you some insight into Sunak's Crypto meetings: before the collapse of his FTX house of cards, Sam Bankman-Fried was a "big supporter of Solana" which is itself no stranger to controversy; Sequoia was the leading venture firm backing FTX, with $150m, while Sequoia's own investment funds received $200m via FTX's trading arm, Alameda Research; and Andreessen Horowitz led a $314m 'private token sale' by Solana. Meanwhile, Bitwise also has a stake in Solana and, among many boosterish claims, Bitwise CIO says the reason why the price of Ether is drifting sideways is that it's being suppressed by general Crypto industry bad news rather than, say, the fact that Ethereum mining is no longer profitable.

Like the Tory Party (and Sunak's government), the Crypto currency world (as opposed to many plausible but mundane scenarios for deploying distributed ledger tech generally) lacks substance and is rancid with infuriating boosterism. So it may simply be that Rishi feels at home in both camps. 

But based on his career progression and political record, my sense is that whatever Rishi's selling you'd be a damn fool to buy... 

Is The Production Cost Floor Another Flaw In Cryptocurrencies?

The fact that one of the largest bitcoin miners has just filed for bankruptcy underscores the significance of the fact that the BTC price has hovered around the average mining cost of approximately $17,000 since November 9. When added to the fact that both the trade volumes and the price of the supposedly 'trustless' cryptocurrency have been flattened by the implosion of numerous cryptoverse intermediaries in the past few months, it seems there are a number of very important 'externalities' that the bitcoin protocol and blockchain are unable to address and the market has failed to appreciate.

Of course, Core Scientific's filing follows several warnings, and the bankruptcy of another miner in September, as explained by Coindesk in the latest coverage. But the fact that this filing comes amidst the market doldrums related to the FTX collapse and speculation on Binance makes it particularly significant.

How do you calculate the cost of mining a bitcoin?

One industry 'Bitcoin Mining Profitability Calculator' assumes the following (presumably not necessarily for the major miners):

Mining metrics are calculated based on a network hash rate of 6,363,326,225 GH/s and using a BTC - USD exchange rate of 1 BTC = $ 16,810.56. These figures vary based on the total network hash rate and on the BTC to USD conversion rate. Block reward is fixed at 6.25 BTC. Future block reward and hash rate changes are not taken into account. The average block time used in the calculation is 617 seconds. The electricity price used in generating these metrics is $ 0.12 per kWh. Network hash rate varies over time, this is just an estimation based on current values.

Of course, the mere quantity of energy consumed in mining bitcoin is itself a significant problem to be solved.

When considering the drivers of the base mining cost (or the Production Cost Floor or Bitcoin Electrical Cost, as calculated by the analyst Charles Edwards), it's worth noting that the bankruptcy filings for NASDAQ listed Core Scientific (CORZ) explain that 45% of a proposed $72m rescue package hangs on a #BTC price of $18,500. This suggests that Core's actual mining cost per bitcoin is higher, presumably because of higher energy costs relative to other miners, but also the cost of its financing arrangements.

Core Scientific seems to have effectively borrowed over $600m in convertible notes, bank facilities and DeFi loans, and in the context of a bankruptcy this must affect Core's own base mining cost. But this should extend to other miners, given the Core's 10% market share; the fact that another miner, Compute North, filed for bankruptcy in September owing about $500m; and the sector as a whole has $2.5bn in fiat currency borrowings. Borrowing must also be directly related to the miner's own view on how much it needs to weather market troughs and possibly to protect a desired base price (not to mention that fact that the Bitcoin protocol halves mining rewards periodically with the next halving due in 2024, on current forecasts).  

What's harder to factor in is the wider risk of contagion due to lenders' overall credit risk exposure and potentially increasing finance costs or even withdrawal from the sector in certain circumstances...

In other words, a more sophisticated base mining cost calculation is fraught with uncertainty. 

At best, therefore, the base mining cost is merely one factor to consider as a guide to the future of miners and bitcoin.

Can the mining sector (and bitcoin) recover?

Core Scientific says it hopes to win the support of key creditors and continue mining.

Continuing market hype also suggests that Bitcoiners are still ploughing in time and advertising spend to stoke demand, which may increase trading volumes and prices. 

Energy/electricity costs should fall, if and when Putin finally accepts defeat in Ukraine... but when will that be? 

Will lender appetite persist amid the ongoing contagion from the FTX (and Binance?) fallout?

Time is indeed money when it comes to the $2.5bn in real world commercial debt outstanding among miners. 

Stick all that in your protocol!

