Humanizing the Great Ad Machine

This is a comment I couldn’t publish under this post before my laptop died. (Fortunately I sent it to my wife first, so I’m posting it here, from her machine.)

OMMA’s theme is “Humanizing the Great Ad Machine”  Good one. Unfortunately, the agenda and speaker list suggest that industry players are the only ones in a position to do that. They aren’t..

The human targets of the Great Ad Machine are actually taking the lead—by breaking it.

Starting with ad blocking and tracking protection.

I see no evidence of respect for that fact, however, in the posts and tweets (at #MPOMMA) coming out of the conference so far. Maybe we can change that.

Let’s start by answering the question raised by the headline in Ad Blocking and DVRs: How Similar? I can speak as an operator of both technologies, and as a veteran marketer as well. So look at the rest of this post as the speech I’d give if I was there at OMMA…

Ad blocking and DVRs have four main things in common.

1) They are instruments of personal independence;

2) They answer demand for avoiding advertising. That demand exists because most advertising wastes time and space in people’s lives, and people value those two things more than whatever good advertising does for the “content” economy;

3) Advertising agents fail to grok this message; which is why—

4) Advertising agents and the “interactive” ad industry cry foul and blame the messengers (including the makers of ad blockers and other forms of tracking protection), rather than listening to, or respecting, what the market tells them, loudly and clearly.

Wash, rinse and repeat.

The first wash was VCRs. Those got rinsed out by digital TV. The second wash was DVRs. Those are being rinsed out right now by the Internet. The third wash is ad blocking.

The next rinse will happen after ad blocking succeeds as chemo for the cancer of ads that millions on the receiving end don’t want.

The next wash will be companies spending their marketing money on listening for better signals of demand from the marketplace, and better ways of servicing existing customers after the sale.

This can easily happen because damn near everybody is on the Net now, or headed there. Not trapped on TV or any other closed, one-way, top-down, industry-controlled distribution system.

On the Net, everybody has a platform of their own. There is no limit to what can be built on that platform, including much better instruments for expressing demand, and much better control over private personal spaces and the ways personal data are used by others. Ad blocking is just the first step in that direction.

The adtech industry (including dependent publishers) can come up with all the “solutions” they want to the ad blocking “problem.” All will fail, because ad blocking is actually a solution the market—hundreds of millions of real human beings—demands. Every one of adtech’s “solutions” is a losing game of whack-a-mole where the ones with hammers bang their own heads.

For help looking past that game, consider these:

1) The Interent as we know it is 21 years old. Commercial activity on it has only been possible since April 30, 1995. The history of marketing on the Net since then has been a series of formative moments and provisional systems, not a permanent state. In other words, marketing on the Net isn’t turtles all the way down, it’s scaffolding. Facebook, Google and the rest of the online advertising world exist by the grace of provisional models that have been working for only a few years, and can easily collapse if something better comes along. Which it will. Inevitably. Because…

2) When customers can signal demand better than adtech can manipulate it or guess at it, adtech will collapse like a bad soufflé.

3) Plain old brand advertising, which has always been aimed at populations rather than people, isn’t based on surveillance, and has great brand-building value, will carry on, free of adtech, doing what only it can do. (See the Ad Contrarian for more on that.)

In the long run (which may be short) winners will be customers and the companies that serve them  respectfully. Not more clueless and manipulative surveillance-based marketing schemes.

Winning companies will respect customers’ independence and intentions. Among those intentions will be terms that specify what can be done with shared personal data. Those terms will be supplied primarily by customers, and companies will agree to those terms because they will be friendly, work well for both sides, and easily automated.

Having standard ways for signaling demand and controlling use of personal data will give customers the same kind of scale companies have always had across many customers. On the Net, scale can work in both directions.

Companies that continue to rationalize spying on and abusing people, at high costs to everybody other than those still making hay while the sun shines, will lose. The hay-makers will also lose as soon as the light of personal tolerance for abuse goes out, which will come when ad blocking and tracking protection together approach ubiquity.

But the hay-makers can still win if they start listening to high-value signals coming from customers. It won’t be hard, and it will pay off.

The market is people, folks. Everybody with a computer or a smart mobile device is on the Net now. They are no longer captive “consumers” at the far ends of one-way plumbing systems for “content.” The Net was designed in the first place for everybody, not just for marketers who build scaffolding atop customer dislike and mistake it for solid ground.

It should also help to remember that the only business calling companies “advertisers” is advertising. No company looks in the mirror and sees an advertiser there. That’s because no company goes into business just so they can advertise. They see a car maker, a shoe store, a bank, a brewer, or a grocer. Advertising is just overhead for them. I learned this lesson the hard way as a partner for 20 years in a very successful ad agency. Even if our clients loved us, they could cut their ad budget to nothing in an instant, or on a whim.

