Month: June 2016

Fossil fuel use, and it’s status as the principle driver behind a destructive world economy, is causing changes around the world. Climate change is one of the most prominent processes we see as a result of continued use of fossil resources, and the continued freedom of companies bringing fossil fuels to market. Changes we are seeing today, more than 100 years after the process of carbon fuel driven climate change was understood, are grave, and news about them can be unsettling.

Examples of serious consequences to leaneancy towards fossil fuels and the corruption of our politics by fossil fuel interest are exteem heat, drought, floods, rain, ocean biosphere destruction and more. Floods and droughts can both be caused by warming, because the increased temperatures keep water in the cloud longer, so when it finaly breaks out rains are torrential, this traditionally was only the case in Monsoon regions.
A map of how fare people should move to maintain the same temp as before fossil fuel use driven warming

A map of how far people should move to stay in temperatures from before fossil fuel driven warming

All these changes and their predicted continuation makes some scientist suggest that some regions will become uninhabitable. The idea is to move the people to still habitable regions. In some cases, f.i. for trees, it has been found that they can not move to their best habitat (with the same temperaturs) fast enough to survive as a species. For people this is easier. It is no fantasy that this may be necessary or desired, because today in some parts of India people really can’t go outside for the searing heat of 51 degrees Celsius.

The right way to respond to this situation is not to retreat. It is not to leave hotter zones and withdraw to where one can still cope.This would be an acceptable response if we could expect the situation to relent in the near future, but this situation will not. It will eat up all life on earth if it gets the chance. If we make room for climate change it will destroy our oceans, soil, forrests, basically everything alive and there is no winning for humanity in the end.

Some people will say “But Dinsaurs live in hot temperatures and they where fine!”, yes, but during the period of heating that led up to the era of the dinosaurs 85% of all life on Earth disappeared. The rise of the Dinosaurs was possible because a rapid rise in global temperatures by 12 degrees (Celsius) wiped the planet clean of most plants and animals, especially those that needed a lot of oxygen (warm blooded species). The process of warming now triggered by the large oil, gas and coal companies will have exactly the same effect.

To survive we need to fight climate change, its causes and effects

The conclusion thus is that we need to fight climate change where it deteriorates the situation, not retreat to where we can still survive, because still really means still, for a while more. Luckily where rains fall and the sun scorches the earth there is energy and opportunity, just not one that the living environment can easily counter. A living environment aided by mechanized or specially designed systems however can. Small changes can have large impact, like digging trenches in dry land so when the rain comes it permeates into the soil and doesn’t wash everything away. Or using solar energy to cool and grow/maintain trees. Or using solar to build the structures needed to store rainwater. Because this requires a lot of manpower we may not have automation in this area is going to be crucial. Hence our concept of the Roboeconomy.

The causes of climate change are primarily the existence of the fossil fuel industry, and the banking industry because the cooperation between those two industries creates an incentive in the economic system to stay with fossil fuels/ The primary reason is that credit can be created almost without limit based on fossil reserves that can be accessed with that credit. THis does not work with renewables. Second reason is that a steady fossil consumption cashflow keeps a lot of bankers in their jobs, and they will protect thos cashflows, just like public servants will protect tax cashflows. Basically because people’s incomes are from local sources (their company) this creates an incentive for hoarding and protecting cashflow intensive processes, and a very important one of those is the consumption of fossilfuels.

We need to start fighting now

Some may say we are doing what we can to fight climate change, but that is not true. Clearly all kinds of operations serving the fossil fuel industry are still free to function without any directive to shut down or even stop growing. Fighting means some pain is suffered in order to prevail, and we have not taken the fight to any cause of climate change yet. The main reason is that the intrinsic climate damageing nature of ‘economic growth’ is not recognized. The nature of money as fossil credit is not recognized. If we are to fight climate change though we have to do it now, because now we still have order, we still have a sizable amount of fossil fuels to start things up. We may lose that f.i. due to a water or fossil fuel war, or due to increased misery. We may be ok on the fossil ration for a while, but we should not take that situation for granted as is done now. Being content with gradual change is being content with waiting on the needs of a damaging and destructive and politically adversarial industry. The fossil sector lobbies, spreads propaganda, funds political ”grass roots organizations’ funds scientific research all to thward whoever wants them to shut down. They are fighting, we are waiting. That must change.

