Ethereum. Eats money, contracts, law, and governments?

mrees999
By mrees999 on Wed, Jun 14, 2017 - 2:15am

I've been studying this technology for so long I forget or just assume that people have not been following this as long and know what I know as it's warped my sense of reality. Some part of me just assumes you all already know what is coming. I have to remind myself that most people are going to be blindsided by what's ahead. 

How many things in the world did the internet 'eat'? Video rentals, postal service, land lines. libraries, bookstores, entertainment venues, video games. travel agencies, printed newspapers, and magazines,  It changed just about everything that involved data. It gave people the right to publish themselves and be heard or just as important as the all powerful media giants that ruled up until the late 90s.

What will blockchain 'eat'? In particular - ethereum?

I found this video on YouTube 

 which does a great job to really speak to this and puts ethereum possibilities into a different light. I share much of his story about the origins of ethereum and how it happened in the beginning. Sending our bitcoin and getting nothing but an email with a small file that said - 'thanks - hold onto this tiny txt file as it might be worth something some day. It would be well over a year before that small file could do anything. For me, it was the content seed of the first 2,000 tokens of ether exchanged in their Initial Coin Offering to crowdfund their effort to creation this 'thing'.  From such a simple beginning so innocent that I had to make sure I saved somewhere that I wouldn't forget about just in case it turned into a 'thing'.

They were actually a little more careful that you saved that tiny attachment, they verified you copied it to a Google drive or dropbox so it was stored in at least two locations, and it was encrypted with the password you used when you sent your bitcoin. People don't realize now that this was just a gamble. The creator of ethereum gave it only a 10% chance of working. But if it could work - it would change the world.  I put up $500 in the form of one bitcoin to be included and convinced two friends to join me. Part of me wrote it off. But the other part - that I tried to ignore for over a year, held my breath that it would work.  The two friends and I made a pact to not spend them until and unless they became worth a million dollars. So I haven't even been tempted yet.  A pact is a pact.

Many these days just think it's another currency replacement token, funny money, tulip bulbs, a fad, a joke, and that it will all come crashing down. They fail to grasp what this means and what is already set in motion. The paradigm is being swept away for almost all you know. The ripple effects will change borders and the 19-year-old hacker who started it all has now sat before kings and presidents. Some of the world's biggest banks and companies of the world now court his opinion. Yet he remains obsessive about his creation. 

Almost nobody can yet comprehend what has started. And you were here to witness it. Hopefully little posts like this help to put this into perspective.

It started much earlier that getting a simple email with a simple attachment that almost nobody would understand the significance of why it will likely soon be worth more than $1 million.  Yet the network is less than two years old. It still has a few years and revisions to go before it is even considered production. It is already being used to deliver food for the UN, and launch hundreds of new companies that will be the 'internet' of the next generations.  Nearing one million dollars, and that portion is still embryonic. 

$400 dollar ether - and the boat hasn't even left the harbor yet. Imagine what it will be worth when it starts eating governments. People wonder how high ether can go in the next year.  At this time last year a bitcoin was about $400. It has since touched $3,000 and it was in no way about to 'eat governments, laws, contracts  and act basis of a new generation of business and internet'.

$3,000 by next summer? In my sleep. $10,000 sometime next year? I'd bet on it - and keep in mind - it sill won't be in 'production' even then. Only around 100 million will be created before it switches modes in a way where there will no longer need incentives for the nodes by creating new ethereum to stay running.  

Not even one out of three US citizens currently alive would be able to own a full one, less than one in a hundred if distributed equally. Owning even one hundredth of one may one day be seen as unbelievable wealth to our children and grandchildren.

You ain't seen nothing yet.

30 Comments

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Tim Ferris interview w/Nick Szabo

http://tim.blog/2017/06/04/nick-szabo/

Great interview sent to me by my son.

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WhalePanda Response

Somebody already asked me to speak to that Medium article - so I did. It was late last night and it might not prove to ultimately insightful but I didn't want to spend the point-by-point dispute as he was a bitcoin maximalist that suddenly switched from Eth hater to ETC lover after the split.  Even though they used the EXACT SAME CODE.  He's a Barry Silbert group follower. There are a bunch in that camp with the 'holier-than-thou" attitude.

Here's my response, keep in mind I was sleepy and my sarcasm was showing. It met the sarcasim attitude shown by WhalePanda  (AKA  ManBearPig)

https:[email protected]/in-response-to-whalepanda-ethereum-rant-531f8e19e7ea

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bitcoin unlimited interview

Jim I followed your link, saw a fun interview with Vlad Zamfir in which my overall sense was confirmed about two things.

1) sharding is exactly as hard as I suspected it was.  And from what I heard in the interview, they don't really know how they're going to do it.  The haven't actually settled on the solution, which means implementation could be a very long way away.  Based on my time in the trenches, "hard stuff" like that is probably minimum 1 year implemented-and-tested, assuming they get it right out of the gate, which is about 100 bitcoin-years.

