Category Archives: Diary

Toy Story Birthday

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Literally

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Reply to The Underground Economist, Why Bitcoin can't be a currency

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I wasn’t going to make a post bashing Bitcoin because their FAQ clearly states that its value only stems from the fact that merchants are willing to accept it. Unfortunately, this hasn’t stopped people from pushing it as the currency of the future, so regretfully, I feel compelled to post why this is not so.

While Bitcoin has managed to bootstrap itself on a limited scale, it lacks any mechanism for dealing with fluctuations in demand. Increasing demand for Bitcoin will cause prices in terms of Bitcoin to drop (deflation), while decreasing demand will cause them to rise (inflation). What happens in each of these cases?

Let’s start with deflation, because right now demand for Bitcoin is on the rise. What do people do when they think something’s value will be higher tomorrow than it is today? Well, they acquire and hold on to it! Who wants to give up money that’s constantly rising in value? In other words, rising demand causes demand to rise further. Irrational exuberance at its finest. Deflation begets deflation, ad infinitum, or at least until something breaks. You could make lots of money on Bitcoin, provided you get out of the market at the right time.

Eventually, of course, prices won’t be able to fall any further. Either people won’t be spending their Bitcoin anyway because they’re making so much money just by holding it, or the merchants will get tired of changing their prices every few seconds, assuming they don’t hit technical issues first, like the indivisibility of coins or their software not being able to handle all the zeros after decimal points.

At this point or shortly before, people will start taking their profits. They’ll start spending or selling their hoarded coins. If this manages to start any inflationary momentum at all, you’ll see the deflation scenario played out in reverse. And who’s going to stop it? The supply of Bitcoin is fixed and there is no other use for it besides as a currency. I doubt prices will have much of a chance to rise, since this will happen so fast. Merchants will go from taking one coin for a year of porn to not taking Bitcoin at all, and a bunch of people will be left with worthless Bitcoin.

The reason this can’t happen with government currencies is that government currencies *are* backed. They’re backed by bullets. If demand for USD starts to fall faster than the USG would like, the USG can just raise taxes without increasing spending, increasing demand and reducing supply simultaneously. There’s a bunch of stuff the FED can do, of course, and the FED tends to act first, but its operations are harder to explain. This is obviously not a perfect mechanism, since bubbles are still blown and popped, but even this mechanism is not available with Bitcoin.

Negative feedback loops like this are basically homeostasis. In nature, positive feedback loops like exist with Bitcoin are lethal; the only thing that’s even kept Bitcoin alive this long is its novelty. Either it will remain a novelty forever or it will transition from novelty status to dead faster than you can blink.

This is an interesting and honest critique. I especially like the part about how governments can protect their currencies with bullets. That is so true.

It is true that merchants must update their prices to reflect the current market price of Bitcoin. But there are mechanisms to make this less tedious. For instance, if you use the MyBitcoin.com shopping cart integration, you can peg your product against USD so your BTC price stays in sync. This isn't a perfect solution because getting an accurate peg relies upon the fledgling market data that comes from the Bitcoin exchanges.

Another barrier against the falling price against the BTC value is the use of inventory. This is something somewhat unheard of in USD denominated economies. If you prepare your inventory blocks for multiple sets of price, when you run out of inventory at one price, then inventory in another price becomes available. Welcome to the deflationary economy. It's fun!

Another problem cited by the author above is the problem of having to handle all the zeros after the decimal point. But many government currencies have this same problem in reverse. I.e., they have to handle all the zeros *in front* of the decimal point.

So the author is very worried about Bitcoin deflation. But I am looking forward to it very much. If demand for Bitcoin is that high, it should be very interesting indeed. I, for one, think the coin division isn't prepared *enough*. I think we should be expecting 10^-32, just to be on the safe side. If you have even 50 BTC, right now, hold it. When scarcity *really* sets in, that will be a tidy sum (e.g. if you think 20¢ one-month rise against USD is a lot, you ain't seen nothing yet).

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A4 - Span

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Span by Anthony Martin  
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Span.mp3 (4117 KB)

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The Prime Directive is Immoral

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Remember The Prime Directive from Star Trek?  It is Starfleet's General Order #1, the most prominent guiding principle of the United Federation of Planets.  And it is totally and 100% morally bankrupt.

The Prime Directive is defined thusly:

WHEREAS, the right of each sentient species to live in accordance with its normal cultural evolution is considered sacred.

WHEREAS, interference includes introducing superior knowledge, strength, or technology to a world whose society is incapable of handling such advantages wisely.

