Pick and Speak – 4: Bitcoin

While discussing on the whole Free Software, Open Software and IBM’s acquisition of Red Hat for $34 billion, Dr. Sudhendar Hanumantharao, a professor whose knowledge reaped from corporate experience and academia combined is a treasure beyond measure, mentioned various names and concepts during a lecture. I hadn’t heard a few of those names before, so I thought I’d look them up and share snippets of information with you all, as I do in most of my “Pick and Speak” articles, so you’d be inspired, maybe, to look up more should the interest bug bite you.

Context: Free Software and Bitcoin

Key People Mentioned: Richard Stalman, Eric S. Raymond, Satoshi Nakamoto, Herbert A. Simon, Rober Schiller

Key Concepts discussed: Free-software, Cathedral and the Bazaar style of development, Concept of Bitcoin, Greater Fool Theory, Bounded Rationality, Irrational Exuberance.


Richard Stalman

A genius activist and author, who founded the Free-Software Foundation, authored EMACS (the extensible, customizable, self-documenting, real-time display editor), launched the GNU Project (GNU’s Not Unix) and wrote the GNU General Public License, among various other towering achievements. He is the Gandalf of the Free Software world, ever-so-wise, making numerous people follow in his example and leading to the creation of a new shared world. Over time, Linus Torvalds freed the Linux Kernal and it pieced perfectly with GNU, and helped change the world for the better by creating a free operating system that could run on any computer. A lot more on how Linux made an entirely new world possible is beautifully outlined in an essay by Eric S. Raymond in the Cathedral and the Bazaar (about which I have talked in the next section).

Richard also came up with the popular statement: “Libre not Gratis”, which means free software isn’t about it being “Free (Gratis)” in terms of “Price”, but about the “Freedom (Libra)” to “Use”. He describes, in one of his TEDx talks, the 4 types of Freedom.

  1. Freedom 0 – Freedom to run the program as the user wishes for any purpose
  2. Freedom 1 – Freedom to study the source code of the program and change it, so that the computer does what action the user wants it to perform
  3. Freedom 2 – Freedom to redistribute
  4. Freedom 3 – Freedom to redistribute the changes made on the source code

Eric S. Raymond’s “The Cathedral and the Bazaar”

Eric S. Raymond, in his seminal essay says, “While I don’t claim to be a great programmer, I try to imitate one. An important trait of the great ones is constructive laziness. They know that you get an “A” not for effort, but for results, and that it’s almost always easier to start from a good partial solution than from nothing at all”. Or less formally, “Given enough eyeballs, all bugs are shallow.

Eric dubs this as “Linus’s Law”. His essay talks about “Fetch Mail” and how he worked in the example of Linus Torvalds and ended up building a great software. The two styles of development talked about in the essay are as below.

  1. The conventional, closed, proprietary kind, which is compared to that of a cathedral – meticulously picked team with hierarchical structures, tight specification of objectives, systems and set processes, long interval between launches owing mainly to testing and making sure the best possible software is launched.
  2. The open, peer-peer, decentralised, market like style – The bazaar, where there are short release intervals and constant feedback who are mostly outside the project, intense peer review and so on, which enables more and more developers to participate openly and build great softwares, together

Click here to read the full essay

The Bitcoin

Bitcoins, the ground-breaking currency system created by Satoshi Nakamoto, are like the castles with gold in the Hobbit, only no one dared understand it fully. So I thought, why not I give it a go too, so here goes.

In agreement with the idea of Richard Stalman, the Bitcoin protocol and software are openly openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. Bitcoin can only work correctly with a complete consensus among all users, hence all users and developers have a strong incentive to protect this consensus.

“Value” of “bitcoins” cannot be “created” out of thin air or by the whims of governments / financial authorities, which have proved disastrous in the past and have led to hyperinflation and numerous other problems. Bitcoins, unlike the Dollar or pound, isn’t a form of fiat currency that depends only on the willingness of people to use it and put their trust in it, it has an intrinsic value.