2) an ICO where the founders get to walk off with the money prior to delivery of the final product is probably not the optimal structure for ensuring that an implementation gets delivered.  *cough* understatement *cough*.

In the valley I worked in, options vesting schedules were 4 years, with a 1 year cliff.  That was done because of human nature - as in, at a "why communism failed" sort of level.  If you allow the engineers to flee with the cash before the beast ships, you are selecting for maximum promise, and minimum delivery.

From the pointed interview questions, my sense is that the founders got to pocket their Ether, and as a result the number of initial founders has dwindled as they have become ridiculously rich.  So who will write the code to solve the incredibly difficult computer science questions?  How long will it take to ship the version that actually delivers on the promise?

Again.  They are solving really hard problems.  And, the reward structure is set up to (apparently) encourage key people to cash in long prior to completion, while encouraging all the vested participants to hype everything all along the way.  Once the hard problems get solved, all is well, but between now and then...I think I'll get my dip.

I also predict a restructuring in how ICOs get done - if that hasn't been done already.

I really do want this to work.  I like it when hard problems get solved.  Mrees, can you tell me from your history in the space, is the interviewer a known idiot?

Bitcoin is showing signs of a "dark cloud cover" on the weekly timeframe; if it closes below 2500 this week, then we get a "bearish engulfing" - what we saw at the top for silver 1980.

Anyone here actually worked as a mainline engineer (or tech lead, or tech manager) delivering large, complex software products - and stayed with the team through 3-4 product release cycles?  Just curious what the experience level is out there.

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Chris Derose - And the things left unspoken.

Let me first say that this was a completely biased and attack from the interviewer whom I’m very familiar with. That Vlad went on with this interview says a lot about Vlad has he was going into the lion’s den.

The interviewer here is Chris DeRose. He is one of the heads of the almost defunct CounterParty blockchain platform that is based on bitcoin but set out to be what Ethereum has become. Most if not all of the startup companies and projects that started on Counterparty have quit\ gone out of business or just migrated to Ethereum (See Storj).

The development of the blockchain just stopped, and Storj developers were trying to patch it as well as work on the Storj product themselves. My belief is that the toxic attitude and unwelcoming combative personality of Chris bare much of the responsibility. I follow people more than projects, and as I got to know DeRose – the more I lost respect for him. If you see a few interviews with him – I won’t need to tell you why. He is a podcaster so evidence is widely available on youtube if you can stomach him.

He also hates Vitalik. As a competitor to Vitalik, he has tried to convince the world of Vitalik’s inability to lead \ outrightly states that ethereum is a scam and Vitalik doesn’t know very little about the subjects he prolifically writes about.  Because of DeRose specifically – I sold all my counterparty tokens long ago. he is combative and arrogant. He is one of the embarrassments to the blockchain space.

I can’t post many links on this post as they will fail

But here’s a couple: https://www.cryptocoinsnews.com/chris-derose-ethereum-hype-no-substance/

http://www.newsbtc.com/2016/03/28/counterparty-founder-ethereum-cant-work-100-hype/

With that out of the way.  Vlad is young.  He was what I called a ‘tantrum’ a while back after some all night stress as I’m sure I did too in my early 20s. Genius nerds don’t tend to get out much and are a bit socially awkward. – I say this to give some context.

Now, people are super jacked up about Ethereum. But it’s still very, very early. I made comments that the ship hasn’t left the harbor. Given the timescale compared to bitcoin. We are at 2011 when the very first Pizza was bought and bitcoin still had no value. It hadn’t been tested and wasn’t on anybody’s radar including the governments.

Ethereum is MUCH more ambitious. There is a LOT more than can go wrong. There is a LOT more pressure on it as governments and the ‘who’s who’ of planet earth are getting behind it. That is a blessing and a curse.  The EEA alignment has agreed to use this new network as the future backbone public blockchain and have agreed to develop on it. They agreed to use standard tools and share all of their research together in agreement in the alliance.  This is very, very important.

This means the problems of sharding are no longer being barred on Vlad. Or the core team. Now the core team is bolstered by the best IT teams money can buy. The folks from Microsoft \ Intel \ Cisco and hundreds more can send in the big guns to help solve the problems. They could buy out the entire team with a tiny portion of the IT budget. The ideas and vision to dream it up  and act as natural third parties is set by the ethereum foundation. But the heavy lifting is now a world effort. The vision and genie will not go back into the bottle. The challenges are big I’m sure. But not out of reach.  The internet wasn’t able to handle voice of data \ or movies \ radio \ all the spam in email etc… and early versions couldn’t. But it kept growing with the imagination and desires that were built on top of it.  It just took the imagination and spark to set it in motion.  Of course, Vlad might see his own importance diminishing because of this. They heavy weight is lifted but also the ego that feels the sting when much of what you do gets ‘outsourced’ so to speak.

Hope this gives more perspective.

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ethereum: interviews and schedules

mrees-

Ok, thats a really good perspective to have.  He has a serious axe to grind, and every motivation to want to see ethereum fail.  I sure don't want it to fail.  I want it to succeed, so I can run off and write "smart contract" code to implement my next fantastic idea.

