September 2014

MONTHLY REPORT – SEPTEMBER 2014

BITCOIN

Hoarding

Bitcoin is poised for exponential growth, so the opportunity costs of not being involved to the highest personal degree possible are incalculable.

Yet merchants, investment peddlers, and other hoarders have been able to convince countless bitcoiners to part with their future riches, despite the obvious downsides given you have a long enough time horizon to see the coming post-fiat world. They’ll tell you spending is vital, that Bitcoin 2.0 will be even better if only you give them some of your Bitcoin 0.9, or that your bitcoins are worth only $475 a piece. They’ll tell you this with a straight face, the wringing of their hands unseen across the Internet.

Bitcoin is exciting. Looking at a static wallet file and balance is not. Instead of holding and forgetting, many bitcoiners choose to “put that money to use,” and endless crypto-peddlers are ready to snatch your bitcoins up. They’ll offer you mining contracts, present their plans for a hedge fund, or entice you into investing in a Bitcoin company. Today, the most popular investment vehicle for bitcoiners are Bitcoin 2.0 schemes, ranging from Mastercoin to Ethereum.

Long term investors should use Bitcoin as their unit of account and every single investment should be compared to the expected returns of Bitcoin.

If hyperbitcoinization occurs, Bitcoin holders will see their purchasing power increase by orders of magnitude. Bitcoiners should think twice before throwing away even a couple millibits towards a project “just to see where it goes.” A running joke in the community is how expensive the two pizzas Laszlo bought were. We joke about a million dollar pizza, and hyperbitcoinization has not even occurred yet. I praise Laszlo for his entrepreneurial use of a new technology, but I do not wish for myself or others to be a Laszlo.

My friends and I joke about starving due to the intense deflation, but I can’t say I don’t look back and wish I had skipped a couple lunches in the crappy dorm cafeteria to buy $10 bitcoins when I had the chance. Hyperbitcoinization will not be a force to trifle with. Even a marginal bitcoin holding right now will constitute a very significant majority of a bitcoiner’s portfolio. Once it happens, there is no going back. One day, your Bitcoin balance will likely never see the decimal point move to the right again. – Michael Goldstein

 

The Bitcoin Network

The ultra-resilient bitcoin network is the world’s largest distributing computing project in terms of raw computational power, having long ago surpassed 1 exaFLOPS (1,000 petaFLOPS) – over eight times the combined speed of the top 500 supercomputers.

Although since increasing to an amazing 3.2 zettaFLOPS (3,200 exaFLOPS), the project was quietly removed from Wikipedia’s list of distributed computing projects. This is probably due to the fact that the exaFLOPS estimate breaks down with bitcoin’s specialized ASICs, since they are not capable of floating-point operations.

Instead, the estimate may be used for estimating how well other supercomputers and distributed networking projects would be able to mine bitcoin, since supercomputers have the capability to perform the integer operations used in hashing.

Therefore, today’s fastest supercomputer, China’s Tianhe-2 with a performance of 33.86 Pflop/s, would measure at about 0.001% of the bitcoin network – Jon Matonis

 

 

MINING

Bitcoin Bull Market Won’t Start Until the ASIC Capex Spending Bubble Bursts

Miners selling coins to cover opex is a factor, but miners selling for capex is driving bitcoin price –Pierre Rochard

 

Mining Difficulty

If you are a bitcoin miner of any scale you have just gone underwater

When people say that the price has been here before they are correct, but the mining difficulty hasn’t been here before.

Surely miners will switch off and diff will fall ?

That depends on how long it stays sub 390 – Bryce Weiner

 

Bitcoin Price vs Difficulty on Sept 19

2010 – $0.06,  2.1k

2011 – $5.29,  1.7m

2012 – $12.41,  2.8m

2013 – $157.81,  112m

2014 – $389,  29b

Bryce Weiner

 

 

ALTCOINS

Altcoins & Appcoins

When Chris Odom was asked about his thoughts on altcoins and appcoins at Inside Bitcoins London, there were many people in the crowd who were surprised by his answer. While some people like to research every altcoin on the market to see what new features it has to offer, the creator of Open Transactions almost seemed bored with the entire concept.

At first, Odom said nothing more than, “I don’t think that altcoins are going to be that relevant compared to Bitcoin.” There was an awkward pause that lasted for the next few seconds, as the audience wanted him to explain his anti-altcoin position on a panel that was supposed to be all about the future of altcoins. Odom was then asked to go into more detail on his position throughout the rest of the panel, and most of his responses were able to illustrate how Open Transactions makes many altcoins “irrelevant.”

After claiming, “Bitcoin is the winner.”, Odom went on to explain how the coins behind certain decentralized apps in the Bitcoin space don’t really have a reason to exist. The man also known by his online alias FellowTraveler claimed, “[Developers] are creating additional functionality and they’re using these appcoins to fund development, but the actual additional functionality that they’re creating would be perfectly viable without the appcoin itself.

