mfioretti: block chain protocol*

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  1. Blockchain systems do not magically make the data in them accurate or the people entering the data trustworthy, they merely enable you to audit whether it has been tampered with. A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic. A corrupt government can create a blockchain system to count the votes and just allocate an extra million addresses to their cronies. An investment fund whose charter is written in software can still misallocate funds.

    How then, is trust created?

    In the case of buying an e-book, even if you’re buying it with a smart contract, instead of auditing the software you’ll rely on one of four things, each of them characteristics of the “old way”: either the author of the smart contract is someone you know of and trust, the seller of the e-book has a reputation to uphold, you or friends of yours have bought e-books from this seller in the past successfully, or you’re just willing to hope that this person will deal fairly. In each case, even if the transaction is effectuated via a smart contract, in practice you’re relying on trust of a counterparty or middleman, not your self-protective right to audit the software, each man an island unto himself. The contract still works, but the fact that the promise is written in auditable software rather than government-enforced English makes it less transparent, not more transparent.

    The same for the vote counting. Before blockchain can even get involved, you need to trust that voter registration is done fairly, that ballots are given only to eligible voters, that the votes are made anonymously rather than bought or intimidated, that the vote displayed by the balloting system is the same as the vote recorded, and that no extra votes are given to the political cronies to cast. Blockchain makes none of these problems easier and many of them harder—but more importantly, solving them in a blockchain context requires a set of awkward workarounds that undermine the core premise. So we know the entries are valid, let’s allow only trusted nonprofits to make entries—and you’re back at the good old “classic” ledger. In fact, if you look at any blockchain solution, inevitably you’ll find an awkward workaround to re-create trusted parties in a trustless world.
    A crypto-medieval system

    Yet absent these “old way” factors—supposing you actually attempted to rely on blockchain’s self-interest/self-protection to build a real system—you’d be in a real mess.
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    Boyd Cohen's picture

    Boyd Cohen

    March 19, 2018

    This opinion piece by Boyd Cohen explores how a new blockchain layer for mobility could allow shared mobility startups to quickly launch their services and have immediate access to a network effect. Cohen is the co-founder of IoMob, which combines open source and blockchain technology to decentralize mobility, and the dean of research at the EADA Business School in Barcelona.

    Shareable readers are well aware of the overlapping interests between the blossoming sharing economy and the need to support the urban commons and Sharing Cities. As our urban populations swell, there is growing demand for green space, housing, food, energy, jobs, cultural activities, and mobility.

    Luckily for us urban dwellers, a growing array of sharing economy projects have emerged to help, at least in some cases, reduce our resource consumption, and shift to circular and shared access models. Perhaps no part of the urban landscape has been more embraced by sharing economy entrepreneurs than mobility. And with good reason. Our cities have become all too congested and contaminated by the 70 percent of vehicles commuting as the single occupied variety. Our cities' physical infrastructures and investments have been spent on enabling personal vehicles to travel, park, and refuel (with fossil fuels for the most part), instead of allocating such precious resources to other and better uses.

    The shared mobility space is huge. We have witnessed in recent years all kinds of business models for shared mobility such as bikesharing (municipal or P2P), carsharing, carpooling, parking space sharing, shared access to EV charging stations, and more. In fact, in Barcelona alone, according to Sharemrkt there are more than 50 such shared mobility operators in the city.

    The question we ask ourselves at IoMob however, is how can this growing number of shared mobility startups compete with the entrenched larger and multinational mobility companies (Uber, Cabify) and even the more benign, larger peers like Zipcar or municipally run bike-sharing schemes? The current shared mobility marketplace requires that each startup build their own underlying tech for handling payments, user registration, reputation management and the like, while also spending their scarce resources to build their brand and user base. It is an uphill battle for sure.

    Blockchain technology offers a powerful alternative to this scenario by engaging a range of mobility stakeholders and an open-source set of technologies for startups. Larger companies and public transit operators — any shared mobility service operator, really — once validated as complying with local laws, could be made visible to any user who uses apps that are connected to the protocol. Instead of requiring each mobility provider to launch their own apps, the Internet of Mobility (IoM) allows for an open ecosystem of operators to share access to infrastructure and user bases. You may ask, for example, why would a larger operator be willing to share their users with a shared mobility startup? For a couple of reasons:

    It supports customer retention by ensuring customer needs are met.

    A previously established agreement between the providers — or one approved instantaneously — allows the provider offering access to their user to get some revenue based on previously agreed relationships with mobility providers. This would establish how much commission is transferred for each shared customer.

    We don't believe all mobility providers will embrace an open, transparent ecosystem, at least not in the beginning. But you can imagine over time the network effect for having a range of public and private mobility services sharing users in a city.