When all is said and done, it seems to me that the claimed ideological 'purity' of bitcoin as a 'permissionless', 'trustless', 'fully decentralised' 'currency' is actually vulnerable to the following 'externalities' (either in the sense of affecting outsiders but not being reflected in the market price and/or being apparently outside the perception of bitcoin proponents/fans): 

• the centralising effect of intermediaries, such as crypto exchanges, custodians and decentralised finance (DeFi) providers;

• wilful misconduct by intermediaries (resulting potentially in active distrust of bitcoin itself); 

• the sheer scale and quantity of energy required to mine each bitcoin;

• rising energy costs;

• limits on computing efficiency; 

• existing and proposed regulation; 

• competition from other cryptocurrencies or types of token (e.g. stablecoins);

• (over) borrowing/investment by miners; and

• 'news' or commentary concerning each of the other externalities listed above. 

That's not to say bitcoin is necessarily 'worthless', but it is not the idyllic ecosystem that fans claim it to be; and can't really be dubbed 'successful' until it's value is not subject to the wild swings we've seen to date nor at risk of being significantly undermined by any of the above externalities.

Before You Invest, Please Realise That 'Web 3' Is Not The Same As 'Web 3.0'

Tech hypsters are colliding in cyperspace over rival claims to being the latest version of 'the Internet'. And the media aren't helping by failing to spot critical distinctions, as in CNN's recent mistake in interviewing a Web 3/'blockchain expert' about the Web 3.0 data privacy business started by Tim Berners-Lee (who has already warned us to ignore Web 3).

Perhaps the confusion stems from that fact that 'decentralisation' is a common theme for both: 

• the "Web 3" world of distributed ledger technology, blockchains, crypto-tokens, cryptocurrencies, cryptoassets and non-fungible tokens (NFTs), in which the community of more zealous participants are referred to as "Crypto"; and

• the evolution of the World Wide Web from Web 1.0 to Web 2.0 to "Web 3.0" under the W3C banner - the space on the Internet (a network of networks, defined by the TPC/IP standards) in which the items of interest ("resources"), are identified by global Uniform Resource Identifiers (URI), the first three specifications of which were URLs, HTTP, and HTML.

While the Ethereum blockchain co-founder Gavin Wood suggests he "coined" the term Web 3.0 in 2014, it was certainly in use before then, as even my own post from January 2013 demonstrates - and I definitely didn't coin it. In fact, the Wikipedia entry for 'semantic web' cites a New York Times quote from 2006 that suggests 'Web 3.0' began being used in connection with linking data resources somewhat earlier than that:

People keep asking what Web 3.0 is. I think maybe when you've got an overlay of scalable vector graphics – everything rippling and folding and looking misty – on Web 2.0 and access to a semantic Web integrated across a huge space of data, you'll have access to an unbelievable data resource … 

— Tim Berners-Lee, 2006

The goal of the Web 3.0 community is to enable you to take control over 'your own data' (all data generated by your activity, not just personal data), enabling you to permit who can access and use it from wherever it is stored, by means of 'application programming interfaces' (APIs). This is encompassed in the concept of "linked data" and "linked datasets", often also referred to as "the semantic web". Midata is a related regulatory trend toward enabling consumers to control their own data, of which Open Banking and Open Finance generally are examples.

On the other hand, the goal of the Web 3/Crypto community is a broader, libertarian utopia that (according to Ethereum) guarantees 'personal sovereignty' in a 'permissionless', 'trustless' cryptographic environment with its own 'native' means of peer-to-peer payment. 

Unfortunately, in my view, the absence of trust in this would-be Crypto idyll is merely an externality that others are yet to satisfactorily address, as demonstrated by the collapse of many crypto exchanges and other 'decentralised finance' (DeFi) participants, the most recent being FTX group... 

All the more reason not to confuse 'crypto' Web 3 with 'semantic' Web 3.0!

Britain Needs An Independent Commission Against Corruption

The Baroness Mone saga is proving, yet again, that the British state is very poorly protected against those who (allegedly) require Ministers and/or officials to act unlawfully and/or in breach of their codes of conduct.

Unlike many other jurisdictions, Britain has no organised 'anti-corruption' programme, but only individual agencies that may focus partly on the public sector as part of their remit to address fraud and so on. The highest claim to an anti-corruption focus is a "collection" of "documents related to the government's work to combat domestic and international corruption"  and an "Anti-corruption Plan" from 2014, signed by none other than... [drum roll] Matt Hancock, whose subsequent activities are alleged to lie at the heart of a vast misallocation of public resources, not to mention the discharge of Covid patients into poorly equipped social care settings...

