That's The Way The Bitcoin Crumbles

Source: TheDigitalConsultant

Is Bitcoin imploding? It's a question that needs to be asked.

In the past few weeks we have had the Mt. Gox Bitcoin exchange go 'belly up' in a rather spectacular fashion. It reportedly lost 750,000 Bitcoins, blaming its demise on a 'bug in the Bitcoin system'.

This has been followed by Canada's Flexcoin who closed down after losing around 440,000 euros worth of Bitcoins to hackers. 

Today there are reports of the American CEO of Bitcoin exchange company First Meta, who is based in Singapore being found dead near her apartment. The reason for her death has yet to be explained.

Also today we finally discover, through the investigations of Newsweek, who the founder of Bitcoin actually is. Mr Satoshi Nakamoto is a 64-year-old Japanese-American and has subsequently disowned the project and strongly denies any current association with the crypto-currency.

"I am no longer involved in that and I cannot discuss it," he says, dismissing all further queries with a swat of his left hand. "It's been turned over to other people. They are in charge of it now. I no longer have any connection" he told Newsweek.

However, all is not what it seems as it turns out that the Mr Nakamoto was in fact NOT the creator of Bitcoin after all.

It is barely two days since the Monetary Authority of Singapore (MAS) issued a warning to consumers and businesses 'to be cautious with transactions involving Bitcoin, as virtual currencies are unregulated and consumers may not have legal recourse should there be problems'.  

Clearly this prophecy has come to pass and these recent developments are hardly reassuring for those who have taken the plunge and are, or were, playing the Bitcoin market.

Not to be deterred, Singapore also recently installed two Bitcoin ATM's where people can insert their hard-earned Singapore dollars and convert them to Bitcoins.  I shouldn't imagine there is much of a queue to do so given all of the above.

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Memristor Moments & Hurricane Hunting - A Peek At What 2014 Will Bring

It's always good to take a punt on what might happen in the future.  Forty years ago the science fiction writer Isaac Asimov wrote that you might find the following in a 2014 World Trade Fair, and he is not too far off the mark as some of his predictions show:

“By 2014, only unmanned ships will have landed on Mars, though a manned expedition will be in the works and in the 2014 Futurama will show a model of an elaborate Martian colony"

"Men will continue to withdraw from nature in order to create an environment that will suit them better”

"Gadgetry will continue to relieve mankind of tedious jobs. Kitchen units will be devised that will prepare automeals"

"It will be such computers, much miniaturized, that will serve as the "brains" of robots"

"Much effort will be put into the designing of vehicles with "Robot-brains"*vehicles that can be set for particular destinations and that will then proceed there without interference by the slow reflexes of a human driver"

"Communications will become sight-sound and you will see as well as hear the person you telephone. The screen can be used not only to see the people you call but also for studying documents and photographs and reading passages from books".

If anything the pace of change has increased significantly since 1964 so what trends and developments might we expect in the year ahead?  The following are the results of my crystal ball gazing.

The Way We Work

The debate about the merits of remote working will continue to ebb and flow, with no clear cut decision either way. The BYOD (Bring Your Own Device) approach will bring with it  a huge surge in the growth of the mobile workforce.  This will be coupled by a corresponding growth in the need for data and device security as imported malware on personal devices will pose any even greater threat to company security.

As businesses evolve into 'any-time/anywhere' enterprises the change will bring with it a huge societal shift, as new technologies increasingly blurs the line between 'work' and 'play'.  The need to reinforce a work/life balance in the workforce will be greater than ever as the realisation sinks in that the new work practice is not simply about handing out smart devices to employees.  Companies will also need to become less risk averse if they are to succeed.

Mobile But Not As We Know It

Mobile will continue to be one of the dominant trends in 2014 and we will have even greater dependence on our mobile devices. Marketing will increasingly focus on mobile and mobile content marketing strategies will separate out those who succeed in the marketplace and those who do not.

Mobile Apps will be more carefully targeted and smaller.  Their development will surge ahead at the expense of applications.  There is a prediction that app developers will be looking for ways to snap together apps to create larger applications.

It is probable, but not definite, that augmented reality glasses such as Google Glass will finally go mainstream in 2014, as the march towards wearables continues. Smart watches will become 'de rigueur' in all the smartest circles and will live up to their name by becoming even smarter than the existing prototypes we have today.

Transformative Technologies

There are several of these either in use, or in the offing.  Here are my top picks for the year ahead:

• Bitcoins
  Although I have written previously (with guarded skepticism) about the merits or otherwise of Bitcoins, it is clear that there is continuing adoption of the alternative 'currency'. But it's a case of 'buyer beware' as, while is has apparently been a boon for online drug peddlers, its value fluctuates widely. Between November and December 2013 Bitcoin's value rose from $US 200 to $US 1,200 only to lose half its value by December 7th.
  Little wonder then most holders of Bitcoins are keen to change them into more tangible assets such as bullion. According to Business Insider nearly $US 7 million of bitcoins were spent on Black Friday and a large proportion of them were traded for silver and gold coins and bars.
• Drones
  Although both loved and loathed in equal measure depending which side of the political fence you are on, robotics and drones in particular are more and more invading our lives.  Miniaturisation and new nano material technologies make this feasible and affordable.
  While military uses of drones are well known, the recent announcement by Amazon.com that it would use drones to convey book orders to customers broadened the debate about their use.
  Other uses include Tijuana authorities using them to monitor traffic, locate landslides and control wildfires. The US uses them to hunt hurricanes, undertake 3D-mapping, monitor the condition of farmer's fields and offer a degree of protection for wildlife.
  