Joby Weeks, in a documentary, says that in creating gold, work is involved in mining refining, getting it in the crucibles, polishing and so on, which generates a scarcity value and gives it an intrinsic value. Similarly in Bitcoin, work is involved in hashing, solving math problems, electricity and so on. In addition, the former Vice President of J. P. Morgan, Tone Vays, says that Bitcoin has multiple levels of Intrinsic value – like being unconfiscateable, free in the sense that no one can stop anyone from sending it to anyone, and it depending on the productive capacity of the brightest developers who choose to work on an open source protocol. The decentralised structure coupled with the advantages of Blockchain, makes it impossible for any transaction to fail, get hacked into or shut down. The peer-peer network without any third party governing it makes it more reliable and put the control with the user.

Thus, we can draw parallels with the idea of Eric’s Bazaar, where, freely and without any restrictions, a group of peers work on crafting something great for all. As of now, the only regulators for Bitcoin are Mathematics and Cryptography, and the boom of Bitcoin can be attributed to the level of trust made possible by Blockchain. Divisible into a hundred millionth (called a Satoshi), the bitcoin blockchain enables distributed consensus and builds trust in the system so that any transaction of any type can happen without a central authority regulating and monitoring it, making the it universal and scalable.

Also refer: An Open Source History: from Linux to Bitcoin BlockchainFirst look at the Bitcoin Source CodeBitcoin FAQ

However still, many such “coins” are coming into circulation, each one delving more into technicalities that cross between the finance sector and technology, both of which are tricky and hard to assimilate at once, making it a speculative asset class, leading thus to the next topic of interest.

Herbert A. Simon

A Nobel Prize and Turing Prize Awardee, known best for his work on “Bounded Rationality” (I have written briefly about this in Pick-and-Speak-1, Click here to go through it in case you haven’t yet or want to jog your memory).

In short, even consciously and with all information available, we might not make the best decision. It might be because of shortage of time, which leads us to safely say that too much information will cripple the decision making ability. On the other hand, less information too is bad for making decisions. So, how much if just about enough? I think only those who can decisively tell the ending of Inception can get an answer to that (I’m hoping none).

At this stage, with regards to our topic of discussion anyway, some of us have too less information and some have too much, the former either has skeptics or over-enthusiasts, and the latter has dreamers or again, over-enthusiasts, and then there are those who exploit the best (or worst) of both and profit from the Greater Fool, which leads us to the next concept.

Greater Fool Theory

The greater fool theory states that it is possible to make money by buying securities, whether or not they are overvalued, by selling them for a profit to a Greater Fool, a Fool who is willing to pay a higher price, at a later date. Many practise this and in has past, it has manifested in dire consequences such as the 2008 Financial Crisis.

Similarly, Bitcoin and the whole cryptocurrency, which even though is backed by computing and developing making it possess an intrinsic value, people still have to believe in it, making it both (in my opinion) an intrinsic and fiat currency. With no-one to regulate and the lack of accurate knowledge to many, the number of options and investments in variants of cryptocurrency might increase, and this can go terribly wrong, and if Murphy’s Law has to be believed, it will go terribly wrong.

Robert Schiller – Irrational Exuberance

Irrational exuberance refers to an investor’s enthusiasm that drives asset prices up to levels that aren’t supported by fundamentals. Irrational exuberance is believed to be a problem because it gives rise to a bubble in asset prices, and when the bubble bursts, investors engage in panic selling. The panic can also then spread to other asset classes, and can even cause a recession.

Hence, Cryptobubble, a “speculative” asset-class, can cause a recession, and again, Murphy says, it will cause a recession.


However, with the world moving more towards digital payments and slowing weaning from cash usage, with apps like Tala, m-pesa, Paytm, Google Pay and so on taking massive people in developing countries online, the next step might not be as difficult as the first step.

I do not know why, but I am reminded of three lines from George Orwell’s seminal novel – 1984, which goes.

War is peace.