Prime Minister Boris Johnson's own 'anti-corruption champion' managed to remain in post throughout numerous 'scandals' from 2017 until his abrupt resignation in June 2022, including that of the unlawful appointment of his own wife to public office by... Matt Hancock. What sparked this 'champion's' resignation was the fact that "Johnson’s independent adviser on ministerial interests, Lord Geidt, had said he felt unable to offer his opinion on whether Johnson had broken the [Ministerial] Code, because he might have felt compelled to resign if his advice were not followed." 

There's an offence of Misconduct in Public Office, but that seems so hedged around with discretion as to be deliberately subvertible.

Most significant unlawful government activity seems to be revealed through private lawsuits. And a skim through the many private actions initiated by the Good Law Project, for example, illustrates that HMS Britannia has a very leaky hull indeed. 

But that's the tip of the iceberg when you consider strong patterns of successful challenges to government decisions relating to the withdrawal of personal independence benefits, for example, and refusal of asylum applications. 

The UK even has a mechanism for civil servants to be absolved from legal responsibility so long as they receive a 'ministerial direction' to proceed - many of which have been issued in the May/Johnson era:

They have a duty to seek a ministerial direction if they think a spending proposal breaches any of the following criteria: 

• Regularity – if the proposal is beyond the department’s legal powers, or agreed spending budgets 
• Propriety – if it doesn’t meet ‘high standards of public conduct’, such as appropriate governance or parliamentary expectations 
• Value for money – if something else, or doing nothing, would be cheaper and better 
• Feasibility – if there is doubt about the proposal being ‘implemented accurately, sustainably or to the intended timetable’

While this results in the minister being responsible, there is little sign of actual ministerial accountability, especially where the government of the day holds a sizeable majority in Parliament and/or has significant links or sway with the media.

This lack of oversight and consequences for unlawful ministerial activity has meant that populist party policies and cronyism have overtaken the Rule of Law as the guiding principles for the British state. 

It's therefore time that Britain had its own 'Independent Commission Against Corruption', as was introduced in the state of New South Wales. It's no panacea, obviously, but it would more effective than anything the UK has now.

 

No, Really, Bitcoin Is Not "Money": Debunking Yet Another Bitcoin Sermon

Another day and another Bitcoin boost, this one so irritating I've been inspired to negate virtually every line... At this stage, surely the only reason why anyone holding or mining Bitcoin would lure new buyers is to get their own Bitcoins out. Rational justifications don't bear scrutiny, so the boosters' pleas tend to be couched in semi-religious rants that only require you to believe - as an act of faith. But try watching the WeWork documentary without thinking about FTX... That doesn't mean I'm down on distributed ledger technology in general. DLT has its use-cases, but its deployment should be approached like any other tech project, not a cult.

Debunking another Bitcoin sermon

Bitcoin is not "money". At best it might be a means of settling a trade between two parties (A and B), so long as each of them has an absolutely certain way to exchange their Bitcoin immediately with another party (C and D) for the agreed value of their trade in fiat currency. That might be possible in certain institutional scenarios - although even institutions got caught up in FTX - but very risky as a retail payment method, mainly because the price is so volatile. 

Bitcoin does not remove counter-party risk. Ask Celsius or FTX customers. And it's futile to claim it removes counter-party risk between A and B in the above example, when that risk remains between A/C and B/D - not to mention the wider cryptoverse, as still being illustrated by the collapse of FTX. 

Bitcoin transactions do happen faster than many types of retail and other payment methods which are settled over one or more days, since each block of transactions is completed in 10 minutes. But speed itself does not make Bitcoin appropriate as a retail payment method (as opposed to a potential settlement mechanism, as mentioned above). 

Bitcoin does not have an absolutely "incorruptible history", which could only be judged in hindsight anyway. Even if it initially seemed unlikely that any one miner or group of miners could create a new branch or 'fork', rising energy costs and periodic reductions in rewards have been driving concentration among miners (explained further below).

While the Bitcoin protocol itself may be 'trustless', that's actually a shortcoming or 'externality' that others have struggled - and consistently failed - to solve, at greater and greater cost as the ecosystem has grown. Ironically, therefore, it is kind of true to suggest that Bitcoin "is an impenetrable fortress of validation" (yet) "trusted third parties are security holes". The point is that Bitcoin does not exist in a vacuum. [For some reason I'm reminded of the Lewis Grizzard book: "Don't bend over in the garden, granny, you know them taters got eyes."]