I did feel I came away with some good information from the interview.  Derose is clearly a smart guy, although I'm sure I wouldn't want to work on a team he ran.  His attitude is toxic in a work environment, especially with a bunch of relatively temperamental engineers.  He'd be a management disaster.  But it puts him in a good position to see the soft spots, and then poke at them.  Which I find quite useful in an interviewer.  Perhaps he has found his niche.

The very structure of ICOs invites scams to proliferate.  You mentioned as much, but I hadn't looked into it at all.  Now I understand why.  If anything comes from a structure like that, it will be accidental.  Human nature requires cliffs and vesting.  Its easily fixable (after all, the valley provides us a workable model) but we cannot rely on the founders to police themselves, any more than a two-year-old will say no to himself about cookies in jars.  So much money will be lost before that gets sorted out and the world learns this lesson again.  But ultimately, that's not my problem.

From what I can see, the "invention" part of ethereum has already been done.  Now what needs to happen is execution.  Its not necessarily a good thing that lots of big companies are involved, as you point out.  They all want to own it, they're desperate to own it, control it, and turn it into a proprietary product offering.  How much time must be spent on disentangling the politics from the design process?  The ownership structure of the dev process will be key.

I still think the promise is very interesting.  If they manage to get reliable code out the door that implements sharding and proof of stake, it will be very useful.  Useful for what, as they said in the interview, nobody really knows.  Something interesting, I think.  I mean that.

But it is really clear that most if not all the "owners" of ethereum coins have no clue about development process, and the schedule risk the whole thing has.  I lived and breathed this process for years.  And such processes do not benefit from massive spotlights, and the sociopaths that spotlights attract.  And even people very close to projects, and who should know better, are far too optimistic about schedules, and the likelihood of making them, the costs of changing features mid-stream, and so on.  I've seen it all first hand, and for years.

Ok, let me put on my "engineering director" hat on, and make use of your vast knowledge about all of it to ask some key questions:

  • what's the product release schedule for sharding? [is there a schedule?]
  • where are we in the schedule?
  • what team is working on the code?
  • how many people are on the team?
  • Is there a QA team?  A testing plan?
  • how is everyone paid? [have they already been paid?]
  • who has the decision-making authority for the feature set that gets released?
  • has the design been finalized?
  • will the final code be open source?

At this point, I want to see the project plan!

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bitcoin buy signal

So my paint-still-drying pattern code is giving bitcoin a 68% buy signal, which is the strongest buy signal it has given off since March 28th.  Signal triggered on yesterday's daily bar (i.e. the 14th).

The candle code is slightly more bullish than bearish for the 14th, but the signal isn't clear enough for me to be happy with.

Not trading advice, YMMV, etc, etc.

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Schedules and timelines for buidling the internet

As the etherum network is decentralized (officially), anybody is free to contribute and test \ suggest (Through the Ethereum Improvement Process). There are several projects going on at once but there were always for planned upgrades and each would require a hard-fork. The next (3rd is planned for September.) This can all be found on ethereum.org. 

The fourth will officially introduce Sharding and Proof of Stake. This won't be done for a few years possibly although they may ease into it carefully. In addition to that, you have hundreds of private sandboxed versions running by companies like Microsoft \ JP Morgan and several consortiums that are all independent of the public chain. The alliance agreed by members guaranty their 'discoveries' would be shared with the public chain as they build out tools. Microsoft builds theirs for corporate customers using AZURE and thus will need to handle millions of TPS. Likewise the banks. They will likely have independent teams with their own timelines that meet all of your questions but likely do not share it with the public. Mind you that hundreds or thousands of these project are likely happening at the same time. Just like the internet didn't have just one body deciding all of the protocol layers and websites, and technologies that would utilize it. It's creative chaos. Wild and unexpected things can be expected to evolve from the mess - just like we found on the internet.

So you are asking the wrong questions. You are framing this around one organization or team that coordinate. But what we have is the wild west and laws of natures that spawn from organic grass-roots growth where we find 'survival of the fittest'. As none of the alliance wants to spin off into uninteroperable versions of ethereum, they've agreed in the alliance to share discoveries so the entire ecosystem can mature. This is why tens of thousands of new engineers are leaving jobs at Facebook \ Google and other high-tech firms to join the research and possibilities in Ethereum. 

The core team likely has their own version of these things as well. They have several test networks and multiple teams. With your experience and interest, I suggest contacting them and immerse yourself. You'll find a friendly team that will welcome you and your experience. There you can get an inside look and take your place and find your role in changing the world. At the end of your years perhaps look back and feel satisfied that you played a part in this paradigm change.

As far as the ICOs - just like all of the coins, it's likely that 90% are scams or unrealistic. There is a lot of dumb money rushing in and some people will be there early and will profit from the stampede. We are definitely in a bubble but like the dot com, these can go on for a few years and we are still early. There can be a lot of money to be made in this short window but I wouldn't recommend using any money you would lose sleep over, but I consider using some profit to buy some land and other ways to get out of debt. In short, do something positive and help your family with it rather than spending it on frivolous temporary meaningless items.