    One step towards this has already begun, and is referred to as Mobility as a Service (MaaS). MaaS models are great in that they aggregate a set of public and private mobility services in a package for residents who can pay a monthly fee for a set amount or unlimited amount of services in a given month. We embrace MaaS models, which can easily be connected to an IoM protocol, as a great improvement over existing models. Yet, blockchain and IoM allows for an even better model. Embracing open protocols and open source software, shared mobility startups and established mobility providers can share access to users and the base tech in a way that is not exclusive. MaaS models tend to be run by private companies using proprietary software and partnering with the largest mobility services in the city. This leaves little room for mobility innovation or for the startups to gain access to the local mobility market.

    We have even begun envisioning how you could blend MaaS and our open IoM thinking in the following way: Any validated mobility operator could work with an open hub aggregator to develop a monthly pricing package based on each user's personal travel patterns. In this model, a new user could go to a website, either describe their travel patterns or have the system track them for a period of time, and then discover any mobility service, large or small. A drop-down menu would give users the option to pick and choose any service and see how much it would cost to add that service to a monthly package. Think of it as a Personalized Mobility as a Service (PMaaS).

    Blockchain technology poses the potential to decentralize and democratize our economies. The Internet of Mobility could significantly enhance urban mobility users' experience, while creating a vehicle for shared mobility startups to launch innovative services more rapidly and gain democratized access to urban mobility users.
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  3. The distributed, decentralized, public and open design of blockchains are inherently anti-authoritarian; espousing protopian dreams of a free and decentralized society. But we’ve been here before with the cyber-utopian idealists of the early internet and world wide web.
    Tags: , , by M. Fioretti (2018-03-28)
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  4. Regardless of the model, my point is that blockchain technologies cannot escape the problem of governance. Whether they recognize it or not, they face the same governance issues as conventional third-party enforcers. You can use technologies to potentially enhance the processes of governance (eg. transparency, online deliberation, e-voting), but you can’t engineer away governance as such. All this leads me to wonder how revolutionary blockchain technologies really are. If you still rely on a Board of Directors or similar body to make it work, how much has economic organization really changed?

    And this leads me to my final point, a provocation: once you address the problem of governance, you no longer need blockchain; you can just as well use conventional technology that assumes a trusted central party to enforce the rules, because you’re already trusting somebody (or some organization/process) to make the rules. I call this blockchain’s ‘governance paradox’: once you master it, you no longer need it. Indeed, R3’s design seems to have something called “uniqueness services”, which look a lot like trusted third-party enforcers (though this isn’t clear from the white paper). RSCoin likewise relies entirely on trusted third parties. The differences to conventional technology are no longer that apparent.

    Perhaps blockchain technologies can still deliver better technical performance, like better availability and data integrity. But it’s not clear to me what real changes to economic organization and power relations they could bring about. I’m very happy to be challenged on this, if you can point out a place in my reasoning where I’ve made an error. Understanding grows via debate. But for the time being, I can’t help but be very skeptical of the claims that blockchain will fundamentally transform the economy or government.

    The governance of DLTs is also examined in this report chapter that I coauthored earlier this year:
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  5. In short: there’s a lot of noise. But there is also signal. To find it, we need to start by defining cryptocurrency.

    Without a working definition we are lost. Most people arguing about cryptocurrencies are talking past each other because they don’t stop to ask the other side what they think cryptocurrencies are for.

    Here’s my definition: cryptocurrencies are a new asset class that enable decentralized applications.
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  6. The entire point of money is that it allows parties to transact without having to barter. But for money to have value, and to generate economies of scale, only so many currencies can operate at the same time.

    In the US, the reason we do not use euros or yen in addition to dollars is obvious: doing so would be pointless, and it would make the economy far less efficient. The idea that hundreds of cryptocurrencies could viably operate together not only contradicts the very concept of money; it is utterly idiotic.

    But so, too, is the idea that even a single cryptocurrency could substitute for fiat money. Cryptocurrencies have no intrinsic value, whereas fiat currencies certainly do, because they can be used to pay taxes. Fiat currencies are also protected from value debasement by central banks committed to price stability; and if a fiat currency loses credibility, as in some weak monetary systems with high inflation, it will be swapped out for more stable foreign fiat currencies or real assets.

    As it happens, Bitcoin’s supposed advantage is also its Achilles’s heel, because even if it actually did have a steady-state supply of 21 million units, that would disqualify it as a viable currency. Unless the supply of a currency tracks potential nominal GDP, prices will undergo deflation.

