Cubegeek

Data Mining & Easter Eggs

Q: Why do they call it data mining? Isn't it knowledge mining?

A: No, it's data mining. Knowledge is two steps up the added value chain. Once something becomes knowledge, you don't really need data mining. So let's first talk about the added value chain.

Data is less valuable than information. You can have bad data. It’s still data. You cleanse the data and organize it then you have information. Encrypted data is still data. It’s not information until you decrypt it. That’s the difference between data and information.

Good, clean, organized data = information. It’s not knowledge until it tells a story. That means a human can understand what it is. Knowledge is information in context. If I say “35 Units are in Department 7” and “27 Units are in Department 8” I have information. But it’s not knowledge until I have complete information. I don’t know the date. I don’t know how many departments there are.

Intelligence is actionable knowledge with appropriate qualifications. We could get into what make makes something actionable. But that has been done here[1].

All of these elevations in value come from human organizing data into information into knowledge into intelligence. But humans have a particular way of organizing and thinking about where to find intelligence. Think of how children search on an easter egg hunt. They don’t brute force search every square inch for things that look like eggs, they try to emulate the thinking of ‘Easter Bunnies’, the parents who hide them. Machines, on the other, search more exhaustively and find patterns that humans don’t consider relevant. A machine might notice for example that light colored eggs were hidden an average of 2 inches from tall vertical surfaces. Children would not notice, they just count the eggs. But machine can surface patterns in the DATA that create a different kind of information, knowledge and intelligence. For example, data mining an easter egg hunt might show based on proximity of egg colors and the color of occluding objects, that some of the people who hid the eggs might be colorblind. Their inability to distinguish certain colors made the hunt easier for non-colorblind children to find the eggs, and therefore the hunt rewarded faster running children without sophisticated hunting tactics. That is surfacing information in the data that humans would never have the inclination or patience to discover, which is the point of having machines do the mining rather than humans.

As soon as you have a machine-sensed pattern in the data, it changes how you organize the data into information. That is what adds value and it changes the way you think about analyzing easter egg hunts in the future.

Footnotes

[1] Barriers to Added Value in Data Analysis

 

Waiting for Dot Gov

Somebody asked me: Could blockchain technology be used to implement Social Security or Universal Basic Income?

I sez:

Yes, it’s possible. It’s coming from a side angle though. Basically Congress is going to have to admit at some point that the credit card companies keep better track of individuals. And then the credit card companies will have to admit that the new crypto devs have a more secure way of keeping individuals in control of their own identity. And then somebody at Apple is going to make it easy to integrate anonymous identity with iCloud and ApplePay.

Basically, the interest around blockchain and cryptocurrency is going to drive the development of secure identity management and peer to peer payment tech.

If you look at something like Keybase you can get a feel for how a single ID can federate other well known IDs.

I forget the name of this other company, but they have the ability to take your one credit card and make it authorized for all your online purchases except you use a different ‘credit card number’ for each transaction. So your single, real credit card ID is never used online. It’s just used to authorize, from your desktop (or thumbprint as Apple has proven), an on-the-spot value card. This technology is similar to Amazon KMS and HashiCorp’s Vault. IE it’s already done and well understood.

This combination of technologies already exist. The question is basically who is going to mainstream it best. I bet Apple will. Now let’s say they do that next year or late this year. How many Congressmen do you have to buy in order for them to

1. Get it
2. Regulate it
3. Authorize it’s use for Government things.
4. Get bureaucrats across the US to understand it.

Yeah almost never. Which means somebody needs to hack the other two credit bureaus to prove what we already know. Current identification schemes that dominate US commerce are insecure and outdated. Then of course you’ll have to deal with millions of paranoids about the possibility of a National ID, seeing as it’s ‘racist’ to have people show a driver’s license when they vote.

Bottom line. Stop hoping for the masses. Do the math, figure it out, and do it with people who already get it now. And yes I did triple my money in Bitcoin (and in Amazon stock before that (and in Google before that (and in Netscape before that (and in Inktomi before that)))) and no I’m not hurt by the price collapse today.

On the other hand, there will be people who will slowly duplicate old tech with new tech, and maybe they’ll be able to sell this stuff. The old dis-spirited workers at the NSA and CIA are going to have to work somewhere.

 

The Bitcoin Power Equation

Q: How much power does the production of Bitcoin cost the planet?