  

• Get your DNA sequenced for just $100
  Surprising as it may seem this is not as revolutionary as it at first sounds.  A new nanofluidic chip developed by BioNanomatrix makes this such cheap sequencing possible.  In the future personalised medicine will mean that your doctor will be able to determine (for example) genetic changes in a cancerous tumor with increased accuracy -  and for the what it would cost you today to have a chest X-Ray.
• The year of the Memristor
  Your cat is smarter than a supercomputer;  its synapses switch on and interconnects thousands of neurons, modifying brain circuits and boosting functions such as facial recognition. University of Michigan scientist, Wei Lu, told The Register that he believes that "Memristors can potentially learn like synapses and be used to build human brain-like computers".
• VoIP phone calls (made via the Internet on platforms such as Skype) will surpass the use of standard land-line connections in 2014
• Your check out operator at the local supermarket will become an increasing novelty as retail turns increasingly to automated systems
• Apple's Touch ID technology will; find greater use in other applications and products
• 3D Printing which has already ushered in a new 'industrial revolution' will expand it use exponentially in 2014

..and, remembering another 1964 prediction of Isaac Asimov,

"Complete lunches and dinners, with the food semiprepared, will be stored in the freezer until ready for processing"

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Bitcoins, Baubles and Business

E-Commerce and its currencies can be a topsy turvy world.  Just when you thought everything was on an even keel along comes a (relatively) new kid on the block that shakes up the status quo.

So it it is with Bitcoin, which is either a boon or a bubble depending which side of the fence you choose to sit on. There are those who firmly believe it is the currency of the future but for folks who are not economists, it is difficult to see objectively beyond the hype.

Semil Shah of Tech Crunch at least attempted to make sense out of Bitcoin by asking five economists their take on the online currency.  Harvard Professor Chris Roberts neatly sums up the nagging feeling that many of us have about Bitcoin's longevity in his statement:

"It would really be something if intelligent people chose to invest more trust in a currency system built and managed, in large part, by anonymous computer hackers than they did in currency systems built and managed by governments of the people, by the people. Fortunately, we are not there yet."

In the same article Peter Rodriguez, Professor at Virginia’s Darden School of Business, makes two further points about the currency:

"In some ways, Bitcoin is just a virtual pack of smokes. But in other ways, it’s revolutionary. Cigarettes have inherent value and alternative uses, like cotton and even gold. Bitcoins are valued in and of themselves. They have even less alternative uses than paper currency or baseball cards".

"Even it they just serve to measure the value of goods ultimately transacted in ‘real’ currencies, Bitcoins will have become something entirely new: a true, stateless, virtual currency rooted in nothing other than confidence in the set of rules that surround them".

It is perhaps this last dimension, a stateless currency that is a huge part of Bitcoin's attraction, especially in an economic climate where traditional currencies and banking systems have been taking such a hammering of late.

Rwanda-based Nyaruka suggests that it is developing countries that will and do benefit most from Bitcoin and its pretenders.

"Rwanda, like its neighbours, is very much a cash society, which means that most digital goods are out of reach, not because they aren't affordable, but simply because most Rwandans don't have credit cards."

As this very good blog article states, Bitcoins are simply digital cash and because of this works well in any society where cash is the norm.  And of course digital cash is far easy to get hold of without going through the hassle of applying for, and managing a credit card.

It may be a surprise to some to learn that the decentralised, cryptographic, Bitcoin isn't exactly new.  It was launched four years ago as an open-source digital currency by Satoshi Nakamoto, who it turns out is probably not 'his' real name and could in fact be a group of people hiding behind a pseudonym.  Hardly reassuring news to any enterprise assessing business risk and contemplating the digital currency.

Purely digital currencies such as Bitcoin have an inherent problem; that of double-spending. i.e. someone concurrently sends a single unit of currency to two different sources.

Thomas Lowenthal notes that "digital products like a movie or a text file are non-rivalrous. If you have a copy of my pseudo-trip-rock band's new MP3 album, there's still just as much MP3 to go around for everyone else who wants one. That's not a problem for files, but it is a problem with currency, since the whole point is that there's a limited supply."

The key question to me is, does the use of cryptography do away with the need for an intermediary verification process, such as that which Paypal uses?

I am personally not convinced at this stage that business adoption is a wise move but I would be delighted to be proved wrong.  You need to ask yourself, is it safer to mine Bitcoins or to mine gold - or for that matter neither?

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