Marc Andreessen on the Future of Bitcoin

Marc Andreessen, writing in The New York Times, has a very good piece titled “Why Bitcoin Matters” explaining Bitcoin and its potential. You have to remember that Mr. Andreessen has skin in the game (to quote Nassim Taleb), because he will do very well if Bitcoin succeeds. However, it is still worth the read.

What’s the future of Bitcoin?

Bitcoin is a classic network effect, a positive feedback loop. The more people who use Bitcoin, the more valuable Bitcoin is for everyone who uses it, and the higher the incentive for the next user to start using the technology. Bitcoin shares this network effect property with the telephone system, the web, and popular Internet services like eBay and Facebook.

In fact, Bitcoin is a four-sided network effect. There are four constituencies that participate in expanding the value of Bitcoin as a consequence of their own self-interested participation. Those constituencies are (1) consumers who pay with Bitcoin, (2) merchants who accept Bitcoin, (3) “miners” who run the computers that process and validate all the transactions and enable the distributed trust network to exist, and (4) developers and entrepreneurs who are building new products and services with and on top of Bitcoin.

All four sides of the network effect are playing a valuable part in expanding the value of the overall system, but the fourth is particularly important.

All over Silicon Valley and around the world, many thousands of programmers are using Bitcoin as a building block for a kaleidoscope of new product and service ideas that were not possible before. And at our venture capital firm, Andreessen Horowitz, we are seeing a rapidly increasing number of outstanding entrepreneurs – not a few with highly respected track records in the financial industry – building companies on top of Bitcoin.

For this reason alone, new challengers to Bitcoin face a hard uphill battle. If something is to displace Bitcoin now, it will have to have sizable improvements and it will have to happen quickly. Otherwise, this network effect will carry Bitcoin to dominance.

One immediately obvious and enormous area for Bitcoin-based innovation is international remittance. Every day, hundreds of millions of low-income people go to work in hard jobs in foreign countries to make money to send back to their families in their home countries – over $400 billion in total annually, according to the World Bank. Every day, banks and payment companies extract mind-boggling fees, up to 10 percent and sometimes even higher, to send this money.

Switching to Bitcoin, which charges no or very low fees, for these remittance payments will therefore raise the quality of life of migrant workers and their families significantly. In fact, it is hard to think of any one thing that would have a faster and more positive effect on so many people in the world’s poorest countries.

Moreover, Bitcoin generally can be a powerful force to bring a much larger number of people around the world into the modern economic system. Only about 20 countries around the world have what we would consider to be fully modern banking and payment systems; the other roughly 175 have a long way to go. As a result, many people in many countries are excluded from products and services that we in the West take for granted. Even Netflix, a completely virtual service, is only available in about 40 countries. Bitcoin, as a global payment system anyone can use from anywhere at any time, can be a powerful catalyst to extend the benefits of the modern economic system to virtually everyone on the planet.

And even here in the United States, a long-recognized problem is the extremely high fees that the “unbanked” — people without conventional bank accounts – pay for even basic financial services. Bitcoin can be used to go straight at that problem, by making it easy to offer extremely low-fee services to people outside of the traditional financial system.

A third fascinating use case for Bitcoin is micropayments, or ultrasmall payments. Micropayments have never been feasible, despite 20 years of attempts, because it is not cost effective to run small payments (think $1 and below, down to pennies or fractions of a penny) through the existing credit/debit and banking systems. The fee structure of those systems makes that nonviable.

All of a sudden, with Bitcoin, that’s trivially easy. Bitcoins have the nifty property of infinite divisibility: currently down to eight decimal places after the dot, but more in the future. So you can specify an arbitrarily small amount of money, like a thousandth of a penny, and send it to anyone in the world for free or near-free.

I think this is the most interesting/compelling use of Bitcoin to me:

Think about content monetization, for example. One reason media businesses such as newspapers struggle to charge for content is because they need to charge either all (pay the entire subscription fee for all the content) or nothing (which then results in all those terrible banner ads everywhere on the web). All of a sudden, with Bitcoin, there is an economically viable way to charge arbitrarily small amounts of money per article, or per section, or per hour, or per video play, or per archive access, or per news alert.

For example, I don’t want to pay the monthly subscription to The New York Times, because while I read a lot on the site, I don’t see the benefit of paying for a subscription when I can get to the articles for free via social media channels. But if the cost was something small, say $0.05 per article, then I would be more inclined to browse from the homepage directly.