There’s a new world of marketing waiting to happen out there in the wide-open customer-driven marketplace. But it won’t grow out of today’s Great Ad Machine. It’ll grow out of new tech built on the customers’ side, with ad blocking and tracking protection as the first examples. Maybe some of that tech is visible at OMMA. Or at least maybe there’s an open door to it. If either is there, let’s see it. Hashtag: #VRM. (For more on that, see https://en.wikipedia.org/wiki/Vendor_relationship_management.)

If not, you can still find developers here .

The Castle Doctrine

home castle

The Castle doctrine has been around a long time. Cicero (106–43 BCE) wrote, “What more sacred, what more strongly guarded by every holy feeling, than a man’s own home?” In Book 4, Chapter 16 of his Commentaries on the Laws of England, William Blackstone (1723–1780 CE) added, “And the law of England has so particular and tender a regard to the immunity of a man’s house, that it stiles it his castle, and will never suffer it to be violated with impunity: agreeing herein with the sentiments of ancient Rome…”

Since you’re reading this online, let me ask, what’s your house here? What sacred space do you strongly guard, and never suffer to be violated with impunity?

At the very least, it should be your browser.

But, unless you’re running tracking protection in the browser you’re using right now, companies you’ve never heard of (and some you have) are watching you read this, and eager to use or sell personal data about you, so you can be delivered the human behavior hack called “interest based advertising.”

Shoshana Zuboff, of Harvard Business School, has a term for this:surveillance capitalism, defined as “a wholly new subspecies of capitalism in which profits derive from the unilateral surveillance and modification of human behavior.”

Almost across the board, advertising-supported publishers have handed their business over to adtech, the surveillance-based (they call it “interactive”) wing of advertising. Adtech doesn’t see your browser as a sacred personal space, but instead as a shopping cart with ad space that you push around from site to site.

So here is a helpful fact: we don’t go anywhere when we use our browsers. Our browser homes are in our computers, laptops and mobile devices. When we “visit” a web page or site with our browsers, we actually just request its contents (using the hypertext protocol called http or https).

In no case do we consciously ask to be spied on, or abused by content we didn’t ask for or expect. That’s why we have every right to field-strip out anything we don’t want when it arrives at our browsers’ doors.

The castle doctrine is what hundreds of millions of us practice when we use tracking protection and ad blockers. It is what called the new Brave browser into the marketplace. It’s why Mozilla has been cranking up privacy protections with every new version of Firefox . It’s why Apple’s new content blocking feature treats adtech the way chemo treats cancer. It’s why respectful publishers will comply with CHEDDAR. It’s why Customer Commons is becoming the place to choose No Trespassing signs potential intruders will obey. And it’s why #NoStalking is a good deal for publishers.

The job of every entity I named in the last paragraph — and every other one in a position to improve personal privacy online — is to bring as much respect to the castle doctrine in the virtual world as we’ve had in the physical one for more than two thousand years.

It should help to remember that it’s still early. We’ve only had commercial activity on the Internet since April 1995. But we’ve also waited long enough. Let’s finish making our homes online the safe places they should have been in the first place.

 

A reading list for online publishers

I’ll be talking to a pile of publishers today at a Meet the Blockers thing hosted by DCN in New York. Here are a few of the many links I’ve accumulated as a background for the conversation I hope ensues. (These are in addition to my own Adblock War Series, now 53 posts long.)

I’ll report more on my exact advice later.

 

Why #NoStalking is a good deal for publishers

"Just give me ads not based on tracking me.."

That line, scribbled on a whiteboard at VRM Day recently at the Computer History Museum, expresses the unspoken social contract we’ve always had with ad-supported print publications in the physical world. But we never needed to say it in that world, for the same reason we never needed to say “don’t follow me out of your store,” or “don’t use ink that will give me an infection.” Nobody ever would have considered doing anything that ridiculously ill-mannered.

But following us, and infecting our digital bodies (e.g. our browsers) with microbes that spy on us, is pro forma for ad-supported publishers on the Internet. That’s why Do Not Track was created in 2007, and a big reason why since then hundreds of millions of us have installed ad blockers and tracking protection of various kinds in our browsers and mobile devices.

But blocking ads also breaks that old social contract. In that sense it’s also ill-mannered, though not ridiculously so.

What if we wanted to restore that social contract, for the good of publishers that are stuck in their own ill-mannered death spiral?

The first and easiest way is by running tracking protection alone. There are many ways of doing that. There are settings you can make in some browsers, plus add-ons or extensions from Aloodo, BaycloudDisconnect, the EFF and others.