Update: Industry is looking into this technology as was clear at the Dutch Blockchain Conference, held at the KPMG office.

Yesterday I visited the blockchain conference in Amsterdam. There is a string of these conferences around the world you can see the link here. The conference in the Crown Plaza business center in Hooftddorp could be called small. About 60 people, with a suprising number flying in from London. The proceedings consisted of an introductory talk about blockchains, presentations of startups and panel discussions.

Blockchain as a concept is associated with cryptocurrencies, mainly Bitcoin, now also Ehtereum, and many more. Usually virtual currency platforms are open source, because whoever gets involved wants to see that there’s no backdoors or bugs in the code that may threaten serious use of the currencies or the blockchain code. I will go through a number of aspects of blockchain technology, first the blockchain itself.

What is a blockchain?

To most a blockchain has no meaning, so to explain, a blockchain (because it is a more or less general design) is a system that stores transactions. It does so by grouping transactions into blocks, and then chain encrypting them. This means that all information on transactions of block one creates a code, called a hash, that is included in the information of block two. Block two also creates a hash, which will be included in block three.

The result of this mechanism is that it is very hard or impossible to change information in block one (or any previous block), because it would change the hash, both for block two and block three. The data of the blockchain is distributed over the people that want to use it to store transactions, and if you try to look up a block it is only blocks that can be verified to exist and have a certain hash (the one included in the following block) that you can use to check your transaction. This means the distributed system running the blockchain creates a single transaction history, which is immutable as long as you don’t change all subsequent blocks on a majority of existing datastorage devices.

Blockchains are not new, they are the principle way in which most document encryption works. If you take a large document and try to encrypt it, the encryption algorythm can’t just take the whole thing at once, it cuts it into blocks of a standard size and uses so called  padding to fill in the rest. Then it encrypts the first block, uses a hash of the first to encrypt the second block and so on. So all encrypted data is in blockchain format. When it is decrypted the process is reversed. The hash is not used because it is a one way process.

Trustless networks

Why Bitcoin and Ethereum and others are disruptive is that it uses the blockchain as described above to maintain a public ledger. Bitcoin was designed to exchange so called Bitcoins over a blockchian being run over many nodes. None of the nodes, peers or computers in the network would have authority over what did or did not get included in blocks, this would be a democratic process. Today the Bitcoin sphere is dominated by a handfull of large miners, but because bitcoins are used by many for transactions, it has a value like any currency, it can be traded without tax between other currencies at least in the EU.

A trustless network is like a game you play by the rules. The rules can only be changed democratically, nobody needs to trust anyone to follow the rules, they are baked into the cake.

At times there are alarm bells on Bitcoin because mining becomes increasingly unattractive (this is the process of creating new blocks of transactions and peer verifying them) as it is a energy intensive enterprise, It is not clear if Bitcoin will retain its value in the long run. It does prove a point that the creation and use of such a virtual currency in a network that is basically uncontrolled is possible. This is not surprising, gold coins worked for centuries and where also trustless. What is surprising is that this worked in the digital sphere, which always has a cost associated with it.

Bitcoin and Ethereum and other blockchain currencies do have a development community, and sometimes this community is divided. This community decides on parameters that affect the usefullness and value of a blockchain, and for most users who can not code this means they have to trust these developers to do the right thing.