Freedom is slavery.

Ignorance is strength.

Bandersnatch : Review

On October 28 I watched Black Mirror: #bandersnatch, an interactive film in the Netflix’s TV Series #Blackmirror.

The film personified #innovation #creativity and broke the barrier between #entertainment and #technology. The film has various plotlines that are based on what choices the viewer makes, be in terms of what food he eats, what actions he takes, what he says and so on (I will spare the details as I do not want to give anything spoilers away). The plot makes the viewer hooked to the screen and attracts complete attention, making them the puppeteer controlling the lives of the characters and thus the plot of the story.

Netflix has once again explored a new territory in Film and has reinvented itself, ever so gracefully.

To those of us in management, this represents how value can be created through synergies, how competitive advantages can be enhanced and how Netflix is changing the scope of film and creating disruptions.

This futher shows that #technology can be extended in its use to encompass more fields of interest, in particular to the theme I have set through my writings – Society and Regulation. #business #leader

Pick and Speak – 2. Technology as Regulators

This is an article of the nature, “Well, one thing led to another…and here we are”. So, here we go.

One of my professors told in a passing that a short-story titled, “The Golden Bug”, by Edgar Allen Poe, talked about ciphers and set some interesting ground rules on the basics of deciphering. So I decided to give it a read. Like all Edgar Poe’s stories, it did manage to start with a chilly setting and slowly put everything right its place. The story gained pace soon enough and I happened upon this paragraph, at which point I broke the read and stepped from the Fiction world into the Google world.

“Circumstances, and a certain bias of mind, have led me to take interest in such riddles, and it may well be doubted whether human ingenuity can construct and enigma of the kind which human ingenuity may not, by proper application, resolve.”

“Bias” of mind led me to open another window and search for it, when I came across Behavioural Biases, which says that rational and logical thinking on relevant facts are necessary to make any winning decision. However, ideas and opinion guided by the mind and formed by either recent events (Recency Bias) or anchor points (Anchoring Bias) and various other extraneous factors, all of which combined doesn’t necessarily help one in making the winning decision always.

I then happened upon the concept of Deterrence, which says that an inferior nuclear force, by virtue of its extreme destructive power, could deter a more powerful adversary, provided that this force could be protected against destruction by a surprise attack. Thomas Schelling, the Nobel Prize winning economist, says about deterrence – “The use of the power to hurt as bargaining power is the foundation of deterrence theory, and is most successful when it is held in reserve”. However, when everyone has that power, it is pretty much useless, however, Deterrence is a powerful play on the mind. Click here to see a video on Deterrence.

Mind games have always existed and I believe there sure is no way to go around this inherent / hardwired biases, however, for those decisions that aren’t of “fight or flight” nature, or for those decisions where one has time to study, weigh, process and decide, I think keeping tab on the existence of such biases (both internal and external), and trying to separate out the effect of those biases might help make the best decisions.

As I closed these tabs, I was thinking – “I can write an article on this with the heading – How to never make a bad decision”, when I recollected a friend talking about this at the Drucker Forum. I also recollected a professor of mine talking about it in a talk recently, where he spoke about Shivani Siroya. So I googled her and came across a wonderful TED talk, where she speaks about using people’s contact list and call logs to determine their credit worthiness to lend money in under a few minutes. Here, Phone-Behavioural Analysis was used to grant a loan that could well change the lives of people. Again, emphasising on the point that biases in our behaviour, even when no one is around, can influence others’ judgement about us, so today, being true to yourself is one thing, but working towards making the definition of “True” same across the length and width, with room for as less subjectivity as possible, can sure help chart a successful course. Click here to see Ms. Siroya’s talk.