The Most Visited Content at The New York Times in 2013

I’ve blogged a few of the selections below, but this is what The New York Times claims were the most visited pieces of content at its site in 2013:

1. How Y’all, Youse and You Guys Talk: http://nyti.ms/19ACHVs

2. Blasts at Boston Marathon Kill 3 and Injure 100: http://nyti.ms/1dfCCl4

3. 2nd Bombing Suspect Caught After Frenzied Hunt Paralyzes Boston: http://nyti.ms/1dDrTp8

4. My Medical Choice, by Angelina Jolie: http://nyti.ms/KnYJyJ

5. A Plea for Caution from Russia, by Vladimir Putin: http://nyti.ms/1jbLTTf

6. The Scientific 7-Minute Workout: http://nyti.ms/1b8HmsW

7. Site of the Explosions at the Boston Marathon: http://nyti.ms/1jaKhGX

8. Invisible Child: http://nyti.ms/1dZ8g7i

9. The Extraordinary Science of Addictive Junk Food: http://nyti.ms/1mieYwu

10. Cardinals Pick Bergoglio, Who Will Be Pope Francis: http://nyti.ms/1gWRzwC

###

(via @nytimes FB page)

Amazon Wants to Ship Your Package Before You Buy It

In a newly filed patent, Amazon wants to ship a package to your door before you click “buy.” The Wall Street Journal has the scoop:

In deciding what to ship, Amazon said it may consider previous orders, product searches, wish lists, shopping-cart contents, returns and even how long an Internet user’s cursor hovers over an item.

Today, Amazon receives an order, then labels packages with addresses at its warehouses and loads them onto waiting UPS, USPS or other trucks, which may take them directly to customers’ homes or load them onto other trucks for final delivery.

It has been working to cut delivery times, expanding its warehouse network to begin overnight and same-day deliveries. Last year, Amazon said it is working on unmanned flying vehicles that could take small packages to homes directly from its warehouses.

In the patent, Amazon does not estimate how much the technique will reduce delivery times.

As for me, I’m looking forward to Amazon drones delivering my packages that I didn’t even order.

Consciousness as a State of Matter Like Liquid, Solid, or Gas

I’ve stumbled upon a fascinating new paper recently titled “Consciousness as a State of Matter” (PDF link), authored by physicist Max Tegmark at Massachusetts Institute of Technology. I confess to have only read the first few pages of the paper, but the abstract (and introductory sections) intrigued me deeply:

We examine the hypothesis that consciousness can be understood as a state of matter, “perceptronium”, with distinctive information processing abilities. We explore five basic principles that may distinguish conscious matter from other physical systems such as solids, liquids and gases: the information, integration, independence, dynamics and utility principles. If such principles can identify conscious entities, then they can help solve the quantum factorization problem: why do conscious observers like us perceive the particular Hilbert space factorization corresponding to classical space (rather than Fourier space, say), and more generally, why do we perceive the world around us as a dynamic hierarchy of objects that are strongly integrated and relatively independent? Tensor factorization of matrices is found to play a central role, and our technical results include a theorem about Hamiltonian separability (defined using Hilbert-Schmidt superoperators) being maximized in the energy eigenbasis. Our approach generalizes Giulio Tononi’s integrated information framework for neural-network-based consciousness to arbitrary quantum systems, and we find interesting links to error-correcting codes, condensed matter criticality, and the Quantum Darwinism program, as well as an interesting connection between the emergence of consciousness and the emergence of time.

In the paper, Tegmark discusses the importance of characterizing consciousness as a state of matter like a solid, liquid, or gas:

What are the corresponding physical parameters that can help us identify conscious matter, and what are the key physical features that characterize it? If such parameters can be identi ed, understood and measured, this will help us identify (or at least rule out) consciousness from the outside”, without access to subjective introspection. This could be important for reaching consensus on many currently controversial topics, ranging from the future of arti cial intelligence to determining when an animal, fetus or unresponsive patient can feel pain. If would also be important for fundamental theoretical physics, by allowing us to identify conscious observers in our universe by using the equations of physics…

He then goes on to describe concepts of memory, Computronium (“the most general substance that can process information as a computer”), and Perceptronium (“the most general substance that feels subjectively self-aware”). A good summary of the paper is found in this post on Medium:

Tegmark uses this new way of thinking about consciousness as a lens through which to study one of the fundamental problems of quantum mechanics known as the quantum factorisation problem.

This arises because quantum mechanics describes the entire universe using three mathematical entities: an object known as a Hamiltonian that describes the total energy of the system; a density matrix that describes the relationship between all the quantum states in the system; and Schrodinger’s equation which describes how these things change with time.

The problem is that when the entire universe is described in these terms, there are an infinite number of mathematical solutions that include all possible quantum mechanical outcomes and many other even more exotic possibilities.

The entire paper, for those brave enough, would make for excellent bedside reading. Consciousness is one of those topics that I think a lot about (first having encountered it at Caltech via Kristof Koch’s book, The Quest for Consciousness).

