The Wisdom of Crowds. Blockchain "coins" .... but first, those nukes...

Before getting into blockchain and BitCoin and all that, a brief aside regarding the inescapable news cycle.

Rule of thumb. If you ever find yourself envisioning that any Donald Trump action might actually benefit America and the West, look closer. Take the latest news from North Korea that DT is crowing about.

Kim is offering talks right now because it is logically exactly the right time for him. His aim, in seeking nukes, was always to replace an expensive deterrent - a gigantic, standing army - with a much cheaper one, H Bombs.

The trick? Get the US and SK to agree to "limit" NK to 20 or so warheads, enough to protect the regime. In exchange, we 'get' a ramp down in his conventional forces... which is exactly what Kim desperately needs, in order to feed his people and rescue his economy. And as part of the deal, South Korea must also disarm.

Think these things through. Regarding any action taken by this administration -- look for who gets a win-win-win. In this case, DT will get a symbolic-raving "diplomatic victory." Kim will get absolutely everything he, wants, in exactly the order that he wants them. And Kim's sponsor-owners - without whom he never would have made a single bomb or missile - continue to own a dagger that they can shoot at us any time, with an EMP warhead, while retaining "it wasn't us!" deniability.

None of this would have worked without a Siberian Candidate in the US presidency, demolishing all of our alliances. Is anyone... anyone?... thinking this through, out there?

Argh, enough. Let's now veer to something else that's almost-equally unbelievable, making aliens stare in stunned disbelief at Earth's lowbrow Reality Show.

== A Boom-Bust Gold Rush online: ICOs and the Wisdom of Crowds ==

I’ve lately learned more about blockchain, crypto-currencies and ICOs (Initial Coin Offerings) than I ever wanted to know. It started before I was invited onto several advisory boards, way back while editing my recent anthology Chasing Shadows. There, I present Karl Schroeder’s brilliant story “Eminence,” which is fast becoming a bible-verse for this entrepreneurial community… at least those who want to accomplish real goals that affect real world traits via virtual-world currency interactions.  

Alas, for reasons too complicated to describe here, (did I tell you I’ve had to explore this a fair bit?), most of the fellas doing this are deep in the “bubble” side of ICOs, because they aren’t delivering on the internal “community functionality” - or utility - part of their promise. The part that's meant to keep them out of jail.

Let's start with context...

Social scientists have long been interested in the wisdom of crowds—when large numbers of individuals, seemingly acting independently, can collectively "make surprisingly accurate decisions, sometimes even better than the smartest among them.” And hence we get FantasySCOTUS — an online fantasy league in which contestants compete by predicting decisions made by the U.S. Supreme Court. Players are ranked as in any fantasy league, and the best performers can win prizes such as a “Golden Gavel” and even $10,000 in cash.

This article reports not only on the result, but an in-depth analysis of the inner processes of this wise crowd and how teams of observers or sponsors might best use them.

Oh, note: long before blockchain and all that, I offered glimpses of "smart mob" or "crowd wisdom" citizen activity in both EARTH and EXISTENCE.

Okay, swinging back around, let's define a few terms re: the “ICO” craze.  Tens of billions spent just this year on “blockchain currencies” that would be illegal if the coins or tokens were offered as “investments” in promise of real world value increase. So most token issuers talk about building an "inner community" where the coins can build intrinsic value based upon utility... 

...like the magic swords in World of Warcraft, which are meant to be useful, inside the game, but get traded for real money outside of it. (Using regiments of poor Chinese guys to slave in WoW for magic swords is said to be how Steve Bannon made his first killing.)  

“Community building” is the fig leaf that nearly every ICO uses, to proclaim indifference to the token's Outer World value. And many of the purported communities have a purpose to crowd-source wisdom… in a prediction market, or a news-article verification community, or citizen science. There are scores of these things! And some of the goals are worthy, if done well at all. 

Only there’s a problem. Most ICO issuing groups never develop the promised inner utility community. 

“Alas we also know weaknesses of crowdsourcing wisdom. For example, the wisdom of crowds often breaks down when the opinions of individuals become correlated—when they influence each other too strongly. This can result in disastrous situations, as when large groups hold irrational or wrong opinions under the sway of groupthink.” 

In fact, that flaw destroyed crowd wisdom in nearly all human societies and strong efforts are underway to use propaganda and tribalism to wreck it today. 

Indeed? This flaw in the ICO model would seem to offer a business opportunity! And I am talking to some VC types. (And more would be welcome.) To explore a market niche and service to all these budding communities and help keep the organizers out of jail.

== Diving in a little closer - the matter of "utility" ==

Learn to recognize the signs — where the utility of a blockchain token or coin is just an excuse for the issuers to slyly hint their “coin” has the purpose of speculative real world resale appreciation.