A: In my HashFlare Scenario[1] I did some calculation to figure out how much it would cost to mine Bitcoin. I used the example of the fastest commercially available mining machine, the Antminer S9 which consumes 1600W. Right now there are about 12,000 full nodes in the Bitcoin network. So that multiplies out to about 19.2MW for the current usage of the mining network, not counting the cost of electricity of the networking hardware. So add a megawatt or so for that and you have about 20.2MW. This is a lot of energy but not much at all for any global system.

Your average household eats 10kW. And your average Texas wind turbine generates 6MW. So basically you could power the Bitcoin network of miners with four wind turbines.

To give some perspective, in 2014 Google’s data centers used 260MW.[2] One nuclear power plant produces 1GW. All of the data centers on the planet use 1.1 to 1.5% of all global electricity.

So to answer your question, if you took the current Bitcoin network and expanded it tenfold, it still wouldn’t use as much energy as Google used 3 years ago. If you expanded it 40 times, you could handle its energy use with one nuclear power plant. Or if you liked you could use solar. The US currently generates 47GW of solar power[3]. So basically 2% of US solar power could power a Bitcoin network 40 times as large as today’s.

Footnotes

[1] The HashFlare Scenario

[2] INFOGRAPHIC: How Much Energy Does Google Use?

[3] What's in a Megawatt? | SEIA

 

How To Cloud A Mainframe

Once upon a time there was a mainframe computer. I ignored it. So did you. We were wrong.

My mighty mainframe was a CDC Cyber running NOS. It was such a craptastic machine that I hated doing homework precisely because the damned thing wasn't reliable enough for me to slack off until I was ready. Surely when I got into a groove of programming in fricking ADA, it would be broke. I hated my college's datacenter and the frogs who worked there. It was enough to make me love microcode and BNF. But that was 30 years ago, literally. Nevertheless, it left a bad taste in my mouth particularly because I loved DEC Vaxen and client server. After all, I did work at Xerox. 

But while I was at the big X, I did come to love and appreciate VM/CMS. What a cool idea. And there was always a weird kind of appeal to ISPF, I have to say. Plus it was also very cool to use a channel attached Overland Data tape drive that worked with IND$FILE. Ok enough reminiscing. We all know that IBM was an early embracer of Linux, and became even cool again when I read about something called a Beowolf cluster of Linux nodes running on a System 390. And of course the RS 6000. Yada. Yeah. They understand hardware. I even listened up to the time when they started on about The Grid and grid computing in general. Why? Because I have always been a big data fanatic. Ok, devotee. 

So this morning I'm talking to my engineering manager colleague down in LATAM and he's helping me to understand what sharp elements of his team have been doing over the past few years. I know a bit about it, but now I'm responsible to communicate that. Non trivial. It turns out that they've essentially been packing puffy clouds around mainframes. Huh? What?

We have come up with a way to put legacy mainframe data systems into cloud native architectures.

One of the things we do is work with airlines. I don't have to tell you again. You know. And a whole lot of airline reservation information, flight routing, frequent flyer currency, etc are on a multiplicity of divergent systems and architectures. We don't have patience with all of that. We're a systems integrator doing what needs doing in the AWS cloud. Of course a lot of this data is deeply embedded in complex systems that it will never make sense to re-engineer. So we said, leave it where it stands. We built stuff around it. Our offerings are called API Modernization and Middleware Modernization Blueprint. And what we've been able to do is engineer and rationalize what lives best where in an extended hybrid cloud environment. One of the things we've done is applied Scala Akka frameworks to create RESTful interfaces and GraphQL to smooth out the rough edges of ancient mainframe subsystems and scale them up to deal with the new real world of cloud & webscale applications. Another thing we've done is take complex business rule logic which was once a legacy monolith, generalized and retooled it to work in multiple applications. We've augmented or replaced IBM MQ message queues and worked them into both Kafka and Kinesis. We prefer the headache free Kinesis. We don't have patience with zookeeping. Naturally, we've used the power of Cloudwatch to provide more reliable and customizable system monitoring capabilities, and of course we've used the power of AWS Availability Zones to make the whole thing robust against failure. So yeah, we can think of your mainframes as a middleware component in our ever-evolving data management architecture. 

Obviously this is not cutting and pasting technology. It requires deep thought, patience and understanding. We've got our share of that and it's working out nicely. It's not easy to communicate all of those details, but I wanted to give you a heads up so you could consider some of the interesting directions our quest for data perfection has taken us. It has taken us back to the legacy of centralized computing, and we have recast that command and control to fit into contemporary cloud architecture. What a journey. Hey mainframe, we're pals again.