Rewarding the work

A blockchain require work to exist. It requires peers to collect transactions and put them into  a block. It requires the verification of existing blocks by peers. This means a lot of calculations and these are energy intensive. Running a wallet (the name for a node in the network of blockchain peers) means you join in confirmation of hash calculations of blocks, sometimes from the first to the present of the blockchain in question. To compensate there is a mechanism that rewards this work, which is called mining. Mining is the term for ‘working’ to gain Bitcoin or Ether or some other cryptocurrency associated with a blockchain. It is not finding a prime number, it is basically guessing a number. One of the least attractive aspects of the current blockchain is that all mining participants are trying to gain currency by mining and to that end expend money on electricity. The idea is that the first one to ‘guess the number’ closes the latest block and gets a reward, and all participants are competing for this reward. On average the reward can be calculated and this provides the incentive to invest in hardware and electricity.

This guessing is otherwise completely useless. This is the worst aspect of Bitcoin and Ethereum. It causes immense CO2 pollution where this is not needed. The main reason is that the network is trustless, so it needs more protection against attacks, and one of the ways to do it is to distribute a burden which one ‘player’ could never carry. In a closed system this need not be the case. Ehtereum allows you to create currencies that use the general Ethereum blockchain and mining so many currencies can be created at the cost of one ‘guess the number’ process. This has also been implemented with bitcoin but was not inbuild.

A next generation public blockchain will have to have alternative ‘proof of work’, but the cryptocurrency associated with the blockchains is not the main advantage of them, especially not of Ethereum. The main advantage is to have a trustless data and code store that is hypertransparent and can be used for many purposes. More about that now..

Blockchain or Database

May organizations that wonder whether to use blockchain systems to store data do so because they understood that this data will be permanently stored and visible, like set in stone (as long as the blockchain exists). The IT industry does have a sector that is the current protector of data : The database community. Databases can be distributed as well, they are super proven technolology with billion dollar companies like Oracle providing solutions for most major companies. Websites usually use MySql (owned by Oracle but free for use), Microsoft has SQLServer products associated with their own server versions of the Windows OS.

The difference between a blockchain and a database is simple to explain. If you are dealing with a database you have two aspects : 1. Storage of data, done in files on the server. and 2. Mutations of this store. In the case of databases a mutation results in changes in the files on the server. If you look up data your database solution will have a file with a map of the other files, using it to find the right file, open that and look up your data.

A blockchain also has a store of data and it also allows you to mutate the data. But its store of data is distributed over all the transactions recorded on the chain. So if one wants to store data in the blockchain one could make a transaction with the table, field of choice, and leave the data in the chain. Then if someone wants to look up that data it has to find the transaction and reconstruct the data.  So the big difference between both storage media is that a database provides ready low work access (is optimized for that) and a blockchain requires more work. But in return a blockchain solution can be very low maintenance, in fact, you can download and run an Ethereum Wallet, store data, close the wallet and access the data years later with zero overhead. Even if you want to run your own blockchain nodes it is a process that can be done by non-IT personell on their desktops. 

Some applications

The best example of an application of blockchain technology was shown by Adi ben-Ari of Applied Blockhain. He uses the blockchain to store data on diamond properties and provenance. This is very important mainly to protect the major stakeholders in that market, also to protect against or exclude modern synthetic diamonds. It provides a means to control diamonds as a currency for illegal transactions. The applications are set to grow from diamonds to art to other valuable goods. Applied Blockchain uses a private network of nodes who can rely on it to keep a fair and impartial record of transactions.

Other applications where in fintech, possibly easing or elimination accounting load, and factoring, loan administration. Another application is triggering maintenance alerts.

Developer commitment

Blockchain code has to be developed and maintained. The main reasons for this are

• The structure and mechanism is under constant review
• The code contains bugs that need to be fixed
• The code may have security vulnerabilities that have to be fixed
• The code is not in it’s final state, features are being added

This process requires commitment by developers. this commitment is usually bought by initial release of the associated cryptocurrency, so Bitcoin developers who mined them easily in the biginning are now all multi miljonairs (sort of, cashing in is not a straightforward process). This also goes for Ethereum and the DAO a trustless organization that emitted it’s own currency to its stakeholders at the start.