Out of the ashes, and the limelight will come some important discoveries and inventions we can hardly imagine when the hype dies down. Consider saying the word "Ethereum" in a crowded room and count how many people know what it is. Once you've reached 50%, an exit strategy might be in order. 

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Sharding Mind Map Link

Only for Alpha Geeks.

https://www.mindomo.com/mindmap/sharding-d7cf8b6dee714d01a77388cb5d9d2a01

And IPFS - The Interplanetary File System. AKA - Distributed Web.  AKA Web3.

https://ipfs.io/

These are also for others who enjoy a brain cramp.

laugh

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bitcoin: candle code confirms

After receiving the closing prices for the 15th, the candle code confirms yesterday's read from the pattern code.

Bitstamp shows a bullish "high wave" candle, 76% chance of a reversal here.  Same is true across all the other exchanges, to varying degrees.

The code is saying, it sees a 76% chance of an "8-day low", meaning price should not drop below 2200 in the next 8 days.  Theoretically.

This is what I mean about waiting for the pullback.  Isn't this price better than buying at 2900 when you were feeling as though you were missing out on the big rally?  That feeling of missing out, which we can all feel, is often a "tell" that a spike high is in progress.

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Bitcoin fundamentals report to add to the trading report

There is much fear about the upcoming planned hard-fork currently planned for Aug 1. There is much uncertainty and exchanges recommend either selling bitcoin during the last spilt attempt. The market exchanges will likely lock people's bitcoin into place for days or weeks to see what the end results will be so people won't loose value by making use of it by having it recorded only on the less dominant chain that might not survive. My own prediction is that both chains will survive and live long and healthy lives performing different use-cases.Both disrupted chains would likely loose significant value in the short term. But for long-term holders, the possibility of getting two-for-one might be attractive.

However, there is no guaranty as there might be a 'war' between camps with different ideologies. One camp might try to 'sabotage" the other less dominant chain. Bitcoin miners can be a sore loser bunch. For those that track this kind of thing - many will prefer to wait on the sidelines. Probably a majority will just switch to Ethereum to watch and wait to see what happens- many won't return.

This is VERY bullish the price of ethereum as it will get a sudden influx of new people while creating a surge of demand as the supply is fixed...or even lowering the available supply as different programs which remove additional supply by locking them up in various ICOs with vesting schedules.

I predict the price of BTC will drop significantly with the uncertainty, and the price of ETH to inversely benefit - but on an exaggerated scale which would include the accompanying FOMO that these moves tend to trigger.

Sorry, I can't draw a candlestick for that. But here's a fork. Image result for fork

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fascinating

Super interesting.

The fear will show up in prices.  We'll be able to see this play out in real time.  Perhaps that's why the ETH/BTC ratio has done so well recently.

Mrees has all the experience as to how the prices have moved during past events.  If he's right, we will get to watch a fascinating "flight to safety" effect within the *coin community itself.  Which coins act as "safe havens", and which are not?  Prices will tell us.

Mrees- if you have dates as to when last market-moving bitcoin events occured, I could mark up a chart appropriately, so we could project (perhaps) similar outcomes.

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Flight to Crypto Safety

You will see the last serious attempt took place in March.

Interestingly now, with the latest corrections - people bailed on almost all cryptos - for the two heaviest days at least, I calculated 92% of all the currencies in the top 200 was negative. Where did they go?  Once answer was "Tether".  This is a crypto that is tied to the USD. It should ALWAYS equal one USD.  When it doesn't something is out of balance - and when people bailed - they either went to cash, but increasingly they are staying in crypto but ducking for cover in "tether'.  Its balance in price during the heaviest sell off was $1.04

While you are building models, you might find that interesting as well.

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The coming market cap crossover, BTC vs. ETH

It's cominggggggg..  you can see it clearly on this chart of comparative market cap action;

Mrees said about the coming BTC fork;

This is VERY bullish the price of ethereum as it will get a sudden influx of new people while creating a surge of demand as the supply is fixed...or even lowering the available supply as different programs which remove additional supply by locking them up in various ICOs with vesting schedules.

I predict the price of BTC will drop significantly with the uncertainty, and the price of ETH to inversely benefit - but on an exaggerated scale which would include the accompanying FOMO that these moves tend to trigger.

I agree completely, and I want to add that the upcoming crossover between ETH and BTC will create it's own kind of recognition for ETH, regardless of all the points Mrees makes.  As I have stated here before, this crossover will create a wave of mainstream media recognition with headlines that will read something like this (note I am making this up);

" Ethereum unseats Bitcoin as King of the Cryptocurrencies"

" The Blockchain baton has been passed to Ethereum"

" Corporate adoption drives Ethereum's market cap. to exceed that of Bitcoin for the first time"

My thesis is that this event itself.. the crossover as I am calling it, will create significant wind behind the sails of ETH demand and price.  

