There’s been a little bit of buzz about Bitcoin, a new online currency, you can see their video below to listen to its creators describe it. It’s like someone looked at gold farming in World of Warcraft and decided it would really be more useful if you could get rid of all that questing and fighting.
I’m working on a new science fiction book and part of the focus is on a post-Singularity economy (in a very small way). Generally I prefer to just read what folks like Matt Ridley and others have to say on economics and the like, but I thought I’d offer up some of my thoughts on Bitcoin, as it’s an area I’m very interested in.
Before we get to my criticisms (and possible solution) I want to emphasize that I am very, very encouraged that people like the ones behind Bitcoin are spending some of their cognitive surplus on complex problems like this. My reaction comes from somebody who is reasonably knowledgeable about markets and economics and very forward thinking.
Here are the four biggest problem I have with the concept and why it I can’t see it being anything other than a fascination for geeks who spend too much time inside game economies (like me):
1. It doesn’t represent anything.
Casino chips, McDonald’s gift cards, actual money, all represent something. Either assets sitting somewhere (your money or Big Macs) waiting to be collected, or promises to repay based upon anticipated earnings via taxes, etc.
Bitcoins are just artificially generated certificates. They have no intrinsic value. While the same can be said for actual money under present conditions, money is at least theoretically tied to assets like future earnings. Its backed by real assets or contracts for such.
2. Even in-game currencies have value that Bitcoin doesn’t.
If you spend your day collecting virtual gold inside of World of Warcraft, there’s a market for that gold based upon assets (weapons, etc.) made available by Blizzard inside that game. Blizzard backs that market.
Bitcoins aren’t backed by anyone. The market for them right now is a novelty one, like Monopoly money during a game. Users of Bitcoin are playing a kind of game with them. Pointing to someone who accepts Bitcoins as currency for real goods isn’t necessarily the sign of a thriving market. It’s more of a novelty stunt than anything else right now.
3. It feels scammy.
Whose to benefit the most from Bitcoin? The early adopters. The creators and people who already have their computers running now to generate coins. Like Amyway, getting in early is where the money is at. As the currency inflates and they reach the 21 million coin limit, those early coins become more valuable.
The only way for people who are spending their time making Bitcoins now to ever see any value in their efforts is to talk other people into using it. Because of that whole lack of intrinsic value thing, if people ignore Bitcoin, all those coins have no value.
4. It’s wasteful.
Creating Bitcoins using unnecessarily complicated algorithms wastes energy. For every Bitcoin that’s minted, there’s a net loss of energy and computational resources that can never be regained. One of the problems of physical money is that you’ll never regain the costs from printing or stamping it. Bitcoin is arbitrarily wasteful and every virtual coin is born into this world with a negative intrinsic value. Why repeat the inefficiencies of actual currency?
I get that Bitcoin is based upon the gold farming concept for WoW, but that was a scheme designed for a game to *replicate* how the real world works (spending time and resources to create things of value). Taking the virtual version of a real world situation and trying to bring it back into the real world without producing any real world value is silly.
A better idea
I think some of the ideas behind Bitcoin are genius. I love the idea that people are trying to solve the problems of currencies, government devaluation and other issues facing money. I don’t think the answer is another arbitrary currency that’s little more than a digital certificate. I think a better solution could be created using some of the core ideas about transparency, etc.
Trade computational cycles, not imaginary money
Instead of using computers to crank out imaginary coins from really long number sequences, create an economy based up using the computational cycles of other machines.
Computation has value. Bitcoin wastes it an artificial way. The work being done to generate the coins is arbitrary. Those computational cycles serve no other purpose than to prevent someone from creating too many coins at once. Why not create a real market? A market based upon things with value.
Imagine a piece of software like SETI @ Home or the protein folding project that lets you rent cycles on your computer for information processing. These cycles could then be exchanged for actual money or goods. Companies like Amazon’s S3 already do this. We know there’s a market for computation and can peg a value on it.
It would have to be secure of course, but I think the Bitcoin fanatics could see to that. You could then build very interesting APIs on top of it so other people could build applications that utilize those cycles. Complex photo rendering, factoring and other problems that slow people down could be sped up by making other computers available at the flip of a switch.
Users could set their own prices as to what rate they’ll lend out their computer’s processing time. When a job request goes out to the network, a price would be attached. The lowest (qualified) bidders would get the work. As soon as the job is completed, funds would be released to a payment gateway or a trusted third party.
Cycles could be bought and sold and even futures could be purchased, just like a real asset. Instead of an arbitrary certificate that has no value, we could generate value from some of the one billions PCs world-wide that spend most of their time dormant. Credits for computation could be exchanged for other things like bandwidth and energy and bypass money entirely.