    That means if a steady-state supply of Bitcoin really did gradually replace a fiat currency, the price index of all goods and services would continuously fall. By extension, any nominal debt contract denominated in Bitcoin would rise in real value over time, leading to the kind of debt deflation that economist Irving Fisher believed precipitated the Great Depression. At the same time, nominal wages in Bitcoin would increase forever in real terms, regardless of productivity growth, adding further to the likelihood of an economic disaster.
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  7. The idea: Documentation is often lacking in parts of Africa, leading to land disputes because it isn't clear who owns the land. Even when there are records, sometimes they have been tampered with. A record that cannot be deleted, using something called blockchain, could be used to prevent these disputes. Blockchain is a method of recording data - a digital ledger of transactions, agreements, contracts - anything that needs to be independently recorded and verified. What makes a big difference is that this ledger isn't stored in one place, it's distributed across several, hundreds or even thousands of computers around the world. Everyone in the network can have access to an up-to-date version of the ledger. So it can be an open, transparent auditable and verifiable record of any transaction.

    The application: Cybersecurity company WISeKey is using blockchain technology for the land registry in Rwanda.

    What happened in 2017: WISeKey announced a partnership with Microsoft to support the Rwandan government in adopting blockchain technology, reports technology news site Cryptovest.

    What can we expect for 2018: The first step in adopting blockchain in Rwanda is digitising the Rwanda Land Registry, iAfrikan tech blog reports. The company is opening a blockchain Centre of Excellence in Rwanda, reports the New Times, which could go as far as developing a Rwandan cryptocurrency, similar to Bitcoin.
    Outsourcing IT work to Africa
    Image copyright Getty Images

    The idea: The world has a scarcity of software developers. Meanwhile, Africa has a growing young population. Training software developers in Africa who US and European firms can hire taps into that human capital.

    The application: Andela is a startup company that trains developers in Nigeria and hires them out to global tech companies. The original idea was to teach people a practical skill and then use the money they make to pay for their education, Iyin Aboyeji, one of the founders of Andela, explained to the Starta podcast.

    What happened in 2017: In October Andela raised $40m in funding, reports TechCrunch. The previous year it had raised $24m from Mark Zuckerberg, reports Forbes.

    What can we expect for 2018: There are rumours that it is going to open up in Egypt according to iAfrikan.
    Making it easier to pay for things
    Image copyright Getty Images

    The idea: Many people across Africa don't have bank accounts. Mobile money - sending money via your phone - has already proved a very successful alternative to cash. Africa has become the global leader in mobile money with more than 100 million people having mobile money accounts in 2016, according to McKinsey research. Mobile financial services now include credit, insurance, and cross-border remittances. The problem is that there are too many different systems which do not always work with each other. This means lots of people in Africa can't pay for products online.

    The application: Flutterwave is one of the new innovations coming through. It makes it easier for banks and businesses to process payments across Africa. It lets customers pay in their local currencies and allows people to send money from the US to a mobile money wallet, charging sellers a small service fee, which it shares with banks.

    What happened in 2017: In the first quarter of 2017 Flutterwave processed $444m in transactions across Nigeria, Ghana and Kenya, it told BBC. From the start the company has processed more than $1.2bn in payments across 10 million transactions, reports CNN. The company received $10m of funding from the US this year, CNN adds.

    What can we expect for 2018: The new funding will be used "to hire more talent, build out our global operations and fuel rapid expansion of our organization across Africa," Flutterwave says. With that, it hopes that more people in Africa can buy things they are not currently able to pay for, like on online retailer Amazon. As the firm's boss Iyinoluwa Aboyeji puts it: "If we are successful, we might just inspire a new generation of Africans to flip the question from: 'What more can the world do for Africa?' to 'What more can Africa do for the world?'".
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  8. L’indovinello ha le sue regole. Ogni blocco viene formato da un’insieme di informazioni che vengono scritte come puro testo, secondo un ordine e regole di composizione determinate. Una di queste informazioni è un insieme di caratteri che identifica univocamente il blocco precedente, calcolato matematicamente secondo una funzione precisa che si chiama “hash”. Questa funzione è particolare: restituisce sempre per ciascun blocco (può essere un file, ma non necessariamente) una e una sola “impronta”, una stringa di caratteri esadecimali (da zero a nove e da a ad f) di lunghezza predeterminata, qualunque sia la dimensione del file. Non solo. Qualsiasi modifica, anche infinitesimale al file, genera un’impronta completamente diversa.

    Un esempio chiarirà visivamente di cosa si tratta. Ad esempio, usando l’algoritmo SHA256, la frase:

    tanto va la gatta al lardo che ci lascia lo zampino

    genera un’impronta di hash (o semplicemente “hash”)


    Se uso la maiuscola all’inizio, e dunque

    Tanto va la gatta al lardo che ci lascia lo zampino



    Predire come sarà un hash è dunque praticamente impossibile, perché ogni minima modifica del blocco originario genererà un hash completamente diverso. L’hash, in sé, non ci dà nessuna informazione su come sia il file che lo genera, né quanto è grande, né cosa contiene.

