The Faketoshi Circus: Even Bitcoin Can’t Escape the Politics of Money

by Michael J Casey, chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative

In case you missed it, a new self-proclaimed Satoshi Nakamoto came out of the woodwork last week, this one brandishing a “proof” based on numerology and an obsession with BCCI, the scandal-ridden bank that collapsed in 1991.

The widely debunked “reveal” from Bilal Khalid, aka James Caan – Khalid officially changed his name to that of the American actor – followed a host of equally absurd developments in a Florida court case against the other “Faketoshi,” Craig S. Wright. These included a hand-written note to the judge in which yet another person, one Debo Jurgen Etienne Guido, also laid claim to being bitcoin’s secret progenitor.

Sensible minds in the crypto community remind us that this is all a sideshow, that these competing claims to bitcoin’s creation ultimately mean nothing to its value proposition.

Still, it begs the question: why does it keep happening? Why do the scammers emerge so readily? What is about the crypto community that attracts a parade of false prophets?

Let’s take the question further: why does crypto generate so much drama generally? Bitter feuds over software forks; relentless conspiracy theories; disputes between maximalists, altcoiners, nocoiners and shitcoiners; competing social media memes; token “armies;” Twitter trolls; fraudsters of all kinds – it’s the crypto circus, and many of us secretly love it, at least in doses.

But why? How did a technology spawned by the most math-driven, nerdy and precision-obsessed fields of computer science give rise to Mexican telenovela-like stream of plot twists?

Other open-source tech communities generate their fair share of drama too, of course. (Type in “Linux community” into a Google search and it auto-completes to “Linux community toxic.”) The leaderless structure of open-source projects means there’s no central authority or pooled profit interest policing behavior or managing the external messaging.

Still, the crypto soap opera takes things to another level of madness. Why?

Learning from ancient history
My attempt at an explanation begins with the fact that, unlike other technologies, this is one is fundamentally about money.

“Money has historically been a political process, a process through which people or states or some kind of entity consolidates authority over others,” says Bill Maurer, Dean of Social Sciences at the University of California, Irvine, an anthropologist who has studied the culture and history of money, adding:

“So, you have this big paradox with something like bitcoin, where its very idea is that there shouldn’t be any one person or authority in control…But because of that, you get this cacophony of voices, each claiming to have some kind of truth and striving to be the one in control.”

For the full story, please visit https://www.coindesk.com/the-faketoshi-circus-why-even-bitcoin-cant-escape-the-politics-of-money

Blockchain Narratives, Property and Belonging in Post-Soviet Eastern Europe

by Daivi Rodima-Taylor, Boston University

The kratt. Source: Medium.com

In Estonian folklore, the kratt or “firetail” was a creature humans assembled out of old household objects and animated by drops of blood to performs tasks for its human master. In the current day, this mythological critter has gained prominence in the cultural and political space of post-socialist Estonia – including recent efforts around the implementation of artificial intelligences or ‘kratts’ in the country’s e-governance and private sector, and discussions of KrattLaw around the legal status of AI. Why has this folk metaphor from an Eastern European peasant tradition become central in debates about emerging digital technologies that we often think about as so definitively global?

Looking at the cases of Estonia and Georgia, I am interested in how post-socialist Europe’s historically and locally specific adoption of these new digital technologies may offer insights into the social imaginaries of blockchain. There is an increasing understanding that digital technologies such as blockchain are not merely technological tools, but carry important social and political implications. The use of blockchain in the public administration systems of post-socialist Eastern Europe offers interesting perspectives on how attitudes in popular culture cast light on how these technologies are instituted and used.

BLOCKCHAIN
Blockchain is a software protocol that facilitates electronic transfer of information without the need for third-party intermediation. Changes in its ledger are added to the data structure when multiple distributed parties come to consensus based on pre-agreed rules. The new modes of decentralized value transfer, identity verification, and business and asset management enabled by crypto-codes raise novel questions about the nature of social trust and institutions such as property and citizenship as mediated by the new technology.