Selling computational cycles on your machine is not a new idea. Given light of the attention being focused on Bitcoin and creating new currencies, I think it’s worthwhile to revisit the concept and create a virtual currency with real world value.
With Halloween approaching, I thought it would be fun to put together some of my favorite spooky digital pranks you can pull on your friends using an iPhone or your computer:
Wolverine X-Ray trick:
iSight ghost image:
To create these images I used a quartz filter called “HoloGit” by elbows as posted on MacRumors, last seen here:http://forums.macrumors.com/showthread.php?t=376295&highlight=hologit
It worked fine using iChat in Leopard on my 2.8 GHz iMac
This is what it looks like to have your soul ripped out.
If you activate the effect and then hold real still when it asks you to step out the frame, you can make your friends think they’re in some twisted Japanese horror movie (minus Sarah Michelle Geller). If you spread some blood around your apartment and leave town for a couple weeks it’ll really complete the gag. Keeping showing up on instant messaging and insist you’re still at home.
This is what happens when you step out frame and then burst back onto the screen. Great for talking to grandma.
- Trim to break the device into smaller sections.
- Minimal use of buttons to mask the scale of the device.
- Rounded corners to make the device seem smaller in a similar way to the bevel.
- Black borders to make the screen seem larger.
Andrew Mayne is an illusionist and author. He’s worked creatively for Penn & Teller, David Blaine and produced over 40 books and DVDs on the art of magic. His website is at AndrewMayne.com
- How to put a routine together
- How to work with your assistants
- How to stage an illusion in the place you’re going to perform it
- How to look at it objectively and improve it
The 5 Secrets to Magic Success on America’s Got Talent
This season of America’s Got Talent was a banner year for magic. I was proud to see a number of my friends bring it to audiences. I think every one of them is champion.
It was great to see Michael Grasso go farther than any other magician has before. All I know about Michael was what I saw on TV (actually YouTube and Hulu…). I get why the judges were impressed. There’s a lot to be learned by his success and that of the other magicians on America’s Got Talent.
I thought it’d be fun to break it down into five helpful secrets. I get a lot of email from aspiring magicians who want to break in via America’s Got Talent. While that’s not shall we say a “realistic” expectation, I’m happy to proffer my thoughts to anyone who cares to listen.
I’m going to use Grasso as an example, but I think there’s stuff to learn from everybody. I think Sperry, Restivo and Murray got as far as they did because they’re sharp people. We’d all do well to study their success. More people saw them perform in the last few weeks than just about any other magician in history. That earns my respect.
The first thing that struck me about Michael Grasso was that he gets routining. Every one of his effects has a kicker too it. The biggest mistake you can do in magic, especially on television, is to be too linear. You can’t just escape from the box or saw the lady in half. There has to be a surprise twist. A twist isn’t just surprise revelation where you escape and appear somewhere else. It’s got to be a bonus piece of magic. It needs to be something that nobody saw coming. A substitution trunk or a regular levitation are fine pieces of magic, but there’s no surprise to them beyond the effect. Grasso’s magic had twists that happened after you thought the trick was over.
Expert TV help
No matter how clever you are, you want to get the smartest people you can find to help you out. Here’s the biggest problem: There are a lot of well-known magicians who know absolutely nothing about television. They’re dangerous because they have no idea how little they understand about television magic, but they’ll give you advice anyway. I’ve seen them give performers advice that might work well at a magic convention, but will kill them on TV.
Grasso got some good advice from guys like Enrico de la Vega. Enrico is a young guy, but don’t be fooled. Having worked with Cyril and other projects he’s worked on more quality magic specials than just about anyone I can name. Enrico gets magic on television. I’d trust his advice more than just about anyone on the planet. He’s behind some of the most amazing television magic in the last decade. Grasso picked right and he listened.
Play it safe
If you just looked at the material Michael Grasso performed you wouldn’t see anything that really stood out. Most of it was over twenty years old and based on stock magic methods that had been exposed on television (to no consequence). Of course saying that is like saying the Buck Twins are just doing card tricks. Grasso is a strong performer who took solid material and “plussed” it. This is playing it safe. It’s the smart thing to do.
A lot of magicians are tempted to reinvent the wheel when they’re in front of the largest audience of their career. This is because they feel the need to do something bigger and better. The problem is that they often have the wrong idea of what “bigger and better” is supposed to be. They get stuck thinking like a magician trying to impress other magicians. They look for methods and effect they think will impress their peers. That’s stupid. Go for tested material that audiences like and then make it as awesome as it can be. If you go watch early David Copperfield specials you’ll see he took a similar approach that Grasso did: Take old effects and bring them up to date. Making any illusion look good hard. It’s pointless to experiment with untested material on live television.