The question is what happens once a blockchain has been launched. Once the initial work is done and a more or less stabile wallet (node) can be downloaded and transaction velocity is ok. Then who keeps track of the code, who prevents the initial builders to leave to sit on a tropical island or plant billions of trees in India. The code that is used to access and store new data in the chain may bifurcate and this obviously creates risks.

My view has been that there needs to be key stakholders to a certain blockchain, ones that require others to use it. So for instance all lawyers could require payment in legalcoin, so that anyone requiring legal assistance would need to buy those coins and thus support the existence and maintenance of the supporting blockchain. This is the only way any cryptocurrency is secure long term. All currencies we know are either physical or mandated as method to pay taxes, like the Euro.

If an industry or sector decides to adopt a blockchain mechanism for certain purposes it can do so privately, internally, and this creates an extra layer of trust in the interactions. Some private blockchains are encrypted, which does create risks because who holds the key? What if the key is lost. A major benefit of the current blockchain environment is that the code is open source, so whoever wants to experiment, can with a low treshold.

Introduction Obstacles

A panel discussion of the obstacles of introduction and adoption of blockchain tech was part of the congress. It had to suprising points 1. There are no applications and  2. The dutch culture prevents the dutch from developing lot of applications. Both where a bit weak. It seems the real reasons why there is little adoption (one other reason was offered by a spokesperson of Delloite, who said we won’t see adoption because we have not seen it yet, which is a great tribute to Neville Chamberlain). Of course there are other reasons. To guess a few:

1. The people that build trust networks are not beta, no developers, and like to keep their relationships human
2. Human trust networks are easier to move politically, so special interests and self interest can be more easily and less visibly served.
3. The current stake holders in the most important trust networks do not want to motivate people outside thier sphere to develop block chain applications.
4. Some financial applications like stock exchanges can not be implemented on a simple block chain because stocks traded often do not belong to the parties trading them (yet) or even exist. Market making would require large reserves of real stocks, which is uneconomical.

At least three speakers in the conference claimed there where no applications of blockchian technology yet where very bussy developing applications and speading information about it. Of course the common meetups (free) are a bit neurotic, so there was also someone that wanted to provide a solution to that (the good cop so to say). This all shows classic patterns of capture, protection and distraction around the blockchain community. Even in the community there where people driving a spectacle of adversarial opinions, which really don’t matter in an open source community (but do matter to people wanting to protect their hoard of inital cybercurrency).

Conclusion

Blockchain technology has real world applications, and can save a lot of money in some of them. They are no threat to some human trust networks that will never adopt them, even if they understand them, because they like and want the human in the loop. A DAO, or distributed autonomous organization with mechanistic application of rules will never fly from the developer community, and besides it is already here, it’s called capitalism or economism.

If you have questions or want to apply blockchain technology you can contact the author at frits@rincker.nl . We will offer generalized documentation certification and web content certification and are open to proposals.

 

 

 

 

We have written about how the economy as a system creates individuals that will try to realize goals that are damaging in the end, like trying to sell as much hardwood trees from Kalimantan, or as much Tuna from the Mediterranean Sea. These individuals apply economic rules that ignore anything that is not for sale. The economy is not about resources but turnover, because it was designed by banks who thrive on any trade. In our movie mythology terms a person that applies economic rules without considering or caring about its implication is a Borg or Systemic human.

The individual on the other end wonders what are the resources actually and reliably available to him or her. What skills does he/she posess so there is no need to trust or rely on others. The individual wants to see that there now and in the forseeable future there is food at least, or water, or shelter. The individual may be raising kids and ask the same questions in their place. In general if the economy is depleting a resource like hardwood or tuna, the individual doesn’t like it, the idea that once you had an option to get tuna, but because of the way others are treating the tuna that option will disappear triggers a sense of insecurity and social disapproval.