With its origins partly in crypto-utopian pursuits of decentralized monetary and governance technologies, blockchain has increasingly appealed to more traditional institutions of finance and governance. Governments are pursuing blockchain technologies to render their populations and property systems legible while enhancing transparency.

Blockchain has been hailed as a key technology to help formalize property rights by facilitating secure and transparent land registries – a technology that would “unlock the value of landholding” and boost the entrepreneurial potential of its owners. It is perhaps no wonder that the assumed potential of blockchain to facilitate order and formality in situations of instability is particularly pronounced in post-socialist and post-conflict states. Specific histories of post-socialist property restructuring and decollectivization efforts to (re)construct private property have been marked by legal and administrative ambiguities and alternative institutional arrangements. New property forms may blur distinctions between private and public, resulting in “recombinant” property forms that can be assessed by multiple standards of measure. The promise of a secure digital public database may therefore particularly appeal to societies characterized by fuzzy normative frameworks and unclear land use practices.

Farmland in Tanzania. Photo: Daivi Rodima-Taylor

Currently existing application cases, however, cast doubt on the potential of blockchain to automatically rectify the vast expanses of informality, signaling logistical and political challenges, as in the examples of Honduras and Ghana. Blockchain land registration is underway in Georgia, offering interesting glimpses into the political and social rationale of such initiatives, as well as the implications for existing infrastructure.

GEORGIA
Selling land in post-socialist Georgia used to be a long process, prone to bribery. The development of the Georgian land registry was seen as justified by popular sentiments that “politicians could influence transactions.” Georgia re-gained its independence from the Soviet Union in 1991 after a centuries-long history of foreign invasions, reducing public trust in government. Many property records had disappeared or were non-verifiable after the fall of the Soviet Union. The expansive land denationalization reintroduced the notion of private property, and in doing so created a vast database of recent land titles.

Georgia’s blockchain adoption built on its openness to other digital technologies. The arrival of blockchain-empowered land registries in Georgia was preceded by a decade-long effort to digitize property and business registries of the country, with the help of international development banks and aid agencies. The National Agency of Public Registry (NAPR) partnered with the blockchain company Bitfury in 2016, to elevate the protection of property rights “from national to global levels.” The blockchain layer was thus designed to function as an addition to the already existing IT infrastructure of the database. Over 300,000 titles were transferred to blockchain, drastically reducing transaction speeds and operational costs, and smart sales contracts for property transactions were piloted in 2017.

Bitfury had been operating bitcoin mining centers in the area since 2015, so residents and government institutions were already somewhat familiar with the blockchain technology. Due to popular awareness about cryptocurrencies, many individuals took up small-scale mining activities in their garages. The World Bank estimated in 2018 that up to 5% of households in Georgia were engaged in cryptocurrency mining or investments.

Bitcoin mining in Georgia. Source: NPR

ESTONIA
Elsewhere in post-socialist Eastern Europe, Estonia’s innovative e-governance demonstrated a similar embeddedness between distributed digital technologies and existing digital infrastructures, initiatives, and political rationales. The e-Estonia system is considered the most ambitious nation-wide digital initiative globally. With a small population of 1.3 million, Estonia has a unique socio-political background, including a desire to re-connect with the outside after the Soviet-era isolation. Security was a significant factor - the organized cyber-attacks against the Estonian Internet infrastructures by Russia’s hackers in 2007 mobilized a unified digital response. Since 2000, Estonia has employed a distributed data exchange layer for secure online transfers between information systems – X-Road. In 2007, a team of Estonian software and security specialists designed the digital signature system that would lead to Keyless Signature Infrastructure (KSI) Blockchain Technology Stack that is used in a variety of state registries.

