Standards

 

traffic at night
A sea of red taillights on Sunset Blvd at night.

One of the finest examples of a stated and enforced standard is the specifications written for the automobile.  Every aspect of the automobile is specified so that every manufacturer is required to provide the same features and quality.  Every consumer can expect those same features and quality.  It is a tribute to our society for having created and enforced these standards. Most people do not appreciate what this body of work does or why it is so important.  The automobile industry is over 125 years old and it’s taken much of that time to sort out these standards.

 

Picture yourself driving down a busy highway at night.  Before you are several hundred cars going in the same direction.  What you see are rows and rows of red tail lights.  That’s is to say not just any tail light but the red color specified under Title 49: Transportation, PART 571—FEDERAL MOTOR VEHICLE SAFETY STANDARDS, Subpart B.  Looking down the highway you see each and every red tail light lens’ color matches every other precisely.  Wow.  When we glance down the road we can see in an instant that everyone is headed the same way.  If one of those 100 cars were coming at us, we would spot that in an instant.

Imagine what we would see if there were no standards; if every automobile’s owner decided for his or herself what he wanted for a tail light color.  Looking down the highway we would see something more like a Christmas tree then a column of red.  Is the car ahead of you slowing or stopping?  No one would know. Chaos would ensue.

New technologies take decades before manufacturers and consumers can agree on and set standards and rightly so. To set standards too quickly in the life cycle of a new technology means quashing inventiveness and creativity.  To wait too long before setting standards allows the biggest players in the space monopolistic control over the marketplace which drives up prices and further limits choice and ultimately hurts consumers.  Until standards are set and enforced that new space might behave like the wild West where anything goes.  The law is slow to catch up to the reality of the times, too.  Price gouging, failure to supply the promised value of a new product, and lack of truth in advertising are rampant. Misalignment of consumer expectations with manufacturer’s deliverables is common.  The resultant feeling is one of mistrust and disappointment.

With cryptocurrencies, we’re experiencing the early days of a new technology, characterized by much of the same.  There is a general feeling of mistrust and disappointment with software that doesn’t work as expressed or expected, and developers (the manufacturers, in this case) who are too quick to make promises and not experienced enough to understand why they should not cut corners or speed production in a trade-off with quality assurance and testing. Unfortunately, until standards are set and maintained, we can expect more of the same.  Furthermore, standards take a long time before they are written and ratified.  Until then, expect cryptocurrencies to feel like part of the wild, wild, West.

Trust no one. Never sell. HODL forever.

TheOldProspector

Bitcoin is at the latest, cutting-edge of technology, the bleeding-edge.  Things are a little bit dangerous, a little rough around the ‘edges’.  The ‘edges’ haven’t been polished yet.  That is because the latest technology never works the way it is supposed to. It’s too new.  When everything gets refined, when it’s made to work just right, after thousands of trials and tests, and millions of customers, and tons of revisions, it’s not considered the latest technology anymore. It just becomes our stuff.  We don’t give it a second thought.

The Bitcoin visionaries, the early adopters, were willing to put up with a certain amount of chaos and things not working just right.  They were speculators and prospectors, as well as technologists. It’s okay that the bitcoin exchanges didn’t work that well.  The Bitcoiners were willing to put up with a little nonsense.  They were a tough bunch.

Anecdotal evidence suggests that the newest wave of bitcoin investors, the group buying Bitcoin now, isn’t as thick-skinned as the Bitcoin oldtimers.  An ‘oldtimer’ is someone who has been in bitcoin six months or longer.  If you see someone wearing a sweatshirt that reads “I bought Bitcoin at $50.” extend them the proper respect.  They are a tough, old breed.

Trial by fire. This old breed’s mantra: “Trust no one. Never sell. HODL forever.”

*HODL is a misspelling of HOLD in a tweet that just stuck.

Luddites

rotary.gif
gif by Rollin Bishop, Popular Mechanics

Perhaps, calling someone averse to new technology a Luddite is too harsh a term.  Luddites were trying to stop the advance of technology by destroying labor-saving knitting machines in 19th century England.  Today, we’ve come to use the word to mean a laggard, someone slow to adopt new technology.  There are several friends I consider true Luddites. These are the folks that confess an aversion to technology, only it sounds more like a condemnation. “I can’t even set the clock on my VCR.”

These are the folks that would ask me which PC they should buy, ten years after everyone else already had a computer.  Then, when Apple announced they were coming out with new models in the spring, decide to wait. When I showed off my new Kindle, these same folk would say something like “Nah, I want to feel the texture of the paper in my hands.”  That meant to me electronic books hadn’t come to Main Street yet.  These conversations have helped me gauge where we might be on the new technology adoption curve as I have been wondering about with Bitcoin. When Bobby says “I’m in” I know the technology has hit its cruising altitude.