BlockCon Trip Report

So those of you who know me know that I know something about BI / DW and VLDB aka Big Data. I think I may continue to use VLDB to distinguish big structured data from high heaps of Hadoop which may or may not map to anything or reduce you to tears. So let's block and tackle shall we?

Brock Pierce
I'm fairly sure that I saw this dude a year ago at a conference in DTLA. Dude was in a completely different suit. Today he wore a cowboy hat and showed slides from his wedding at Burning Man. He's quite a showman, and his topic 'Disrupting the Disruptors' excited some non-zero fraction of the audience when he mentioned certain disruptions, which I forget. Seeing that he was an actor does not surprise me. He clearly knows how to play to different audiences. His overall message was very reasonable and underscored what people like me already know. Don't fuck with people's money. I think it's a message that needed to be said, underscoring what was true about what Jamie Dimon said in the previous fortnight or so. This is real money and real people will destroy the fraudulent, real people meaning governments in organized countries and organized criminals in others. 

Thinking about Pierce and the DTLA crowd, including the guy who runs Gem and pointed me to Netki boss Justin Newton, one is reminded that players will play in this space and when they have particular interests that they can articulate, things will happen. If I had any doubts about matters of inevitability, they were swept away. This is a herd of smart cattle. They may not know which particular direction or destination they will find, but when those hooves start thundering, watch out. What is clear from Pierce' perspective is that donkeys will get whipped. There's more regulation that applies here than most people are aware of. It's not a whole new type of human endeavor, it's just a whole new set of technologies that haven't put together a full ecosystem yet. It will be the web of value, but we already know what to do with money. 

ICOs are a volatile term, and people are already coming up with alternative acronyms. But the writing about underwriting is on the wall. Entrepreneurs can enable a new class of investors in boilerplate fashion so long as they are clear and have no intent to deceive. This will ultimately have salient effects on financial transparency in startups and the accountability of OTC traded public companies. Huge, but ultimately very reasonable. I get it. 

The other half of the speech was something interesting that I'm noting from both he and Richard Heart. After you make your first doshpoint, the emphasis is on other things. This is reinforcing my set of ideas around 'the smart money'. Easy for Burning Man types, after all, they're not playing to the masses. Well, not at first. Quoth Pierce, a 'billionaire' is not the person with a billion dollars but someone who helps a billion people. 

Experts & Grownups
I had the good fortune to be sitting between an angel investor herder, Jeff and a legal diligence dude, Matt. The former I only spoke a small bit to, whereas I had a bunch of questions for the latter. We briefly talked about China as I poked him about how much the SEC is likely to say. He informed me that their may be questions in the minds of some startup entrepreneurs about whether they can pivot from security to utility or vice versa, but the law is clear. There are, apparently, relatively pro-forma channels for doing this sort of business, and in fact one company has done so as an exchange back in the day. These packages of diligence, provided by his firm which has a technical auditor as well as an economist can look at all of these things. As I thought before, he added some confidence to the idea that coins are commodities and can work like commodities markets. 

Other Kibbles & Bits
First of all the overall sense that I got from this conference is that there is a good amount of money and brains in the crowd. There is a level of energy that is frenetic. People are committed to be present in the space. There is a wide variety of done-ness to the projects on display and what is one conference today will surely be 3 or 4 separate conferences in the future. Blockchain is simply too big to put under one roof, and the roof they had this time was already too small.  This crowd skewed towards entrepreneurs and devs, very much unlike the one last year DTLA which skewed towards financial folks and VCs. I suspect there is a lot of hashing (!) out to be done before this becomes what I would consider a coherent industry. But believe me, the gongs of inevitability are vibrating the air. 

NEO
I talked to my friend Mark J who introduced me to one of his technical associates. His idea is to generate a coin economy around subcontractors to his product. It's a super cool idea and I hope it works out. But I must say that I need some clarity around the difference between a value coin and a utility coin. I asked his tech guy, whom I'll call 'Pedro', where he was on the idea of Solidity. I tell you it was such a relief when I heard him blurt that it sucks. I'm glad I'm not the only one with reservations about writing what ought to be considered ironclad contracts in a language that looks like a crippled half-sister of Javascript. They're building what they're going to build. So I asked him what he thought about EOS, and he skipped right to the money. He said that if he had to do it all over again, he would choose the Chinese system called NEO, which he characterized as a 2nd and a half generation blockchain ecosystem. If he didn't say the word 'bulletproof' his expression implied it strongly. I popped over to the NEO website and promptly lost my ability to recognize the problems it claims to solve. Only proving I have a lot more homework to do. 