Bigger money, slower smart money, is going to be coming into this space.. and much of it will go to ETH.  Once the crossover happens, the next major psychological, "round number" target for ETH will be adding a fourth digit to the price, i.e. >/= $1000.  $1000 ETH could come astoundingly fast.  With Bitcoin still at $2500... the precedent for a four digit coin price is already well established.  Do your own due diligence.. but I promise you I will be continuing to take Mree's advice with my smallish stash of ETH as I Hold on for Dear Life.        

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Excellent observations

Excellent observations Jim.  There's no doubt in my mind the Ether will be the token and network of choice. Bitcoin will still be a gold standard.  One of the most common complaints or criticism I hear about bitcoin is that "nothing backs it". But they don't understand it is backed by physics. The most powerful computer ever devised running computation lottery for the privilege of earning the reward to be able to write the next block of transactions. Using game theory at its finest to put selfish wants into a model where it creates a network so strong it is considered impossible to break by anything short of a powerful nation state dedicating significant resources.  It will do fine as the 'crypto of last resort'.

For all of Ethereum's struggles with growing pains, necessity is the mother of all invention.  Amazing to think how far it's come from a concept to often considered the most amazing and exciting technology in the last millennium. And we are here before 99.99999% of the world. What are the odds?  Count yourself blessed.

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bitcoin phase transition

This is drawing on the work of Armstrong, plus some historical phase transition events, notably silver in 1980.

This could also be tying in with the timeline of the upcoming hard fork.  Traders always move in anticipation of events.

Now that we've seen the "outside reversal" (i.e. the bearish engulfing) we need to be really careful in watching the right side of the spike.  A failure to make a new high will probably lead to a lot of selling, especially with the impending event that is only six weeks away.  "Cash in my massive gains now, and re-buy after the hard fork is past."

Phase transitions generally retrace at least back to their starting point, in this case, bitcoin 1250.

FWIW, the daily indicators are still positive.  For instance, the most recent red candle on the 18th is more bullish than bearish, and the pattern code still shows no breakdown.

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Fascinating ETH aticle

Much of this went right over my head, but the essence did not.  New software is complex...and bugs and vulnerabilities will happen.

https://www.bloomberg.com/features/2017-the-ether-thief/?utm_source=fark...

THIS IS THE story of one of the largest digital heists in history. And while you may have heard last year that hackers breached Swift, the bank-to-bank messaging system, and stole $81 million from Bangladesh’s central bank, the DAO attack is in a different category altogether. It played out in front of anyone who cared to watch and couldn’t be stopped.

Just as the global WannaCry ransomware attack in May laid bare weaknesses in computer operating systems, the DAO hack exposed the early frailties of smart-contract security and left many in the community shaken because they hadn’t found the bug in time. The aftermath would eventually pit good hackers against bad ones—the white hats vs. the black hats—in the strange and futuristic-sounding DAO Wars. The roots of the DAO belong to an idea Jentzsch borrowed from another internet-fueled phenomenon: crowdfunding.

The 32-year-old Jentzsch, a theoretical physicist by training, and a few colleagues started Slock.it in 2015. As they considered how to fund the company, Jentzsch approached it as many had—sell a digital currency, effectively a token, to raise cash. But why should each new startup have to program its own initial coin offering? Jentzsch wondered. What if one huge fund ruled them all? He introduced his idea to the world at DevCon 1 in London in November 2015. “What is the blockchain way of creating a company?” Jentzsch asked his audience.

“Of course, it has to be a DAO.” It would work like this: Ether, a virtual currency like bitcoin, would be used to fund and develop applications on the ethereum blockchain—things such as making a music app similar to iTunes or a ride-sharing service along the lines of Uber. Investors would buy DAO tokens with their ether; the tokens would allow them to vote to fund projects they liked. If the app they backed made money, the token holder shared in the profit.

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Watching this in real time was exciting

I was watching the forums on Reddit where this was all discussed with each other and the small ethereum community in real-time. The excitement and confusion the crypto politics. The funny thing is that the 'white hat' group didn't even know each other - at least at first. 

Some important details that were missed in the article:

The money was measured in Ether which fluctuates highly, especially during that massive run-up and run-down.

The price of eth had just risen from one dollar to 20. This was sudden wealth from early investors of ether. They were essentially gambling with was literally ten bucks that came out of their own pockets just a couple of months before. Although I put in $1000 worth into the theDAO - it was really about $20 from my own pocket that I had bought just six months before. Most others were in the same boat, but the headlines only grabbed the inflated value at that time.  It was mostly considered a gamble, but it was also an experiment to be a part of history. This was the first ever of this new kind of thing nobody was sure would work. Ethereum had only been running for 9 months, and come out of the first beta version for three months.

So most everybody that has vested interested in it were more entertained by the story and watched it unfold with a big bag of popcorn and the suspense you might find in a thriller movie. Hackers watching hackers, nobody really knows who was black hat and who was white had as the loot was being siphoned and the clock was running down? Desperate hackers trying to find each other and trust their intentions as the black hats were draining back the loot from the white hat and it was a vicious cycle with the clock counting down the time which ended in 30 days from the first hack.