Odom went on to state, “Whenever you make a system that uses an appcoin, there’s going to be some comparable system in the near future that doesn’t have an appcoin that has the same functionality.” –Kyle Torpey

 

 

EQUITIES

Valuations

It’s very hard for us to have any meaningful conversation about appropriate equity valuations in a world of long-term zero interest rates – Sam Altman

 

Alibaba: The Biggest IPO in History

* The sale means that Alibaba (NYSE:BABA) raked in $25 billion in its public offering, beating the previous record held by the Chinese banking behemoth, the Agricultural Bank of China, which raised $22.1 billion when it listed on the Hong Kong Stock Exchange in 2010 – Jonathan Shieber

* The sharp demand for shares sent the market value of the e-commerce giant soaring well beyond that of Amazon, eBay and even Facebook – firstbiz

* Alibaba IPO raised nearly as much as all US venture funding in first half of 2014 – Marcus Wohlsen

 

 

COMPANIES & PROJECTS

Open Source Distributed Systems

The smartest 1% are creating open-source, distributed systems of resistance to render the state irrelevant through technology and encryption – Roger Ver

 

OpenBazaar

Congrats to openbazaar team and to mankind alike as its fully decentralized global marketplace goes public! http://obdemo.ein-mann-armee.de/html/index.html#/dashboard

Vortex

 

OpenBazaar vs. Alibaba

OpenBazaar is an open source, peer-to-peer marketplace. Instead of buyers and sellers going through a centralized platform, like Alibaba, OpenBazaar allows for direct, person-to-person commerce. Trust, security, and dispute resolution are all handled by the users of the system. Since there are no middlemen, there are no fees. Since there are no gatekeepers, there is no censorship.

Alibaba Group Holding Ltd. Although Alibaba has diversified into payment processing, a shopping search engine, and cloud computing services, the vast majority of its revenue comes from charging fees to the users of its marketplace platform.

If Alibaba is, at its core, a trusted third-party that facilitates commerce between two distributed participants, then what use is it when the participants can provide all the added benefits of having a trusted third-party between themselves?

This is the promise of OpenBazaar.

If I were running a company that did a quarter-trillion dollars worth of transactions and my whole business revolved around being the middleman to every one of those, I would definitely be concerned about the development of OpenBazaar – Valerian Bennett

 

Hampton Creek

A team of recently hired mathematicians is building an online database that one day could catalog the behavior of practically every plant protein on earth—a collection of digital information that could allow Hampton Creek to model the creation of new foods using computer software.

Backed by funding from Microsoft founder Bill Gates and Li Ka-Shing, perhaps the richest man in Asia, Hampton Creek isn’t out to genetically modify your food. Instead, the 63-person startup wants to reconstruct it using what nature already has given us. “There are other companies using synthetic biology and genetic engineering to create whole new food ingredients,” Zigmond says. “We are exploring the vast world of plants to discover natural compounds that can revolutionize food.”

Mixing and matching proteins found in the world’s plants, the tiny startup already has created a reasonable facsimile of the chicken egg—an imitation of the morning staple that’s significantly cheaper, safer, and possibly healthier than the real thing—and now it’s working to overhaul other foods in much the same way – Cade Metz

 

 

PRIVACY

Ricochet

A program for encrypted instant messaging that uses Tor hidden services for the protected transmission of communications.

To build Ricochet, Brooks patterned his program on something that already existed—TorChat, a peer-to-peer instant messaging program released in 2007 that used Tor hidden services to transmit communications. TorChat had a number of implementation problems when it came out, however, and has largely been abandoned by users and its developers. Brooks vastly improved the concept.

Ricochet doesn’t communicate with central servers like Wickr and doesn’t allow direct connections like Tox. Instead, each desktop client operates as a Tor hidden service and uses the Tor network to transmit encrypted and anonymous communication. The client generates a random 16-character public key or ID to authenticate the user and establish the channel for secure communication in a simple way that doesn’t require users to install Tor separately. Generating the public key occurs with a single click, and the key is stored on the user’s machine, or on a USB drive so a user can communicate with Ricochet from different machines.

“It is idiot-proof and anonymous,” says Gray – Kim Zetter

 

 

PLACES

San Francisco

Taxi use in the city has tumbled by 65 percent over the last year – Dara Kerr

 

Hangzhou: Boom Time in the Alibaba Tech Hub

You might be millionaires, but please spend wisely.  We’ve worked so hard, but not for the sake of turning into a bunch of uncouth new rich – Jack Ma, Alibaba Founder 

The eastern city of Hangzhou is famed for its beauty in the form of its pagoda-dotted West Lake, long celebrated by classical Chinese poets and often visited by tourists. It is also home for some who have benefited from Alibaba’s success.

Started here in 1999, Alibaba has followed the model of Microsoft, Google and other American technology companies, generously handing out stock to all levels of workers, from senior executives to receptionists. It has created a wealth diaspora rarely seen in China, where the economy is still dominated by state-owned enterprises, and private companies generally reserve riches for executives at the upper echelons.