So it frightens me when one of these same folk (I’m not mentioning any names) calls to find out how to buy Bitcoin. It seems that there is a new vape product he wants to buy but the dealer only accepts Bitcoin. Wow. It hasn’t been thirty days since the Thanksgiving dinner discussion when we had argued over the Bitcoin bubble. Had he purchased Bitcoin then, he’d never have to think about how much pot cost, ever again.

Now, what to think? Are we finished?  Is the run over already? Has Bitcoin reached its fighting weight?  Is this what the future looks like?  Or, is the adoption curve of this new technology so steep that we are going to see explosive growth ahead that will make this past month’s action seem like the calm before the storm?

I’m beginning to think that that is what we are facing. Just in the last few days, I heard about Cryptokitties.io, the online kittens you buy with Ethereum, which are so popular the sales have slowed the Ethereum network to a crawl.  There’s the eSports network switching to Litecoin for its sports gambling.  There’s the CBOE and CME (Chicago Mercantile Exchange) which have been heralded for the past couple of months. Their futures markets will bring Wall Street to Bitcoin.

Each of these is guaranteed to contribute a great deal of new, increased traffic to the world of cryptocurrency. Add to those the coming Ripple ala SWIFT network where banks will sign up to use Ripple to expedite International Wire transfers, Cob coins which will introduce to us fee-free trading of cryptocurrencies, and Electroneum which will replace energy-wasteful mining with mining on smartphones.  The list is seemingly endless.  There are already thousands of new crypto-coins being programmed and introduced.  Some won’t make it.  Many will.  This is going to be huge.

Not a Bubble, a Trend

rockwell icebox
My Uncle Harry told me he never had an easier job than selling refrigerators to people who owned iceboxes.

When people see Bitcoin’s meteoric rise in price they fear they might be witnessing a bubble, wide enthusiasm followed by loud explosions, such as the dotcom bubble of 1999.  Remember when every actress with an idea for a website was creating an IPO (Initial Public Offering)? When it was over, they discovered websites aren’t so easy to create or build, and, a good domain name does not a financial success make.  Boom!

What we’re witnessing is the rapid adoption of new technologies, cryptocurrency and blockchain.  Cryptocurrency is virtual money, digital money that appears only on a computer screen but represents a value by virtue of the fact that everyone believes it does.  Say what? People have been doing virtual banking for quite a while.  When you log in to Citibank or Wells Fargo Bank and you see your balance on the screen, that is a virtual representation of the money you have.  Blockchain is something else, entirely.  Blockchain is the technology that makes cryptocurrencies like Bitcoin secure, anonymous and free of government or corporate controls.  I won’t go into an explanation of blockchain here.  There are some very good ones elsewhere on the Internet.

Why do we adopt new technologies?  There is a simple answer to that. We adopt a new technology when it does something for us better than ever before.  By better, I mean faster, smarter, smaller or cheaper. If a new technology does any one of these attributes better than any technology that came before it than it is an improvement that has a good chance of being successful. By successful, in these terms, I mean widely adopted.  If it achieves more than one of these attributes, it can very well become wildly successful.

I remember my uncle Harry describing to me one of the first jobs he had, selling electric refrigerators at a time when everyone had only iceboxes.  He said it wasn’t “selling” at all.  It was signing up people because the improvement was just that compelling.  It was faster, smarter, smaller and cheaper.

We only talk about Bitcoin because it was the first and best known of the cryptocurrencies but there are and will be many thousands.  We will have to bend our notion of currency and cash.  Think coupons.  Remember when you went to the carnival and the first thing you did was buy a string of coupons that you could use to pay for rides?  Each digital currency, each cryptocurrency,  has specific characteristics to be used in specific ways.  They may or may not be fungible as dollars are.  Think Airmiles and Chucky Cheese coupons.  They each have their own specific function and format.

There will be currencies for general spending purposes.  There will be currencies for pocket money.  There will be currencies for healthcare expenses, for virtual costumes for your Avatars, for real estate, for contracts, for international trade, for virtual kitties, for shopping at Walmart (think company store), for air travel, for stocks, for bonds, and, of course, dollars.  There will be currencies which work faster, currencies which are programmable, and currencies which are anonymous.

Cryptocurrencies are specifically designed to work with computers.  By that, I am speaking generally to include smartphones, thumb drives, pads, tablets, and other electronic devices to be included in the concept of computers.  In our future, computers speak to other computers.  They haggle and negotiate.  They invoice and pay one another with our consent and guidance but not necessarily our direct involvement.  For that, computers need cryptocurrencies.  Fiat currency just doesn’t work.  Imagine robotic arms counting out $15 in paper currency at a toll booth.  I don’t think so.