Again, to blame "centralised exchanges and custodians" as "destroying everything that makes Satoshi's invention great in the first place" is effectively conceding that Bitcoin is worthless in any 'currency' other than Bitcoin itself. In other words, for all other practical purposes Bitcoin is worthless without a way of exchanging or holding it; so if exchanges and custodians 'destroy everything great about Bitcoin' then it must be worthless.

It's obvious and goes without saying that Bitcoin "is not a company. It can't go bankrupt. It has no CEO that can be influenced, arrested, or corrupted." This is just gaslighting. The same can be said of the USD. The fact is that the Bitcoin protocol must have a way of interoperating with the rest of the world and that necessarily involves contact with third parties and other forms of value, at which point Bitcoin's supposedly utopian benefits suddenly become externalities that must be addressed before Bitcoin can be useful. Success in negotiating and regulating that real world interface explains the relative strength, lack of volatility and broad acceptance of the USD and other major fiat currencies, compared to Bitcoin.

Similarly, it's a bit bizarre to say that "Bitcoin's monetary policy is set in time, not by decree. It can't be changed. It can't be argued with. It is unrelated to demand, unrelated to energy usage, and independent from politics." Miners are rewarded in Bitcoin, so it becomes critical to know the cost of mining each Bitcoin, as it would not be worth mining them if the costs could not at least be covered. Currently, the cost of mining a Bitcoin is considered to average out at $17,000 depending on where the miner buys the vast amount of energy required to mine each 'block' (itself a source of significant political controversy). At time of writing the USD price of Bitcoin was $17,220.25 (and, oh look, as at mid-October there were 276,000 Bitcoin mining rigs that had never been installed). The Bitcoin protocol dictates that mining rewards halve periodically and, on current forecasts, in 2024. Yet the maximum 21 million Bitcoins isn't due to be mined until 2140... Given that the Bitcoin protocol only launched in 2009 that's an awful lot of time and opportunity for it to grind to a halt.

But, sure, if Bitcoiners can stoke demand, the USD price of Bitcoin will rise again and profits can be extracted. Or energy costs might fall, efficiencies improve and/or mining might decline to constrain supply in the face of constant demand. Such factors would explain why miners have borrowed during past Bitcoin market troughs. But that's also left miners and their lenders with $2.5bn in loans that are exposed to wider market contagion following the collapse of FTX...  

In other words, the purity of the Bitcoin protocol is actually vulnerable to: the misconduct of exchanges, custodians and decentralised finance (DeFi) providers (and resulting distrust), rising energy costs, limits on computing efficiency and over-borrowing by miners. 

Now comes the crescendo of the sermon, which involves repeating a few truths from above...

We've already seen that Bitcoin is CERTAINLY NOT "an answer to the moral failings of fiat money and our fiat monetary institutions". Indeed, I agree that "Crypto" as an industry "is a reincarnation of ... failing [fiat money] institutions, replacing the friendly faces of clean-shaven bankers with the shy smiles of unkempt teenagers." 

The point is that Bitcoins are not divisible from the Crypto industry, any more than a 10 pound note is divisible from the wider fiat financial system. It doesn't matter whether "Bitcoin is honest, fair, and truthful" on its own, since it is not used or useful in splendid isolation.

Perhaps other implementations of DLT that do not purport to be any form of payment method (or e-money or security) may be divisible from the Crypto industry; but equally we should not be fooled into thinking that they do not have their own externalities and challenges in integrating with the 'real' world. Their implementation should also be approached like any other tech project rather than merely requiring a cult-like belief in their intrinsic benefits.

Bitcoin is as much a victim of the "game of liquidity and purchasing power" as any other commodity, and in some ways more so. Only the financially strong miners have survived, and to the extent that we have any idea who or where they really are, they appear to be based in the world's largest totalitarian regime: 

Due to the cryptocurrency’s design focus on privacy, there is no indicator of how many new coins are created from which location – hence why the figures provided here look at PC processing power, and not Bitcoin themselves. In 2021, the world's top Bitcoin mining pools all came from China, with five pools being responsible for over half of the cryptocurrency's total hash. 

The final tout is a promise of personal sovereignty, much favoured by Trumpsters and the Brexidiot Alt Right: 

"If you don’t hold your own keys, you don’t hold bitcoin—but IOUs. If you don’t run your own node, you have no say in Bitcoin—you are beholden to someone else’s idea of Bitcoin. For bitcoin to be your money, you have to hold your own keys, and you have to verify with your own node." 

Of course, anyone not holding their own keys or running their own node should be worried by this statement. 