At this point the title of the article changed to “It’s not about what you think they see, but about what you don’t see that they see”. I felt that whether for the good or bad, the inherent biases in humans are good, these biases help balance the scales, help leave things up for chance and give rise to factors of motivation, persistence, empathy and so on. However, people always strive to minimise their losses, leave little room for pilferage and ensure that it is both convenient and conducive to be as close to perfection / success as possible. The app “Tala” by Shivani Siroya, that focusses on lending money in exchange for data are accepted by people because on a tipping scale or money vs. privacy, in most cases, the scale tips in favour of money, or whatever one might be trading off. Tala is soon to enter India too, and this is what Ms. Siroya have to say, “We are excited to bring our globally proven, customer-driven product to India, where there is high demand for consumer credit and a significant underserved population. Tala’s speed, fully automated borrowing experience, and empathetic customer service will be an advantage in a fast-growing sector”. Click here to read more about Tala.

However, data can be entirely counterproductive, as in the case of the Nigerian Scam, which has taken various forms and evolved over the years. That isn’t the only scam out there, however this example is well known to people and most people have come across these personally at some point, hence the example. The play of heuristics and biases on people’s mind, on even tempting the most stable with the promise of grand reward with a minimal expense and effort is daunting. Even from before the Internet was used as a channel, these scams existed via post, telegram and so on. The problem then was that the number of people taking bait was lesser (to a single / unit of scammer) because of the potential reach and the probability of success (to scammer) was low as the target pool was small. The internet made reach very easy and the scam easier. However, data security assured protection against data theft and, firewalls did a good job at blocking attackers, now with the evolution of data science, and with so many choices that make people’s lives convenient, people are either willingly giving away / trading away their data or making it really easy for manipulations. Click here to check out the scams in Australia this year (not particular to Australia, I’m sure every country has loads of these, it just happened that for my search, this was on top). To know more about the new versions of Nigerian Scam, Click here.

People, who are built with biases are exploited by many with the aid of the all-pervasive technology, is it then imperative for some regulatory authority to step in?

This, on an extreme scale, is something that gives rise to programs such as China’s Golden Shield Project, which is the Chinese nationwide network-security fundamental constructional project by the e-government of the People’s Republic of China. The Golden Shield Project manages the Bureau of Public Information and Network Security Supervision, which runs a sub-program called The Great Firewall of China, which is a censorship and Surveillance project project that blocks politically inconvenient incoming data from foreign countries. The site censors content from news sources that often cover topics that are considered defamatory against China, such as Tianmen Square protests of 1989, Freedom of Speech, Democracy, and sites linked with the Dalai Lama, his teachings or the International Tibet Independence Movement. Click here to read more on this. And this is just the tip of the iceberg,

Projects such as “The Social Credit System, a “National Reputation System” built by the Chinese Government, with an aim to standardise the assessment of citizens’ and businesses’ economic and social reputation by 2020, are really setting an unprecedented real life example of George Orwell’s Thought Police and their way of thinking:

War is Peace, Freedom is slavery and Ignorance is strength

With the stated purpose: “To help Chinese people trust each other again”, China is on a rampage to control anything and everything on its soil.

At the Global Peter Drucker Forum 2018, Dr. Philip Kotler emphasised the point that most nations in the recent past have exhibited traits of growing “inward” and more and more “nationalistic”, which is a bubble waiting to be bursted. So, with this kind of approach, the world is sure to collapse under the weight of the Leaders like Demi-gods and their inward growing ideology.

So, the title in my mind changed for the third time – “Bad decisions made independently is better than someone watching over you”

The ultimate question now is: Humans are biased, which makes exploitation imperative. Governments can turn toxic if given the power to regulate. At what expense then can our decisions, which aren’t just in our control, be made better? Or was it never meant to be any better?

Can technology, which has always acted as a tool to quicken production, enhance service quality or boost revenues, technology must be used to “Regulate”. Can, with the aid of Quantum Cryptography, Blockchain and so on, such “Tech-ulators” be insulated from the dark web? Particular to this article, to Regulate the content posted, in a way that doesn’t curtail the freedom of speech and the right to information that people have, but detect scams, frauds and such toxic elements, while negating the asymmetry of information in order to make people make great decisions.

Thus the final title – Technology as Regulators.