Mike Super won Phenomenon because he was smart enough to ignore the producers of the show who wanted to push him into doing something he knew was outside of what was strengths were. This happens a lot in television. If it seems too risky, it probably is.
Have a story
Grasso got as far as he did because of his talent. His medical problems made him even more interesting as a person. When it comes to competition reality shows, you need to have a story. It doesn’t have to be as life and death as Grasso’s story, but it should be compelling and give you dimension as a human being. It can’t just be that you’ve wanted to be famous all your life. Everybody on that show has wanted to be famous all their life.
Dig down into that place you hide from people and pull something out. Are you cleaning toilets at night so you can pay for magic rehearsal space. Are you living in your parent’s basement? Did you give up magic because your partner ran off with your act? Find something that makes you vulnerable and human.
Do the work
Grasso and everyone else we saw this season worked to get where they are. These guys eat, drink and sleep magic. They’re busting their balls trying to make things happen. I get a lot of email from people with plans and ideas. It’s all bull. People like that just want to talk about magic. They want someone to wave a wand and make it happen. I get asked for advice. I tell them to get out and perform. They tell me there’s nowhere near them to perform. I give up. This isn’t North Korea. Go somewhere. Somebody who wants to make it work will drive six hours to get on a stage to try out a routine for nothing just so they can have the experience.
If you don’t have that trait, give up now. Grasso, Sperry, Restivo and Murray are all very different personalities but they all have that streak in them. To get anywhere you got to do the work. Are you really willing to do what it takes?
From my HiddenFrequency.com blog:
So Leo Laporte woke up yesterday and realized that his Google Buzz account was broken and nobody noticed. That’s the end of social media for Leo. Paul Carr over at TechCrunch noticed this and opined that all of his twittering has come at the expense of his soulful blogging. Paul too has decided social media has run its course.
With all due respect. I think I perceive social media a little differently from them. It’s about your community, and I don’t mean the community as in “fan club”. I mean community as in the people you have one-on-one interactions with. People whom you have a mutual interest in. The operative phrase being “mutual”.
Leo is an absolute pioneer in online broadcasting and a hero to me. But it’s important to see that Twitter isn’t another form of online broadcasting.
Hint: If you have to use TweetDeck or some tool that lets you follow 1,000’s of people on Twitter then you’re having a different experience than those of us who follow a hundred or fewer people. I read every tweet from every person I follow. That’s why I only follow a few people. I don’t need Twitter to be truncated RSS.
If you treat Twitter as another broadcast outlet, that’s exactly what it becomes. It’s just talk radio with words. Twitter for me at least is like a huge conference call with all my friends.
A tweet from a celebrity with 200,000 followers doesn’t get top billing over a tweet from a friend with 2 followers. And that’s the way Twitter is supposed to work. That’s a very hard concept to understand for people used to a feudal web where one person is the gatekeeper of an audience.
And there’s the difference. Twitter isn’t your audience. It’s your community. It’s easy to tell the difference: The guy on stage at the concert is in front of his audience. The people in the stands are in their community. When the concert is over the audience vanishes but the community continues; with or without the man on stage.
The following is a post from my HiddenFrequency.com blog
Facebook often acts like a bad friend. We’re never quite sure we stand with them. One day they’re making life awesome, the next day they’re telling our secrets to people we don’t want to know. Telling us to pay attention to our privacy settings is like a friend that tells everyone who you made out with last night because you didn’t expressly tell them not to tell anyone. They win on a technicality.
But that’s not why we forgive Facebook or why we think of it as a friend. Or why Mark Zuckerberg can probably get as much action as that vampire dude from Twilight.
We forgive Facebook because of our biology. Specifically because of a hormone called oxytocin. You can read my buddy Dr. Paul Zak’s site for more information about that. In Marvel comics terms, it’s a chemical our brain releases that makes us trust and like each other. Getting a back massage will release it. Having sex will release it. Thinking about people you love can trigger it. Looking at photos of your friends can trigger it. And there you have it: Every time you go to Facebook your body is flooded with this love hormone. By proxy, we love Facebook.
Don’t blame Facebook, blame your biology. If we weren’t addicted to this hormone we’d be able to face up to Facebook like a clearheaded reptile and tell it to stop, or eat it’s young, or whatever animals that don’t have oxytocin receptors do when they’re upset. Instead, we do what every other primate does, screech a bit, bare our teeth and then hug and make-up.