It was all happening because the contract allowed anybody to withdraw their own investment at any time. There supposedly was nothing at risk. That was the reason it got so high in price. We figured "why not" - nothing at risk.

Most of us were indifferent to if we got our money back, easy come easy go. We would have actually been fine if the hacker got away with it. Technically it wasn't a hack. He didn't change any code or break in - he just exploited a bug. Because this happens in life - in the real world we would have taken our losses and gained some invaluable wisdom. 

The rival gain of bitcoiner fans hated ethereum and thought (and still do) anything that is not bitcoin must be a scam. But the moment ethereum split from the hardfork, overnight - they LOVED the orphaned chain of ethereum that was the EXACT same code they hated the day before. Many people suspect it was this faction that helped keep it alive and the biggest sponsor "Barry Silbert" immediately rose funds from his investment group to invest in this but the day before he was disparaging it.  

But the core foundation reasoned everybody knows it still in beta - no company is running production code and it's all an experiment. There could be no way of doing this function in the next months or years as people would start adopting this "for real". This was their one and only chance to 'right a wrong', but they agonized over it. All participants \ miners who run the processing had one simple piece additional 'letter' they added to the program to run the nodes - one signaled they wanted to run the revised version - and leaving off this character (also called a switch). would mean they would continue running the version of history without the adjustment. Around 80% decided to run the altered version that would leave out the block that allowed the DAO to be created.

Everybody who owned etherum tokens before that point suddenly had one coin on each chain. We essentially doubled our money - but in dollars, the smaller chain was selling for only about 10% in dollars of the bigger version run by the 80%. Most sold the orphaned coins once they learned it still had value. 

The ethereum network was still being hacked as it was still immature and future adjustments in the test phase hadn't been merged into the main code yet. The hacker exploited this to by spamming the network with endless new addresses that remained empty of any ether. The only cost of this was a bit of ether paid the processors as a fee. The Ethereum team implemented this in early autumn, by the loss in confidence lowered the price to under $8 at one point. 

Seeing how the ethereum stumbled, and but worked round the clock and game together as a team in the harshest of environments and anger, some embarrassment was impressive. Finding bugs is expected, finding bugs that involve real money in contracts you generally can't just fix once they've begun was a hard-learned lesson. Seeing the team get back up and brush themselves off again - gained confidence that they had more wisdom and a lot more careful about what they were doing. This confidence resulted in the price going from around $8 to over $400 recently. This is a 50 fold increase in eight months. 

The adventure continues.

And you aint seen nothing yet.

New_Life's picture
New_Life
Status: Silver Member (Offline)
Joined: Apr 18 2011
Posts: 103
Hello Chris! :)

Nice to see Chris is looking in on activity in here, gives me some comfort that I may gain a new perspective from another mind far more intelligent than myself..

I too find a lot of the crypto-currency and blockchain discussions way over my minute level of understanding, however I am trying to command discipline within myself to learn about this space.

My open outlook is that if I am to dismiss this potential opportunity for buying into the early days of an alternative monetary system, it is because of an informed decision based on effort/risk/reward rather than my hopeless lack of knowledge and current confusion. 

edit: that was my Silver post, 6 years on and still learning every time I visit here.. :)

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sand_puppy
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Posts: 1490
CAF: Not happy about Crypto Currencies

There are several people I respect with high intellect, wide fund-of-knowledge, pattern recognizers and impeccable integrity.  Catherine Austin Fitts is one.  

Her take on Crypto Curencies are that they enable TPTB to see all of our financial transactions.  

This is the same impulse as the move to a cashless society -- to bring our financial life entirely under the purview of TPTB.  With backdoor access to all of our devices, they have the potential to be shut off at the whim of TPTB.  It is a population control mechanism par excellence

------------

Crypto Commentary: First Installment

News & Commentary on June 18, 2017 at 4:06 pm
 

CAF Note: Introducing James Quaid who has been a part of our network since 2000. I am delighted to announce that he will be posting on cryptocurrencies for the Solari Report.]

by James Quaid

Introduction

First, I freely admit I am not a Crypto Currency aficionado. My POV has been colored by years of investigating digital platforms and Crypto Currencies. I understand that I am a blasphemer in the eyes of the new religion of Crypto Currencies. I accept my infidel status and invite opposing views. People are desperate for good news of any kind. Couple that with FOMO (Fear of Missing Out) on the “Next Big Thing” which has fueled Crypto Currencies to their current stratospheric heights..

My investigation into Crypto Currencies started ~2009. During that time I found someone that was giving away .10 BitCoin (BC). So, I downloaded it and continued my research. In the key of the BC were the following characters in sequence ***kRAP***. This partial string caught my eye. The next day, my hard drive (HDD) flamed out and my .10 BC was toast. I took this as a “Wake Up Call” from Universe, saying “Pay Attention.”