    Qui viene il puzzle. Come detto, non posso prevedere né forzare in maniera calcolabile come sarà l’impronta hash. Se chiedo che qualcuno mi dia un testo la cui impronta di hash contenga in qualsiasi posto due “a” consecutive, lui probabilmente prenderà blocchi arbitrari di testo fino a che non ne troverà per caso uno con due “a” consecutive: nell’esempio di sopra ci sono arrivato al secondo tentativo. Allora complico il problema: chiedo di trovare un blocco che abbia due “a” all’inizio dell’hash. Magari il candidato ne troverà uno dopo cento tentativi (16 al quadrato=256 combinazioni possibili). Se gli impongo di trovare un blocco che abbia sedici zeri (16 alla sedicesima = 1,844*10 alla diciannovesima combinazioni, ovvero circa diciottomila milioni di miliardi di combinazioni) ci metterà ben più di una vita. Anzi no, lo fa fare a computer superpotenti che lo faranno per lui, suddividendosi i compiti.

    Questo è in pratica l’indovinello: trovare un blocco che generi un hash che abbia un certo numero di zeri all’inizio e che contenga tra le altre cose l’impronta hash del blocco precedente. Una di queste informazioni è dunque disponibile solo a partire da un certo momento. Lo sparo dello starter può avvenire solo quando uno dei nodi ha immesso in rete la sua soluzione, e questa soluzione è accettabile. Da lì posso partire.

    Siccome l’algoritmo è fatto per generare un blocco in media ogni dieci minuti, ho solo dieci minuti per risolvere l’indovinello, il quale è già oggi estremamente difficile. E diventa sempre più difficile con l’aumentare della potenza di calcolo totale impiegata per risolverlo: se l’indovinello si dimostra troppo facile, automaticamente la difficoltà viene fatta aumentare (1).
    Tags: , by M. Fioretti (2017-12-27)
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  9. Yaroufakis agrees that there are numerous design flaws with the currency. Not least, he adds, “the fact that there are no controls, no democratic checks and balances of a bit issue and no way of back-stopping financial transactions by means of some kind of insurance policy for those that get defrauded.” Yet his central criticism focuses upon what he refers to as “the fantasy of apolitical money.”

    To Varoufakis, money is inherently political. The decisions regarding whether money is produced or not, how it is distributed and who receives it, all have significant political consequences, benefiting certain social groups over others. Bitcoin’s central design feature, that it is not governed by a central bank or decision-making authority, means that responsibility for its distribution is forfeited. This can have profound social and political implications in times of crisis.

    To understand what Varoufakis means by the political nature of money, consider how governments respond to financial crises. When a major financial crisis occurs, it is usually caused by the failure of widespread and interconnected debts. Once these debts fail, what happens is that a large part of the money supply effectively disappears. With this money gone, governments have a choice whether to replace it or not. Choosing not to replace it through the creation of new money (inflation) becomes a political decision with political repercussions. As Varoufakis suggests, “effectively you are choosing to shift the burden of a crisis onto the debtors and usually the weakest and poorest of debtors. So effectively you are redistributing power and wealth against the weaker members of society.”

    If the decision is made to replenish the money supply, like it was in 2008 through Quantitative Easing (QE), then how this money is channeled through the economy will also influence the political economy. In Varoufakis’ opinion, QE was engineered in a way to benefit large corporations.
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  10. Look: no. Skedaddle is not going to eliminate Yelp or Facebook or tipping. It's not going to be "the first cryptocurrency for real world use." But at some level they're not wrong! One day 20 years from now we'll wake up and all of our interactions and performance will be tracked on the blockchain and will directly determine our income and socioeconomic status, and on the one hand we'll get pretty good customer service, but on the other hand we'll be terrified all the time. It is the logical endpoint of the "gig economy."

    The thing is that this omniscient blockchain of terror will be run by Facebook, not Skedaddle. If you just come out and say that your mission is to build a dystopia of economic precarity and constant surveillance, then you do not have the soft skills to actually carry out that mission. (Never mind if you say that your mission is "to completely take down Yelp and Facebook reviews, while completely eliminating tipping.") If you say that your mission is "to make the world more open and connected," then you have the ruthlessness, and the facility with euphemism, to actually do it.

    Elsewhere in dystopian blockchain fiction, here is a story about doomsday preppers who are hoarding bitcoins against the apocalypse. Doomsday prepping and bitcoin enthusiasm go well together psychologically: Both involve distrust of modern social systems, and both tap into deep libertarian and self-sufficiency themes. But they don't go at all well together logically: If modern society is wiped out in some massive catastrophe, it seems unlikely that the electric grid and global internet infrastructure will survive to run an energy-hungry blockchain for a currency with no physical form that even now basically can't be used to buy anything. But the bitcoin/apocalypse enthusiasts are undeterred:
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