The well-established national digital services framework served as a basis for the innovative e-Residency initiative. Offering a transnational digital identity to citizens of any part of the globe, it allows anyone outside Estonian borders to engage in commercial activities with public and private sectors. About 35,000 e-residents have applied from 160 countries, with thousands of new companies established. As the first program in the world to provide a government-authenticated digital identity to foreigners, it could be seen a step towards a novel idea of a borderless state. The e-Residency platform also serves as a site of expansion for other blockchain initiatives in the country such as decentralized public notary services with blockchain startup Bitnation, and Nasdaq’s blockchain applications with Tallinn Stock Exchange. While the distributed technologies allow the users of Estonian e-governance initiatives better control over their data, the country’s digital embeddedness is viewed as serving an important security protection for the small state with turbulent history. E-Estonia likens blockchain to “digital defence dust” that covers data and smart devices for protection from corruption and misuse, noting that blockchain could be compared to the deterring effects of NATO allies in Estonia.

AMBIGUITY AND EMBEDDEDNESS 
The growing use of blockchain in public administration systems also gives rise to new risks and vulnerabilities. By enabling an “unbundling” of property rights, blockchain registry facilitates a market for small real estate investments, and as other digital registries, may foster an illusion of immutable land rights, while backgrounding other relevant relationships around the landholding. The entry of private startups working with governments in the blockchain space may entail implicit privatization of land registries, creating private markets in public data. The increasing financialization of land may thus be part of the tendency to “re-risk” that often accompanies blockchain applications.

While it is too early to evaluate the actual impact of these technologies in Eastern Europe, it is evident that rather than cutting out the middleman, blockchain registries build on existing social and political frameworks and infrastructures. In order to understand the ongoing reintroduction of intermediaries and the types of “recombinant” collectivities and property forms blockchain registries facilitate, one should study the social imaginaries and metaphors that surround the technology. It is perhaps unsurprising, then, that figures like the kratt from folklore suggest themselves to help narrate the new relationship between technologies with globalizing potentials, and post-socialist projects of the re-emerging nation state.

The kratt could be seen as a broader cultural metaphor of how Estonians think of their digital infrastructures - as a pragmatic combination of different elements and layers of technology, animated by human agency and desire – but also a creature with a separate subjectivity. Estonian digital progress could be seen as an expression of an important continuity embodied in the character of the kratt – as representing indigenous inventiveness and resilience that has sustained Estonians throughout their difficult history. This cultural metaphor for a particular kind of symbiosis between humanity and technology also entails an acknowledgement of an inherent unpredictability of the digital technology that, similarly to the kratt, could turn against its creators and has to be managed by smart policies and “KrattLaws.” The folkloric creature - the kratt - has thus become an important popular metaphor for efforts to grapple with the emerging ethical issues around digital technologies, while calling attention to the fruitful connections fostered through these, as well as their inherent precariousness.

November (2018) Exclusive Clip "Kratt Needs Work" HD

While the implementation of digital technology often accompanies a global sense of oneness, the example of Estonian ‘recombinant’ nationhood that defines allegiances in terms of virtual and not territorial or ethnic affinities, and the blockchain land registry in Georgia that legitimizes private property after long decades of socialist rule, suggest these national distributed digital projects need to be studied in their own terms. Only then is it possible to evaluate the promise of decentralizing digital technologies for enhancing democratic and participatory governance.

Daivi Rodima-Taylor is reachable at rodima@bu.edu.

Understanding fintech from the U.S. to China

By Melissa Wrapp and Bill Maurer

On September 28-29, the 2018 California-Shanghai Innovation Dialogues hosted by UC Irvine brought together scholars, policymakers, and industry professionals from across the globe to discuss the ethics and broader social impact of emergent technologies, from insurtech to blockchain to roboadvising. Filene’s newest Fellow, Bill Maurer, gave a talk analyzing the burgeoning cryptocurrency ‘ICO’ phenomenon focusing on the power of big data and digital platforms to create seemingly totalizing systems. Here, Maurer teases out some of the major financial innovations headed our way and the socioeconomic implications that credit unions should be attuned to.