The second is requesting refined settings from browser makers. That’s  what @JuliaAnguin does in this tweet about the new Brave browser:

Julia Angwin's request to Brave

But why depend on each browser to provide us with a separate setting, with different rules? How about having our own pro forma rule we could express through all our browsers and apps?

We have the answer, and it’s called the NoStalking rule. In fact, it’s already being worked out and formalized at the Kantara Initiative and will live at Customer Commons, where it will be legible at all three of these levels:

3way

It will work because it’s a good one for both sides. Individuals issuing the offer get guilt-free use of the goods they come to the publisher for, and the publisher gets to stay in business — and improve that business by running advertising that is actually valued by its recipients.

The offer can be expressed in one line of code in a browser, and accepted by corresponding code on the publisher’s side. The browser code can be run natively (as, for example, a choice in the Brave menu above) or through an extension such as an ad or tracking blocker. In those cases the blocker would open the valve to non-tracking-based advertising.

On the publisher’s side, the agreement can be automatic. Or simply de facto, meaning the publisher only runs non-tracking based ads anyway. (As does, for example, Medium.) In that case, the publisher is compliant with CHEDDAR, which was outlined by Don Marti (of Aloodo, above) and discussed  both at VRM Day and then at  IIW, in May. Here’s an icon-like image for CHEDDAR, drawn by Craig Burton on his phone:

Sketch - 7

To explain CHEDDAR, Don wrote this on the same whiteboard where the NoStalking term above also appeared:

cheddar

For the A in CHEDDAR, if we want the NoStalking agreement to be accountable from both sides, it might help to have a consent receipt. That spec is in the works too.

What matters most is that individuals get full respect as sovereign actors operating with full agency in the marketplace. That means it isn’t good enough just for sites to behave well. Sites also need to respond to friendly signals of intent coming directly from individuals visiting those sites. That’s why the NoStalking agreement is important. It’s the first of many other possible signals as well.

It also matters that the NoStalking agreement may be the first of its kind in the online world: one where the individual is the one extending the offer and the business is the one agreeing to it, rather than the other way around.

At VRM Day and IIW, we had participants affiliated with the EFF, Mozilla, Privacy Badger, Adblock Plus, Consent Receipt, PDEC (Personal Data Ecosystem Consortium),  and the CISWG (Consent & InfoSharing Working Group), among others. Work has continued since then, and includes people from the publishing, advertising and other interested communities. There’s a lot to be encouraged about.

In case anybody wonders if advertising can work as well if it’s not based on tracking, check out Pedro Gardete: The Real Price of Cheap Talk: Do customers benefit from highly targeted online ads?  by Eilene Zimmerman (@eilenez) in Insights by Stanford Business. The gist:

Now a new paper from Stanford Graduate School of Business professor Pedro Gardete and Yakov Bart, a professor at Northeastern University, sheds light on who is likely to benefit from personalized advertising and identifies managerial best practices.

The researchers found that highly targeted and personalized ads may not translate to higher profits for companies because consumers find those ads less persuasive. In fact, in some cases the most effective strategy is for consumers to keep information private and for businesses to track less of it.

You can also mine the oeuvres of Bob Hoffman and Don Marti for lots of other material that makes clear that the best advertising is actual advertising, and not stalking-based direct marketing that only looks like advertising.

Our next step, while we work on all this,  is to put together an FAQ on why the NoStalking deal is a good one for everybody. Look for that at Customer Commons, where terms behind more good deals that customers offer will show up in the coming months.

A handy blockchain illustration

blockchain

Look up “blockchain symbol,” “blockchain illustration” or “blockchain clipart” and you’ll get lots of different images, but nothing common or canonical. I mean, not like you’ll get for “laptop,” “hard drive” or “cloud.”

So the other day somebody drew the above on a whiteboard.

I like it, so I’m sharing it, in the public domain.

You’re welcome.

How customers can debug business with one line of code

744px-Olive_branch.svg

Four years ago, I posted An olive branch to advertising here. It began,

Online advertising has a couple of big problems that could possibly be turned into opportunities. One is Do Not Track, or DNT. The other is blocking of ads and/or tracking.

Publishers and the advertising business either attacked or ignored Do Not Track, which was too bad, because the ideas we had for making it work might have prevented the problem those businesses now have with ad blocking.

According to the latest PageFair/Adobe study,  the number of people blocking ads passed 200 million last May, with double-digit increases in adoption, worldwide. Tracking protection is also gaining in popularity.

While those solutions provide individuals with agency and scale, they don’t work for publishers. Not yet, anyway.

What we need is a solution that scales for readers and is friendly to publishers and the kind of advertising readers can welcome—or at least tolerate, in appreciation of how ads sponsor the content they want. This is what we have always had with newspapers, magazines, radio and TV in the offline world, none of which ever tracked anybody anywhere.