Historical Digital Platform Problems

Way back in 1998, I was working at a Central Office Switch manufacturer, AG Communications, as a QA Hardware and Software Test contractor. During a department meeting, my supervisor told us that the FBI had waltzed in and demanded a back door into all of the new digital communication offerings from this day forward, AG complied. That same year SQL guru Clif High stated that the NSA had waltzed in and demanded a back door into all Microsoft OS’s from that day forward.

At that time, I sent email to all my family, friends and acquaintances, stating “Put nothing on a computer you do not want the world to see.” The handwriting was on the wall. Please note, this was during Clinton I, ~3 years before 911. The draconian measures of the Patriot Act were already under construction..

The biggest problem Crypto Currencies have is where they reside. Digital platforms have “zero” integrity. Note a few examples below.

These links are proof of the Encryption Maginot Line.

Please note, this one really gets my goat. Where it does not take a secondary stealth OS to set up a phone call, send a text or browse the web. What’s disturbing is, because you do not have root permissions and your Cellular company does, they can see everything on your phone. Therefore, zero privacy prevails..

First Installment Summation

I could go on for quite some time chronicling other digital back door stories I’ve found. But, by now I hope you’ve gotten the gist that no digital device has a reasonable expectation of privacy. It’s been that way for almost two decades and I can find no indication that major changes supporting a reasonable expectation of privacy are on the drawing board. But, know Crypto Currencies are the Tapeworm’s / PTB’s dream come true. Where control mechanisms will be able to selectively turn off and on users’ accounts / access via a computer algorithms based on your online behavior

Next, Crypto Currency Theory vs. Practice…

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2339
CAF....

Honestly SP... I find her a little bit, "out there" even for me : )

I think there is enough to think about going on.. well, on planet, like intelligence agency drug running, and elite pedophilia, without getting too much into the off planet ideas. 

The biggest problem Crypto Currencies have is where they reside. Digital platforms have “zero” integrity.

I dont buy this.  Where a coin resides is in every node reflecting it.  That is the core of crypto.. it's reflected in all (mining or hashing) nodes, just like your DNA is in every cell of your body and you could (theoretically at least) be reconstituted from any one cell.  This biological fact is astounding and amazing.. and the blockchain is also quite elegant.  Individual Digital platforms may have zero integrity, but the decentralized, networked block chain platform has maybe the highest integrity possible.  My vote is that this guy Quaid does not fully understand what he is writing about.  There are no secret backdoors in a code transparent platform like BTC or ETH.  Not happening.        

In any event, it's clear that TPTB are going to eventually outlaw cash, and most cash-like substitutes.  And while some people who don't understand this space may think you can't use a crypto as cash (or a cash replacement).. think about this;  I could go out and buy a crap ton of Ledger Nano's and load each with one ETH, or 0.1 BTC.  Then I could hand it to you, along with the keys (and recovery seed) and I just handed you 1 ETH.  It didn't move on the block chain.. but you now own it.  I lost it in a boating accident.  Try doing that in the matrix in a cash free future.  There will be very few pathways out of the matrix.  Gold and Silver coins.. and a Ledger Nano S with an ETH or fractional BTC on it.   

BTW.. I think there may be a business and/or prepping idea in there somewhere. 

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sand_puppy
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Posts: 1490
Off Grid use of Crypto Currency

Jim H,

A question:  So suppose you pay for something by physically handing someone a physical Ledger Nano 2 loaded with a couple of ETH.  You do this to stay off grid where your transaction cannot be observed.

How is this different from paying with a Krugerrand or 5 Silver Maples?

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Afridev
Status: Bronze Member (Offline)
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Posts: 87
For a transaction

I think nothing has to be handed over physically. Wouldn't exchange of the 'code' do? If the recipients have a blank Ledger Nano 2 and they have the 24 worded code (and a working online computer with Google Chrome and the right App installed... Maybe there is a more independent way that I don't know?), I think they can take over the amount from the original Nano 2. At least that's my understanding.

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davefairtex
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Posts: 4354
prepping bitcoin

Jim-

I think for prepping, paper *coins are best.  No need for electricity, or online access.

Form factor should be basically a mini-security-envelope, with the private key sealed inside, and maybe the outside has a nice design (as described my Mrees) and the # of coins/fractions.  It could also have a visible QR code you could hand to an app which could validate it if you happened to have access.

If/when you want to transfer them to your online wallet, rip open the envelope, retrieve the private key from the inside, and you're all set.  But (hopefully) the design of the note is such that you basically have to destroy it to get at the private key.

If you want to keep it offline and hand it to someone else, you can.  They have to trust you - but they'd have to trust your nano too.

With small enough denominations, it might actually make sense.

And it requires physical access to "hack" them.  Which is nice.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5143
Wild Flash Crash on ETH today

I wonder what happened here?

I'm used to flash crashes on the big exchanges, because of the quant vermin that infest them, but haven't noticed it here before.

Is that a bad tick?  A flash crash?  If a flash crash, how?  Why?

Also, remember, you haven't "made" anything until you take money off the table...

davefairtex's picture
davefairtex
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Posts: 4354
just one flaw

There are no secret backdoors in a code transparent platform like BTC or ETH.  Not happening.