Photo credit: Marilyn Nguyen

What changes are happening in the international fintech space?
We are living in an increasingly digital world. The decreasing costs and rising quality of smart devices is accelerating fintech use. More and more we can expect to see technologies developing around what some are calling the ABCDs: AI, Blockchain, Cloud, and big Data. In China in particular, apps that create an ecosystem of different utilities, such as WeChat Pay and Alipay, are becoming giants in the mobile payments space—and reaching beyond payments into transit, bike sharing, credit, dog walking, you name it. Although their rise in China is in part linked to particularities of the local context, it is important for us to understand these technologies as companies like Facebook, Apple, and Google make moves toward integrating payments, social media, news, and other applications.

Filene Fellow Bill Maurer. Photo Credit: Marilyn Nguyen.

Americans sometimes struggle to understand what they see as Chinese consumers’ relaxed attitude toward data aggregation. What is the appeal of these apps?
For many in China, it is the same as the reason we in the US unthinkingly click through user license agreements without reading: convenience. Analysts are often quick to jump to a framework of surveillance and oppression in conceptualizing Chinese financial innovations. This isn’t unreasonable given the government’s proclivities toward censorship. There are already signs that “social credit” schemes (think Uber ratings, but for everything in your life) may be used to silence political dissidents. And products like Zhima Credit (also known as Sesame Credit), a new social credit scoring system offered by Ant Financial, coincide with broader government plans to collect citizens’ social credit data. However, as scholars at the conference pointed out, these possibilities for algorithmic governance fit into a much broader system of regulation geared toward promoting and maintaining trust in China’s low-trust market environment. So it is important to keep in mind that “convenience” in China is bound up in the social value of stability, concerns over fraudulent goods, and transparent pricing; and that it means something completely different than it does in the American context.

What is something unexpected social scientists have discovered about how people are engaging with new fintech?
People in the tech space often pitch their products in terms of revolutionary, wholesale disruption. However, what we are finding is that rather than entirely replacing things that came before, fintech is creating new layers of possibilities. Turning again to social credit schemes in China, for example, researchers have found that migrant workers are using new apps to access credit in order to extend longstanding patterns of informal lending to friends. Migrants’ efforts to improve their credit scores, therefore, are not linked to a desire to consume more for themselves, but to be able to lend to relations and friends. It is important to pay attention to the way new technologies mix up formal and informal practices, as well as older traditions and tendencies around money with new delivery channels, interfaces, and possibilities. All these continue to be informed by culturally specific moral logics around money, as well as existing financial practices.

Insurtech panel (LtoR): Lei Guang, Liz McFall, Xian Xu, Robert Collins
Photo Credit: Marilyn Nguyen 

What do participants in the credit union movement need to understand about new fintech products?
Despite our best efforts to channel our customers’ behavior toward certain ends, humans will always find workarounds. No matter how “intelligent” roboadvising becomes, for example, it will never fully exclude affect and emotion. No matter how much data is collected by insurtech companies, there will always be a smoker who lives forever and a marathoner who dies young. Sociologist Liz McFall reminds us that the origins of the word risk are related to “things to avoid in the sea.” There will always be things to avoid in the sea: sea monsters, rocks, and reefs lurking beneath the surface that are not fully known. It is better to recognize when people are tinkering, subverting, and otherwise creatively repurposing our technology and try to understand what they are up to and why, than to assume they will adopt tech the way we intend.

Take this conversation to the next level with Filene Fellow, Bill Maurer, when he speaks to how credit unions should analyze the risks of adopting new fintech with its promises and opportunity costs at big.bright.minds.2018. big.bright.minds. brings together experts from each of Filene’s Centers of Excellence to help us redefine consumer financial wellness. Join Bill Maurer and Filene in San Diego on December 6-7.