Bitcoin's Antifragility
The best thing I wanted to hear was that there are some practitioners and champions in this brave new world who understand that it is actually brave to be new, and newer is not always better. So I was pleased to hear the term 'anti-fragility' in the presentation of Jimmy Song. His presentation was coherent and structured and I have added him to my feeds. I will continue to keep an ear out. 

Identity
Identity and security are one of my ongoing concerns, and one of the deeper reasons I am paying attention to blockchain. The blockchain will bring to the masses what I'm calling a more 'perfected security'.  Since the beginning days of e-commerce a bit of fudging has been going on primarily owing to the original design of the Apache webserver. Too much of the WWW is built on stuff that was overburdened for the applications they would eventually support. Now there are more than enough serious developers to make thing work with purpose-built languages and frameworks. Go exists because of what the web has become.  The internet of value will clean up some of the messy identity and security problems we now face, not only for the web itself, but across enterprises as well. It was clear during the panel discussion here that there is a broad set of customers in the identity market and a lot of market penetration is going to happen with brand-y products that may or may not be a comprehensive solution. I'm rather skeptical right now. I want there to be a standard that is at least as good as KYC (if that's a standard). It didn't appear that the panelists were interested in that so much. So I'll keep my bets with Apple and the more boring financial community for the moment. 

Pay Close Attention
The two best presenters for my attention span were BlockCypher and This Guy.

BlockCypher
Basically they are the AWS of blockchain tech. They lease infrastructure and they have an API that ties the whole thing together. No matter which cryptocurrency does what, this company is the surest bet. They have the proper commercial attitude and they've lined up the most real world partners of anybody I can recall at the conference. They're doing work. 

Hyperledger Project
I've tended to forget about this project primarily because I've been answering newbie questions about cryptocurrencies instead of actually building something and answering questions I need to know. Altoros looks like a very sharp operation and so I'm not surprised that they are rather deep into working with those companies that are ready to take a serious look. Oleg's presentation was the first coherent thing I've heard about the differences between private and public blockchains that wasn't dripping with hype about the superiority of Bitcoin. It cannot be that there are only 500 people in the world smart enough to implement, especially given open source, the guts of a world class blockchain. So the breadth of companies seriously looking at this project augur well for the future. I'm really looking to see if I can get a copy of Oleg's presentation.

That's all for now. I should go again next year, and I'm hoping and expecting that if and when Amazon makes an announcement, there will be much wailing and gnashing of teeth. 

It's Not About the Chart

I think many people are unaware of the fact that data analysis is designed to establish a broad consensus and that consensus is supposed to reflect an approximation of reality over time.

That means firstly that everyone must be reminded that they are modeling reality, not representing reality. There are assumptions about the model which need to be kept in mind. If these assumptions are not appropriately understood and well communicated, there is likely to be discord in the ‘now what?’ phase of decision making.

This also means that assumptions may change, and reality may change. So new models must be made. Older ones should not necessarily be discarded, but remembered as heresies against the new regime. There is always value in studying heresies because one cannot always validate assumptions and certain assumptions may revert back over time.

When people are focused on charts and graphics and technologies without paying attention to the process and social dynamics of decision making, they are only seeing a fraction of the problem they are trying to solve. These are the reasons why aphorisms exist like:

"There are three kinds of lies: lies, damned lies, and statistics."

The most difficult and vexing questions to answer are:
1. What were we thinking when we made that decision?
2. Who knew what and when did they know it?
3. Why were we not paying attention to X?

These questions always show up in the wake of a disaster, and the inability for people to address them shows the incompleteness of their thinking around the matter of modeling a changing reality, establishing consensus, and keeping track of the appropriateness of assumptions.

In other words, governance of the decision making process is very valuable and often overlooked (or assumed to be automatic) when a system of analysis is successfully put in place.

Obligatory Seriousness on Goldman Sachs Interest in Bitcoin

So this happened.

Goldman Sachs Group Inc. is weighing a new trading operation dedicated to bitcoin and other digital currencies, the first blue-chip Wall Street firm preparing to deal directly in this burgeoning yet controversial market, according to people familiar with the matter.

I have yet to meet a neutral objective analyst of the Bitcoin market. So I’m really not expecting to get a very good answer as to what happens next. I do expect, however, that Bitcoin in particular will react differently as a market leader and that other coins are traded in a basket without reference to their actual strengths and weaknesses. At some point that will change. I’m singly focused on Bitcoin because the most people know the most about it, and I consider it the safest investment of them all.