An Ultra-Orthodox Jew on Being Adrift, Searching for a Navigator

Writing in The New York Times, Leah Vincent reflects on her upbringing as one of eleven children in the ultra-Orthodox Jewish community and finding romance on the Q train:

I had been raised in the ultra-Orthodox Jewish community. As a girl, my life had revolved around modesty, obedience and dreams of an arranged marriage at 18, followed by a dozen children. Popular movies were irrelevant and forbidden.

But it had been six years since my parents ostracized me for having written letters to a boy, wanting to go to college, complaining when my father, a prominent rabbi, used a slur to describe an African-American person, and wearing an immodest sweater that highlighted my curves. Six years of wrestling with my forbidden desires.

I had finally given up on God and decided I would allow myself to be liberated from the confines of my faith. Now I was catching up on what I had missed.

I loved this paragraph:

Luke was different from those random flings. We talked like old friends about books, Brooklyn, our lives. The next morning, when we hugged goodbye, it felt as if we had already shed a layer of defenses that usually took months to peel away. Our connection seemed deep and profound. On my way home, I let myself imagine what it might be like to wake up every morning with him. I tried on his last name. I wondered what kind of father he might be.

There’s a twist in the story that I wasn’t expecting, but I liked the optimism of her final sentence.

If you enjoyed the piece, you might want to purchase Vincent’s upcoming book: Cut Me Loose: Sin and Salvation After My Ultra-Orthodox Girlhood.

John Siracusa on Geekdom

This is a wonderful post by John Siracusa on how he became a geek. Near the end, he offers some sage advice:

You don’t have to be a geek about everything in your life—or anything, for that matter. But if geekdom is your goal, don’t let anyone tell you it’s unattainable. You don’t have to be there “from the beginning” (whatever that means). You don’t have to start when you’re a kid. You don’t need to be a member of a particular social classracesex, or gender.

Geekdom is not a club; it’s a destination, open to anyone who wants to put in the time and effort to travel there. And if someone lacks the opportunity to get there, we geeks should help in any way we can. Take a new friend to a meetup or convention. Donate your old games, movies, comics, and toys. Be welcoming. Sharing your enthusiasm is part of being a geek.

I actually classify myself as more of a nerd than a geek in areas in which I am interested in, but I could see the enveloping classification of the word “geek” for someone who was brought up with computers at such an early age.

Siracusa’s reviews are always a pleasure to read. I spent a few hours perusing his deep dive into OS X Mavericks last fall.

What Apps and Services Does Barack Obama Think Young People Use?

A young associate editor at The Atlantic, Robinson Meyer, reflects on how he accidentally met Barack Obama at a local cafe. The takeaway of what the young people use (apps, services) seems to be in constant flux, but based on the subtitle of the piece, it seems “that even Obama knows young people don’t use Facebook anymore”:

Obama sat down at the head of the table. There was a brief photo op at the opposite end of the table. I surreptitiously took a picture to remember what being on the other side of a wall of cameras felt like, but now it seems more remarkable that I can see the president’s undershirt.

He had come to my local cafe to meet with five young people. According to White House background, provided to me after he left, they met to discuss how to get more 18-34 year-olds to sign up for the coverage under the Affordable Care Act. (The law depends on 18-34 year-olds signing up for healthcare.) One of the five was a navigator, someone employed to help families sign up; another helped explain the law at a mall over the holidays.

They talked about health care stuff for the first 20 minutes. The five shared their experiences, and some of them spoke quietly, so I couldn’t hear them that well.

At one point the president said, “Now, this isn’t public yet.” I perked up.

“Thirty percent of somethingsomethingsomething is mumblemumble,” he said.

I didn’t hear. I had failed as a journalist, so I went to the bathroom.

Failure

When I got back, they were talking about music. Circumstantial evidence indicates that, while I was in the bathroom, they talked about Beyoncé. 

The conversation moved on. They talked about cell phones, and Obama mentioned how Malia did not receive one until she was 16. One of the young people pointed out that, unlike most parents, the president could always argue that he’d know where she was.

They segued to talking about social media (I couldn’t hear their exact words).Now, I thought. Now I could do tech journalism.

The president said something—I could not hear all of it—about new social media apps that were for messaging, new apps that only somethingsomething’d for eight seconds.

“Snapchat,” said one of the young people.

The president made a comment about how different apps were now popular. Someone—it might have been the president—said the word “Instagram.” 

I guess that they were talking about the difficulty of doing political outreach on Snapchat or one of this newer, less textual ilk? I’m not sure. Then the president drops this:

“It seems like they don’t use Facebook anymore,” he said.

Facebook is so uncool even the president of the United States knows it.

I’ve been saying this for a while, but I am disliking using Facebook as of the last year or two. I prefer Twitter and Instagram.

The story is worth the click simply for that SnapChat photo at the end.