See original post - https://filene.org/blog/understanding-fintech-from-the-us-to-china

Melissa K. Wrapp
PhD Candidate, Department of Anthropology
University of California, Irvine

Bill Maurer
Dean, School of Social Sciences; Professor, Department of Anthropology and School of Law; Director, Institute for Money, Technology and Financial Inclusion
University of California, Irvine

Marching into Hong Kong: Maurer Plays Marco Polo (Part 2)

By IMTFI Director and UC Irvine School of Social Sciences Dean Bill Maurer

The first thing I noticed when coming into Hong Kong from China was that the cab drivers wanted cash. No cab driver was using an app to receive payment. The second thing I noticed was the cash: the HK$100 note is the same size and color as the Chinese 100 RMB note. Instead of a portrait of Mao, it has an image of Chinese soldiers marching into Hong Kong to commemorate the 20^th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR). Oh, wait, it’s not exactly soldiers. It’s a military marching band, holding musical instruments. Soooo much nicer.

With cash as an everyday reminder of Chinese rule, cash and cards dominate the payment landscape in Hong Kong. Overlooking the harbor we saw a giant lit-up ad for Samsung Pay during the nighttime lightshow, but I never saw anyone use it, and no one I met had ever used it (and several had never even heard of it). Lots of cash, a fair bit of bargaining, and some credit card use. Union Pay ads adorn walkways and public areas, as well as the airport, celebrating your ability to “make your choice” and touting Union Pay’s “global payment network.”

Union Pay ad in Hong Kong.

This seems to be a selling point, at least for now. WeChat Pay can’t be used outside of China by non-Chinese citizens (and I haven’t yet seen any merchant in the US who accepts WeChat Pay – but I’ll be looking, and Rutgers graduate student Jing Wang shared with me this photo of a vendor who accepts WeChat Pay outside of the NYU Stern School of Business!). My Chinese students at UC Irvine are all using WeChat for social networking, chat, news and more. It may only be a matter of time and regulation before WeChat Pay also goes global. When that happens, I have to wonder how much more data might be available to WeChat—and the Chinese government—about residents and citizens of the United States.

Food truck vendor in front of NYU Stern School of Business.
Photograph by Jing Wang, used  with permission

This may be why there is so much interest in Hong Kong—and in China, among those I spoke with—in blockchain technology. While I was in China, the government banned bitcoin and shut down some bitcoin exchanges. Nevertheless, several of my interlocutors in China wanted to know more about the cryptocurrency and blockchain. They were ready to disparage the (ridiculous) monetary theory behind bitcoin, but were deeply interested in the potential use of blockchain for “accountability.”

I was surprised to see a whole display of books (see left) in a non-academic, non-tech, general readership Hong Kong bookstore on blockchain and fintech. I actually bought a copy of a blockchain book—in Chinese, just to have as an artifact of this moment in the history of payment and accounting—at the airport bookstore in Hong Kong (thank you, National Science Foundation).

What are the bigger lessons then? I’m tempted to make some big claims but they’re really too flimsy to stand on right now. Still: maybe the US’s messy, noninteroperable, non-seamless, kludgey payments infrastructures are not such a bad thing after all? Google’s got a lot of my data and the NSA can snoop around in it just as easily as the Chinese government can use machine learning to catch phrases in WeChat conversations or shut down entire groups or circles of payment or make it impossible for you to rent an Ofo bike, limiting your mobility. But if I can’t keep track of my various accounts for the different payment services I use, is my fragmentation across payment platforms a good thing for my liberty?

Mobile payment in its WeChat/Alipay app-based form, so different from the SMS-based world of M-Pesa, crucially depends on government-mandated identity as the base layer on which everything else is built. So maybe there’s something to be said about the line from authoritarianism to app-based mobile payment? And maybe, whenever I’m feeling like a blockchain skeptic, I should look at that HK$100 note to remind myself why a noncentralized, non-government controlled means of accountability might be a good thing.

I can’t thank by name but also can’t thank enough my various interlocutors and guides in China and Hong Kong. Xiè xiè!


All photo credits are by author unless otherwise noted.

Read first post: "Paying behind the Great Firewall: Maurer Plays Marco Polo (Part 1)"

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