As Jason Goldberg described, on Hackernoon: “What was recently a handful of mostly well though-out blockchain infrastructure projects, has turned into thousands and thousands of potential ICO’s. Too many of the recent batch seem more motivated by greed and pursuit of a quick buck, rather than a bonafide cryptocurrency purpose and utility.” 

He goes on: “A sizable cottage industry of consultants and advisors has popped up to offer all sorts of pay-for-play programs. Want your ICO listed on an ICO listing site? That’ll cost you a sizable amount of ETH or BTC.

“Tokens are not equity and should not represent the future value of the project or future cash flows. Rather, token prices should mirror the actual demand for the tokens.

“There must be a real utility for the token. Minting the token and establishing a market-price for the token is required in order to make the underlying software protocol and the token economy model function. If the purpose of the token sale is solely to raise capital for the project, that is not enough. Capital can and should be raised via equity and debt instruments, not by selling token assets. The utility of the token must be proven, demonstrable, and replicable by others before holding the token sale.  If the only value ascribed to the token is as a payment rail, it’s a currency not a utility. A demo of the token utility in-action on a blockchain must been presented.

“The project must present a clear case for why a blockchain is uniquely necessary for the solution — i.e., the “secret sauce.” In other words, what is it about blockchain that uniquely enables the solution?  Again, the token sale should not be an end-around to equity or debt financing, rather the token sale should be to establish the economy and the endowment for the ecosystem it intends to support. The token sale is designed to maximize benefits to the purchasers and users of the utility, not to speculators.”

Why did I quote so extensively from just one -- out of a myriad -- passionate essays about this Klondike Rush? Because it is one of the few that go to the essense of what worries me most. Other recent articles of some tutorial value: 

On the Bitcoin bubble?  

An informative review of Etherium and competitor pros/cons.

A Primer on How to Identify Fake ICOs.  

Here’s one that does deliver a “utility” use for their crypto-coin, though their claims of originality would really surprise folks at Second Life.  High Fidelity has just released Avatar Island, a commerce system built on the blockchain that enables users to buy and sell goods in virtual reality. Currently, users can purchase over 300 virtual goods for their avatars in High Fidelity, all created by digital artists who will earn a share of the revenue.  Thebest utility coin systems deal in tangible goods and service, like swapping access to computer memory and CPU cycles... though a huge fraction of that arbitrage is using those cycles to... mine more coins, oy!

Mind you(!) some of the promised utilities would be great to see! Like incentivizing Smart Mob vetting of news stories to separate truth from lies. Or exchanging tokens for reputation. Or for participation in amateur science. 

And yes (again), all of these and many others were hinted at or even explicitly discussed in my nonfiction book: The Transparent Society: Will Technology Make Us Choose Between Privacy and Freedom? And smart mobs in both EARTH and EXISTENCE. And several authors explored such possibilities in Chasing Shadows.

So, I hope some of the good stuff will grow and empower distributed, flat-fair-open arenas for citizen and entrepreneurial engagement!  Those that actually deliver on their promises. That aren't scams, or empty promises.

And finally, back in the "real" world...

== The lights are looking ==

Street lights are fast-becoming the central nervous system of either our new, smart cities or else an Orwellian nightmare.  Read about the experiment in San Diego’s East Village neighborhood, whose streetlights were looking—and listening—all around them, while also monitoring temperature, humidity, and other characteristics of the air. By sometime in May, about 3,200 of the sensing lights, will each monitor an oval area of roughly 36 by 54 meters (120 to 180 feet). They could easily be hooked into the city’s existing ShotSpotter network, which automatically locates the source of gunfire, increasing ShotSpotter coverage from just 10 square kilometers.

“Along with the sensing streetlights, San Diego will be replacing an additional 14,000 of the city’s more than 40,000 streetlights with energy-efficient LED lamps that can communicate with one another and operators and allow brightness adjustments to save energy.”  And none of this should surprise anyone who read The Transparent Society … or even EARTH.

Want the Sci-fi-ish extrapolation? "In late February 2018, The Verge revealed that Peter Thiel’s software company, Palantir, has been piloting a predictive policing technology in New Orleans for the past six years unknown even to city council members. A similar program in Chicago, pulls information from law enforcement databases and social media, listing people likely to be involved in violent crime. “Civil rights groups have raised a host of concerns about the discriminatory effects of such data-collection and algorithm-based programs.” 

Those who fear that this could help lead to Big Brother have reason for their worries! Elites will be tempted to make all of this surveillance information go in one direction – either for nefarious reasons or else, initially, “for our own good.” Some champions of civil liberties think we can prevent harmful disparities of power by hiding from these elites. 

And… that… is… stupid. Because every year, the cameras get smaller, faster, cheaper, better more mobile and vastly more numerous, faster than Moore’s Law. There is no scenario - of any kind - under which hiding or shadows will even conceivably help the little guy or average citizen.

The answer is for us all to share in these information tsunamis. Sousveillance. It won’t prevent being looked at. That tidal wave is coming. But looking back at power could teach us all to surf.