We are all individuals (except the one guy in the Meaning of life), and we all work in systems like a Borg. If we make breakfast for our kids it’s because we feel connected with them, we are family and operate with different drivers from our individual ones. There is nothing wrong with cooperating and not serving the direct individual needs, that is what heroism and sacrifice and pioneering is all about. But we are challenged today to think better about the systems we participate in. This challenge is that it is very easy to create systems that you feel you want to be part of as individual, but that in the end hurt you and your family.

Our sense of family and enterprise, one we have aquired as we lived as farmers in a harsh natural environment can be hijacked, has been hijacked for decades by others that where part of systemic organizations. Political parties, corporations, products like internal combustion cars or industry standards, all thos things represent systems where we have been asked to defer judgement and trust others in four ways 1. That they have our interest at heart 2. That they speak the truth 3. That they will actually do what they claim to do 4. That they consider the effect they have, avoiding negative effects. We can clearly say we have been disappionted.

One of the reasons why we have been disappointed lies in the template of most enterprises today : The loan based profit model. This can be seen as a suborganization any enterprise or organization must also be part of besides doing what it is doing. This template, a product of our banking system, is designed to serve the banking system, not cause the accumulation of wealth and security as we would like an economy to do. By adopting a business idea in the context of the wider economy we have been invited to also adopt this template organization, and this is what has created most problems.

There is nothing wrong with profits. Profits mean freedom to choose to support activities. It means freedom to apply our individual morality to society. But we have been conditioned to view as profit something that is not. Because if we make profit by selling coffee for instance, We find we have money in our hands. Money is a means of exchange. It is not a valuable thing by itself. So we gain access to products others make, but not to new resources. We may be gaining control over resources, but the total amount of resouces has not been increased. Profit is a mere buffer of security against the constant disapearing of money from society (by loan interes, financial losses, fossil fuel consumption). The economic template we have been applying has been a hologram, and nothing in it guarantees our future security or wealth.

If you are in a large organization then you will think in its interest, you will have ingested the system or you are trying very hard to. If what you find conflicts with your individual morality you will either quit or try to supress the thought, and this can in extreme cases create individuals with self loathing, no identity, drones for large organizations. If the organization expects this response then it will not help you cling on to your individuality, it will require you to dress and act as if you are one out of billions, not unique, replacable. It is a basic principle that this happens in any large organization, because large organizations fundamentally lack a reason to exist. They have to be populated with dreamy, distracted individuals. Ask the question : Which internationally operating organization do we really need? If you find a reason then wonder : Is the risk I think this organization protects me from created or always there? Also : Can this what this internationally operating organization achieves also be achieved by cooperating local organizations?

The key to being a ‘sound’ individual, meaning one that strives to survive and protect itself and whoever he/she cares about from harm, is to think through the purpose and effect of any system or organization one is part of, not only what it brings to the table for you. This is made hard by the same economic system, because it forces individuals to constantly look at money as a primary resource, while it isn’t, it is a promise to access to resources which explicitly lacks guarantees. The economy clearly tells us it focusses on trade in the market, not supply to it. As an individual one needs to think about real resources, like water, heathy soil, wood, fish etc. and wonder whether these resources are increased by the organization we work for, even as it sells them. There is a basic logic to that, of course if you sell a product you want to make more of it, but with Tuna, trees and other natural resources the economy doesn’t care, because one thing you will sell al the time : Fossil fuels.

If your organization does not generate resources and does not cooperate with an organization that offsets the damage it does (in real tangible terms), then you should withdraw cooperation in that organization. To make that easiest one should always strive for minimal debt and obligations, maximum ownership. Look for local smaller organizations that add to the reserves of food, soil, fish, fowl, trees, smart/skilled people, systems and organizations that look beyond money profit and those that support cooperation. Help others that want to do the same thing.

It is not Borg versus Neo, because we are made to cooperate and not be only individuals and only self interested. People that are like that use only part of their own resources, and sometimes it is the emptyness that results from that negligence that keeps them captured in their behaviour. We are Neo and Borg, and we can be so without destoying the planet. We just need to use our talent to analyse and our courage to move when we feel we contribute to our own destruction.