NOW THEREFORE, BE IT RESOLVED that the United Federation of Planets, in meeting duly assembled, accepts and supports the following findings: No Starfleet personnel may interfere with the normal and healthy development of alien life and culture.  Starfleet personnel may not violate this Prime Directive, even to save their lives and/or their ship, unless they are acting to right an earlier violation or an accidental contamination of said culture. This directive takes precedence over any and all other considerations, and carries with it the highest moral obligation.

The Prime Directive violates morality since this moral behavior should be preferred (or proscribed) for all Starfleet personnel in all places at all times (i.e., universal).  Starfleet is included as a protected culture since no exemption of any culture is listed.

For a proposition to be defined as moral, it must advocate a logically consistent set that violates The Prime Directive, such as “do not interfere.”

Anyone who argues for The Prime Directive must do so using clear language, arguments, logic and evidence; all based on the principle that truth is better than falsehood.

Clear language, argument, logic and evidence (and a universal preference for truth over falsehood) are all examples against The Prime Directive because the United Federation of Planets can only argue The Prime Directive by violating The Prime Directive.  This assumes anyone who argues is acting on the premise that clear language is universally preferred to gibberish, logic to illogic, and truth to falsehood.

Since The Prime Directive can be opposed by accepting the premise of The Prime Directive, it must stand as an invalid concept.

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Let's All Say It Like George Takei (aka Sulu)

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Race to the Checkout Line

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Competition really can make everything better. Consider this article by Greg Beato:

Unless you're comfortably wealthy, pathologically thin, or both, you probably go to the grocery store at least once every couple of weeks.  When you go, there's one factor that most determines the your experience there, and it's not fluctuations in the price of ground coffee, the number of Ben & Jerry's flavors on hand, or how gripping the National Enquirer cover stories are that week.  It's how smoothly you move through the check-out line.  A country cannot be great without great grocery store baggers - their speed, courtesy, and ability to keep our spaghetti sauce from crushing our hot dog buns is crucial to maintaining public morale.

Source: www.outloudopinion.com

  
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Vast Dairy Conspiracy

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I find this message about rBST rather odd. I can only conclude there is a vast dairy conspiracy afoot.

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Expecting Unreal Weather

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Latest In Nanotech Lithography

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Last, a new addition to your tech lexicon: Nanotech lithography. In the latest issue of Breakthrough Technology Alert, editor Patrick Cox told his readers about the coming boom in a technology that allows us to “print” electronics on virtually anything.

“Xerox has developed a silver-based conductive ink that can be printed on everything from plastics to textiles,” Patrick notes. “The ink’s melting temperature of 140 degrees Celsius is low enough to allow printing on plastics. Instead of expensive fabrication facilities, specialized inkjet printers will be able to print circuits that could be used as part of flexible signage, radio frequency identifier tags and even novelty clothing.

“Beyond logic circuits, energy storage devices will be printable as well. Two years ago, chemists at the Rensselaer Polytechnic Institute in Troy, N.Y., were able to place a thin film of cellulose over a surface of carbon nanotubes. This breakthrough will enable paper and CNT-based batteries. Stanford researchers have been able to take a paper substrate and coat it with ink made of silver and carbon nanotubes to create working ‘paper batteries.’

“Paper-based batteries charge and discharge quickly, making them suitable for a wide variety of technologies. Together, these breakthroughs herald an era of ultra-cheap, easily manufactured energy storage…

“New nanotech-scale manufacturing and materials technologies in the semiconductor industry are going to power a revolution in how we make electronic devices, power our homes and collect and analyze information. Right now, the vast majority of people have no idea how profound these changes are going to be.”

This is just one of several technologies Patrick says are on the verge of changing the world as we know it. For the full list, look here.

Source: Agora Financial

Stuff like this is so cool.  Even more cool will be the ability to fabricate electronics at home.  What a brave new frontier to the information age!

Imagine some day people will buy $5,000 circuit printers with custom enclosure fabrication functionality.  The user will download the specs and it will spit out a shiny new gadget.  The requirements will change just like computers, along the lines of Moore's Law, so you'll want to have the latest printer.  The fabricated gadgets could be as simple as a flash application today, like those annoying sound boards.  Or it might be a hand-held game because eventually, these printers will be capable of fabricating lights, simple displays, and so forth, I imagine.  Or maybe the lights are external and the displays would use a form of e-ink technology!

There will be completely practical uses for these printers, but by far, they will be used for total crap.  Sounds like fun!  Maybe I'll be able to print an actual working full sized flying car!  I was promised flying cars, you know (E: Yes, Anthony, we know you were promised flying cars).

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