Eh, have you ever heard of security bugs in LInux?  That's a transparent platform.  Are we sure none of those were deliberate?  A big complex codebase, worked on by lots of people, you think there's no way they could write something in there?

NSA can get access to pretty much anyone's machine.  Do you really think there's no way for them to inject something interesting into the blockchain code?

Long ago, there was a hack (supposedly) done by Ken Thompson who wanted to put a backdoor in the "login" program.  (This was done a very long time ago.)  But did he hack login.c directly?  He did not.  He hacked the C pre processor to inject a specific set of lines of code in a certain place whenever it was compiling login.c.  All the security focus was on the login program.  Nobody ever thought to look for security problems in the pre-processor.  This hack was an attempt to show that "securing" a computer system was impossible.

http://wiki.c2.com/?TheKenThompsonHack

Similarly, if I wanted to hack blockchain, maybe I'd put something bad in some obscure (but very common) bit of Linux library code that nobody ever looks at, but that literally everyone calls, including the blockchain server code.  Code would check to see if it was being called by blockchain.  If so - it spins up a thread which runs My Special Backdoor gateway code which opens a connection to a remote machine, reports in, and asks if there are any instructions.  Meanwhile in the original thread, it executes the function and returns as normal.

I've seen what those NSA guys do.  They are very, very good.  Who puts malware in disk drive firmware?  They do.  You literally have to throw the drive away to get rid of the malware.  That's one of the million things they have done.

CAF is right about this part.  If your foundation is vulnerable, it doesn't matter how strong your roof and walls are.

Every time someone tells me that something is "unhackable" - I really wonder if they went and read any of what Snowden released.  Perhaps they just didn't comprehend it, and what the implications are.

I'd be willing to bet real money that the NSA has already put backdoors in popular networking chips.  Once you have something running on a chip that has access to memory, well, it can pretty much do anything it wants to the computer.  If I were in the Chinese security service, I'd recruit some hardware guys and I'd design the world's best WIFI chip, and sell it for pennies, so it was everywhere.  Literally everywhere.  It would have a secret mode it would drop into whenever it got a special packet.  Good luck detecting this behavior by eyeballing the chip.  Or its output.  I'd own the world.

But I'm sure they haven't done that.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 701
Kleptocurrencies

Jim,

Would you trade some of your PM stash to a stranger who had a nano ledger that was claimed to contain X *coins without verifying it? Would a paper envelope as DaveF describes in post #25 be any better? If the goal is to process the transaction out of the auspices of TPTB, how are you going to verify the authenticity of the *coins? I'm sure that authentic looking QR codes can be faked pretty easily. Scanning the QR code with any computer device would be a trigger that associates you with that series of *coins. If you are using a smarty phone, they know who you are and where you are (GPS.) Here's a hypothetical situation presented by ACLU to show some of the tracking possibilities (in 2012.) https://www.aclu.org/feature/meet-jack?printmail=1&redirect=meet-jack-or-what-government-could-do-all-location-data

Now, imagine a world in the not-too-distant future where governments are tired of losing out on taxes and need to limit capital flight enough to render (trading, bartering, selling, etc.) these *coins illegal. Since the *coins don't really exist, government can't ever completely destroy them; however, government can certainly increase the legal cost of transacting business using *coins to the point where they have extremely limited utility. What would that do to the *coins' perceived value?

Until there is widespread usage, we're still early in the game for government interdiction. There is likely lots of short term money to be made. If a "colored swan" event doesn't occur first, the *coins success will be their undoing. Confidence will be lost and the perceived value will plummet. At that point, those owning these *coins will be holding virtual bags of virtual dust. You either sell too early ... or you sell too late.

A friend of mine euphemistically calls these *coins "kleptocurrencies." Of course, that is a long term description. ;-)

Grover

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rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1313
To add to Davefairtex comments..

There are no secret backdoors in a code transparent platform like BTC or ETH.  Not happening.

And I'm sure no one ever uses a mobile phone for any type of crypto-currency transaction:

 https://www.osnews.com/story/27416/The_second_operating_system_hiding_in_every_mobile_phone

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4354
second phone OS

Oh good lord.

Lily Tomlin: "No matter how cynical you get, its impossible to keep up."

A friend of mine worked at QCOM in the mid-to-late 90s as a hardware engineer building base station radio cards.  (He's now retired after selling most of his ISOs, top-ticking the market in 2000).  He would always say that the software teams at "the big Q" were seen as a generally flaky bunch (by the hardware guys) and the sense I got is they weren't the A players in the software industry.

Of course that could just be him being a cranky hardware guy, but this was the team that wrote the code you are talking about.  I find it entirely believable that it has a horde of buffer overflows and that it implicitly trusts everything the base station wants to send.  That was the 90s way of doing things for sure.

You can bet that if the NSA didn't have a product to exploit this before, they do now.  Even if it wasn't before, now every mother-loving phone can be owned by them.

It really is impossible to keep up.

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