Anyway, I know a lot of people have been jawboning against Bitcoin, especially a good friend of mine who works for Morgan. They had a jolly good laugh a couple weeks ago when they were convinced that China and Jamie Dimon were going to destroy Bitcoin. The price has rebounded. (and yes I bought on the dip). So now they are going to think twice and wonder what Goldman is doing. I like the idea that Goldman’s interest seems to be coming from its own captive audience of customers, but I cannot imagine that GS will build an exchange to compete with the likes of Kraken, Bitfinex and Coinbase.

One smart thing would be for GS to simply acquire Coinbase (although I wish they wouldn’t), or one of the notable exchanges. It’s a decent idea for them to make their own exchange. They could amass a fair amount of goodwill by funding or certifying banking transactions with one of the major exchanges. But also one of the historical problems in establishing these large public cryptocurrency exchanges is that no banks would do business with them. I’m certain that GS has enough contacts and influence in the industry to quickly martial some tech folks behind market making, and simply on reputation alone could convince people to ‘bank’ on their exchange. In the end, all the bitterness about MtGox was about who was sloppy and who was a crook. So if GS doesn’t have a reputation as being sloppy and crooked, there’s another piece of the market who would trust a GS branded Bitcoin exchange. Interestingly enough, I bet GS knows 1000 whales who would actually pay for access to such a branded exchange, which is somewhat reasonable to expect.

About six months ago, I thought that private blockchains would be an avenue towards improving the lot of clearinghouse tech. Today I’m not so sure. I’d be willing to bet that there’s a lot of efficiency to be gained in the settlement process without blockchain. I’m sure GS among others have figured exactly how much by now, so we should see walking at long last after all the talking. I expected that investment houses would simply chuck out their staffs and replace them with blockchain settlements. But they could save a lot of money by tailoring a service around Bitcoin itself rather than trying to build their own blockchain. The trick is that they’re going to have to buy enough themselves to manage that business as their internal paper. That will make the price go up, as they acquire, and allow their customers to acquire. It’s a big part of the liquidity that Bitcoin needs. If all GS has done is setup their own systems to work with Bitcoin for settlements and for their own investment customers convenience, it would be a very smart move, and all they really needed to do. If I were a macher at Goldman, that’s what I would do.

 

A Blockchain Update: Bitcoin Rules

I have recently discovered yet another superstar Bitcoin maximalist. His name is Richard Heart. He reminds me of another brilliant guy I know and have worked with for many years. As a result of watching him speak for several hours on his YouTube channel, I have come to several conclusions and consequently taken several actions. 

Double Down on Bitcoin
I have moved all of my cryptocurrency investments, or about 90+% of them into Bitcoin. I have learned that there are about 300-500k private off-exchange wallets which severely changes my estimation of the widespread adoption of Bitcoin. I was shocked. I'm an earlier adopter than I thought. And although I'm on the mountain, I'm a long way from base camp on this journey. I expect that as an investing phenomenon, Bitcoin is a great deal further forward in quality and adoption than any other coin or blockchain tech. I have renewed confidence in the engineers working at Bitcoin Core, specifically Greg Maxwell. 

Somehow I had gotten it into my head that Bitcoin development was mostly done and work was only being done to solve particularly difficult fundamental problems but that those problems were better addressed in Ethereum and newer coins. Now I am convinced that the single purpose and mission of Bitcoin is focusing their developers on actually more serious capabilities that are not very well addressed in the other crytpos. Now I am convinced that Bitcoin will improve, and that it is more resistant to external manipulation than any other cryptocurrency. It retains the most serious brains.

Adam Back is a hero. I haven't heard such glowing praise of a hardcore developer since the early Silicon Valley days and that honeypot exploit that I think was called the 'Takedown'. I'd have to go find my book by Cliff Stoll where he mentions it. Speaking of Cliff Stoll, does anybody remember Guy Kawasaki? 

The Oracle Problem
I haven't heard this phrase before this weekend, although it made perfect sense to me when I started thinking about 'smart contracts'. That problem is simply  how do you trust that software contracts written in stone are responsive to things that are reported to it? In other words if I rely on human reporting to a system, what's the point of the system? There are some areas of human affairs that are best left in decisions made in human minds. That will never change. Smart contracts will always have that weakness. Who tells the State Farm insurance smart contract that your motorcycle has indeed been totalled? Who tells the flood insurance smart contract that Irma did actually flood your living room? I think right now that a ledger is a better application than a contract. 