The vibe was unmistakably Silicon Valley, as dozens of young programmers hunched over computers and others napped on an air mattress or inside a pup tent. “People here really value bold thinking and risk-taking, and the government is also pretty good, which is a rarity in China,” said Mr. Lai.

Although luxury car dealers and property developers are hoping the Alibaba I.P.O. will prompt a spending bonanza, several employees with significant stock holdings said they would probably defer big purchases and instead use their money to finance start-ups. Mr. Su, the former Alibaba product manager, said he had no plans to trade his two-year-old Ford Mondeo for a more expensive car –Andrew Jacobs & Neil Gough

 

Hangzhou was described by Italian traveler Marco Polo as “the most magnificent city in the world.”

* Unesco called Hangzhou “one of the most livable cities” in the world.

* Among Hangzhou’s attractions, the West Lake was declared a Unesco World Heritage Site in 2011. A freshwater lake, this body of water, which spans about 6.5 square kilometers,* was described by Unesco as having “influenced garden design” in China, Japan and Korea.

* The Grand Canal, the oldest and longest man-made waterway in the world, runs from Beijing in the north to Hangzhou in the south. More than 2,000 years old, it was also declared a Unesco World Heritage Site on June 22, 2014 – Chay F. Hofilena

 

 

THE SINGULARITY

Made in Space

A private Dragon cargo ship built by SpaceX arrived at the International Space Station today (Sept. 23) to deliver more than 2 tons of astronaut supplies and experiments for NASA, including the first 3D printer in space.

The 3D printer built by Made in Space will churn out a few initial test parts and send them back with Dragon. Researchers with the California-based Made in Space and its partners at NASA’s Marshall Space Flight Center in Huntsville, Alabama, want to learn as soon as possible how the quality of items printed in microgravity compares with the quality of parts made on Earth – Megan Gannon

The first humans to carry out off-world manufacturing

When the astronauts aboard the ISS use the 3D printer, they will become the first humans to carry out off-world manufacturing. It’s not quite the Moon- or Mars-based factory that we’ve always dreamed of, but it’s a very important first step towards manufacturing goods outside of Earth’s gravity, and thus the eventual colonization and industrialization of the Solar System.

We’ve known for a long time that anything we can manufacture off-world — tools, machined components, rocket fuel, water — is a huge, huge step towards long-term human exploration of the cosmos. Sending large amounts of stuff up into space via rockets just isn’t workable — we either have to find another way of getting stuff into space (like the mythical space elevator, or fusion engines), or we have to make the stuff outside of Earth’s gravity – Sebastian Anthony

 

Graphene

Graphene, first isolated in the lab 10 years ago, is 200 times stronger than steel and 70 times more conductive than silicon, properties so remarkable it may revolutionize fields from health care to aerospace.

Graphene may also replace silicon to make smaller, faster and more energy-efficient microchips to power electronic devices of the future. IBM in January announced it had produced an integrated circuit made of graphene that can transmit texts.

Determining whether the new material damages human organs is the first step toward Kostas Kostarelos’s more ambitious goal: using graphene to build tiny drones that deliver medicine internally, reminiscent of “Fantastic Voyage,” the 1966 science-fiction thriller set inside the human body.

“We’re trying to design vehicles that you can inject in the bloodstream or eyeball or spinal cord or in the brain, to try and get to a particular diseased cell population, so you don’t create collateral damage,”

“If you design this self-propelling vehicle, and you get in front of a cell you want to transfer therapeutic materials into it, how would you do it?” Kostarelos said. “Can graphene slide through a cell’s plasma membrane? The answer is yes.” – Oliver Staley

We expect graphene to become in the 21st century what steel and metal were in the 20th. We can already see its potential in a number of scientific domains. It’s not hype – Thomas Skordas

 

Jupiter’s Moon Europa

The more they look at other worlds in the Solar System, the more scientists discover that Earth isn’t as special as we earthlings like to think. Our planet has active volcanoes—but so does Jupiter’s moon Io. We have geysers—and so does Saturn’s moon Enceladus. We have lakes, rivers and rain, and so does Titan, another moon of Saturn’s.

Now a paper in the journal Nature Geoscience argues that one more geological feature thought to be unique to Earth may not be after all. Using images from the Galileo spacecraft, planetary scientists think they’ve found evidence of plate tectonics on Jupiter’s ice-covered moon Europa—a world that’s already on astrobiologists’ radar because the ocean that lies beneath the moon’s thick rind of ice could conceivably host life of some sort – Michael D. Lemonick

To Do List:

1) I’d like to see a Mars sample return

2) I’d like to land on the surface of Europa – the most likely place in the solar system for life

3) I’d like to float a boat on the methane lakes of Titan

Adam Steltzner, Entry, Descent, and Landing Manager for Mars Curiosity Mission

 

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Follow me on Twitter @leebanfield1

Bitcoin: 1Jwh6nZiASJf4d3hNytjxqiimWBmEJvJ4S

 

Bitmessage: BM-2cXjeAykLT7gbjzNHZFnCxdawvyryyb4Nf

 

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