But even if you have the skill, time and resources to rush home and engage with the process of holding your own keys and operating your own node, we have already seen that this process will not magically deliver "deep stability and autonomy" or make you "a sovereign individual" anywhere outside the Bitcoin protocol itself. In fact, depending on the real world's view of your identity and circumstances it may mean you're excluded from the 'real' world altogether, like those caught up in the Hell that is FTX group or North Korean hackers.

So why would somebody write such an overblown puff piece tempting newbies to exchange their cold hard cash for Bitcoin?

Probably so that they and their Bitcoin buddies can cash theirs out.

This Year's Misadventures In The Cryptoverse

Looking back over the posts on these pages over the past few years (and my Twitter feed!), readers may wonder if I've focused on anything other than Britain's political woes. Fortunately, I've been distracted by numerous legal developments, covered extensively on The Fine Print, Keynotes, Ogier Leman's "Insights" pages, LinkedIn and, most recently, Mastodon. A prominent theme is commentary on attempts to introduce legal certainty and controls into the volatile world of cryptoassets, alas too late to avert the string of collapses that have peaked (so far) with FTX... Contagion still lurks and has crossed into traditional financial firms, including Australian pension funds. Two main thoughts leap out from the morass:

• Tech evangelists should stop pleading for ‘light touch regulation’ and explain any significant externalities associated with their technology which need to be addressed. There may be no ‘choke points’ within the energy guzzling Bitcoin protocol itself but consider the role of crypto-exchanges, wallet custodians and decentralised finance (DeFi) operators that enable lending, trading and so on: FTX demonstrated that greed and stupidity still lurks around crypto-tokens, so the tech still needs regulatory tools to guard against related human misconduct; and

• Similarly, the fact that major venture capital firms invested in FTX while receiving investments through FTX's trading arm - and their due diligence seems to have 'missed' the complete absence of ‘traditional’ governance/controls - raises questions about (a) potential tracing claims by FTX clients' assets into the VCs' funds; and (b) whether FTX was effectively an unincorporated association with an array of corporations designed to encourage the idea that it was a 'traditional' corporate group, such that the participants may have unlimited liability... 

The last point should also be considered by those proposing formal recognition of  'decentralised autonomous organisations' (DAOs) which also tend to involve related companies and other 'body corporates' for various purposes.
Well, at least that's off my chest.

Welcome To The Fediverse!

Now that both Facebook and Twitter have confirmed my hypothesis that Web 2.0 'Facilitators' (who solve your problems) could eventually be shunned as merely Institutions (who solve their own problems at your expense), I've finally embraced the fediverse - a network of independently hosted servers running open standard communication protocols. In my case, Mastodon, running on ActivityPub. 

Web 2.0 vs The Fediverse is a little like King Arthur stumbling across an anarcho-syndicalist commune.

And, hey, no advertising!

My research on where to base myself began with an excellent SCL Tea & Tech session with Neil Brown and Simon Forrester, followed by a review of Mastodon documentation, then a trip to the Join Mastodon page to find a hosted server that seemed like the right home and would have me and seems serious about maintenance and moderation... a process that really makes you think about what matters to you! 

Setting up was just as easy as setting up in any of the Web 2.0 social network services.

Trickier is finding whom to follow, and deciding how to curate your new online 'instance' - again an opportunity to think quite hard about what matters to you and how you want to communicate. I'm planning not to follow many people or post much until I've that figured out. Maybe I'll set up several different accounts, following different themes, just as I have separate blogs, email addresses, communication apps and Web 2.0 social media presences some of which may need to fall away...

How Many British Prime Ministers Will Be Sacrificed On The Altar of Brexit?

Cameron, May, Johnson, Truss, Sunak... the list goes on. I give Sunak a month. As detailed again and again in these pages, Reality will keep reaping its way through politicians who think that Britain can grow, let alone thrive, without free movement of goods, services, capital and labour between itself and its neighbours - who just happen to have clubbed together in the world's largest trade bloc.

Cameron baulked at even attempting Brexit. May stupidly thought she could trigger the process yet fudge the result. Johnson lied about the consequences of a deal that he secretly planned to renegotiate. Truss tried to magic her way out of the vicious economic spiral in the full glare of the financial markets spotlight; while Sunak is so pathetic as to find himself skewered by the dog-whistle promise that Britain will refuse to admit any refugees.

What the next candidate will offer the few remaining Tory faithful is anyone's guess, but unless he or she decides to join the Single Market & Customs Union, it will be another short stay in Number 10.