EOS and Transactions
So Ethereum uses the EVM to process a certain amount of transactions using a certain amount of gas. But it's not scaled globally to process a zillion. It doesn't matter how big a zillion is, but sooner or later the zillion will come. If you are not designed to handle the zillion in your original design, then you have a built in Y2K bug. EOS was engineered for the zillion. In other words it's architected to scale to handle billions of people around the world doing hundreds of transactions a day. Like credit card numbers, it understands its domain so that it will never run out. EOS is brand new.

Solidity vs ...
What if the conditional logic processing of Solidity is inferior to Java or Python? I don't know. I'm not sure why smart contracts ought to be processed in Solidity. It may be optimized in a certain way, but that is something less than perfectly clear to me. Is it a proper functional programming language? Is it buggy? These are not questions I'm hearing answers to yet. We shall see.

Customers Before DApps.
This follows the Rule of Doc. Don't tell people what you're going to do, do something and then tell them what you did. Don't tell people you're going to solve their problems with your magic dust before you know what their problems are. Solve their problems first and then prove your magic dust does the same job only better, cheaper or faster. Believe me, I came from Xerox. You don't have to tell me this twice. I will prototype. Repeat after me. I will prototype my solutions in response to what paying customers demand. I'm not a booth babe. 

The End of ETH coining.
This might happen. I've heard an explanation of why it is expected to happen. IIRC it's 'Proof of Stake' vs 'Proof of Work'. If that happens, ETH shouldn't become a store of value. There's something wonky about the idea that if you want and need Ethereum transactions to take place, that the price of gas should not be counted as a coin. What protects the whole economy of transactions if the cost of transactions inflates? I don't want it to. That's at cross purposes to the impetus of turning paper contracts into code contracts. I don't want AI lawyers to cost more than human lawyers. If and when I come to understand Proof of Stake and its downsides, I'll get a better idea about this, but right now it makes me lean away from the rule-based logic of distributed databases of limited transactional capacity and back towards the rule based logic of centralized database that I understand very well. A more efficient transaction engine is always better. The price of gas is a wildcard for capacity planning. 

China Isn't Fooling Anyone
Bitcoin is actually in an important way, to big to fail. But big is not the appropriate word. Call it "확고부동 한", which is Korean for 'entrenched', as in the coterie of nuclear engineers that you would literally have to hunt down and assassinate if you wanted to cripple the DPRK's nuclear ambitions. Except that there are way more Bitcoin devs than Nork nuke scientists, and the devs are already open sourced. So China may want to legislate against ICOs, but like everywhere else, they either are or are not going to put their regulations in writing. Regulations that are anti-freedom will be routed around. China is a large and important actor, but they are not in as much control of Bitcoin as they are of their own 'Internet'. This currency will not be manipulated.

Filecoin What?
I browsed the white paper. I had my doubts about why anyone would go for this. Yes there are people who serve storage in the form of Torrents. So I'll think of Filecoin as getting paid for serving torrents. But really how much am I going to get for my 3 TB of spare space across my installation? And what kind of software do I have to put on top of all that. Something like Backblaze I imagine. But the more I think about it, the more I tend to agree with Richard Heart. There's no way for me to compete with Backblaze themselves, or Amazon. So how long would I have to wait for my crappy fractions of Filecoin to appreciate? Doesn't look like a good revenue stream to me. It has inefficiency built in. Who is going to pay for the new regime's slow storage?

Which goes to my final point, that makes perfect sense as explained by the acerbic Heart. If it's not better, why try to sell it as new? He has gone the distance and lies on the other side of the Dosh Point. I appreciate the economic thinking of such individuals, and from what I've gathered of his principles he's on the right track. Dude has an ethical mean streak. He doesn't like liars or cheaters or scammers and he doesn't suffer fools. He's got a streak of Taleb in him, and since he speaks well of Tim Ferriss, he might actually be consciously aware of Taleb. But I've clearly heard his Chestertonian logic and he sounds Hayekian to me as well. Even speaking ill of Jamie Dimon he doesn't completely lose his shit. Bottom line is he appreciates difficult problems and is willing to put skin in the game while lambasting others who do the charlatan thing. Righteous. 

So where am I on ICOs? I'm going to have to learn how to play Shark Tank. It will help me to listen in that particular way. I'm too old to be impressed with technology. Show me the solution before and after tech. 

Cryptocurrencies & Capitalism - The Mental Exploit

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

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

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

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

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

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

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

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

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

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

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

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

Crackhead Barbie: A Data Story

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

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

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

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

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

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

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

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