So now we offer a solution. It’s a simple preference, which readers can express in code, that says this: Just show me ads that aren’t based on tracking me. Equally simple code can sit on the publishers’ side. Digital handshakes can also happen between the two.

This term will live at Customer Commons, which was designed for that purpose, on the model of Creative Commons (which also came out of work done by folks here at the Berkman Center).  This blog post provides some context.

We’ll be working on that term, its wording , and the code that expresses and agrees to it, next week at the Computer History Museum in Silicon Valley. Monday will be VRM Day. Tuesday through Thursday will be IIW—the Internet Identity Workshop (where ProjectVRM was incubated almost ten years ago). VRM Day is mostly for planning the work we’ll do at IIW. VRM Day is free, and IIW is cheap for three days of actually getting stuff done. (It’s by far the most leveraged conference I know, partly because it’s an unconference: no keynotes, panels or sponsor booths. Just breakouts that participants create, choose and lead.)

If you care about aligning publishing and advertising online with what worked for hundreds of years offline — and driving uninvited surveillance out of business itself — come help us out.

This one term is a first step. There will be many more before we customers get the full respect we deserve from ad-funded businesses online. Each step needs to prove to one business category or another that customers aren’t just followers. Sometimes they need to take the lead.

This is one of those times.  So let’s make it happen.

See you next week.

 

 

Earth to marketing: customers don’t want to be “acquired”

targetbackThey also don’t want to be “targets” that get “managed,” “controlled,” “owned” or “locked in” as if they were cattle or slaves.

Mostly what they want are good products and services from companies that give  good reasons to trust them and buy from them. And, after they buy the goods or sign the contract, they want to be treated well when updates are required or when things go wrong.

And when things go very wrong, they want to deal with human beings who can fix the problem.

They also don’t want anything that puts a burden on them, even if it’s a “loyalty” program with discounts or rewards. There are too many of those already, and each of them a cognitive overload that’s also operational overhead for the seller.

Earn loyalty from what you do best. Your customers will take care of the rest. All have mouths, and word will spread.

Yes, marketing  matters, but not as much as what Peter Drucker said long ago: the purpose of a business is to make and keep a customer.

If you do that well, you won’t need advertising, SEM, SEO, CRM or other 3-letter acronyms to make it happen. Those are good-to-haves, but they are just gravy on the meat and potatoes of products, services and treatment of customers.

A earlier version of this post appeared (using the first person voice) in @Medium.

IoT & IoM next week at IIW

blockchain1

(This post was updated and given a new headline on 20 April 2016.)

In  The Compuserve of Things, Phil Windley issues this call to action:

On the Net today we face a choice between freedom and captivity, independence and dependence. How we build the Internet of Things has far-reaching consequences for the humans who will use—or be used by—it. Will we push forward, connecting things using forests of silos that are reminiscent the online services of the 1980’s, or will we learn the lessons of the Internet and build a true Internet of Things?

In other words, an Internet of Me (#IoM) and My Things. Meaning things we own that belong to us, under our control, and not puppeted by giant companies using them to snarf up data about our lives. Which is the  #IoT status quo today.

A great place to work on that is  IIW— the Internet Identity Workshop , which takes place next Tuesday-Thursday, April 26-28,  at the Computer History Museum in Silicon Valley. Phil and I co-organize it with Kaliya Hamlin.

To be discussed, among other things, is personal privacy, secured in distributed and crypto-secured sovereign personal spaces on your personal devices. Possibly using blockchains, or approaches like it.

So here is a list of some topics, code bases and approaches I’d love to see pushed forward at IIW:

  • OneName is “blockchain identity.”
  • Blockstack is a “decentralized DNS for blockchain applications” that “gives you fast, secure, and easy-to-use DNS, PKI, and identity management on the blockchain.” More: “When you run a Blockstack node, you join this network, which is more secure by design than traditional DNS systems and identity systems. This  is because the system’s registry and its records are secured by an underlying blockchain, which is extremely resilient against tampering and control. In the registry that makes up Blockstack, each of the names has an owner, represented by a cryptographic keypair, and is associated with instructions for how DNS resolvers and other software should resolve the name.” Here’s the academic paper explaining it.
  • The Blockstack Community is “a group of blockchain companies and nonprofits coming together to define and develop a set of software protocols and tools to serve as a common backend for blockchain-powered decentralized applications.” Pull quote: “For example, a developer could use Blockstack to develop a new web architecture which uses Blockstack to host and name websites, decentralizing web publishing and circumventing the traditional DNS and web hosting systems. Similarly, an application could be developed which uses Blockstack to host media files and provide a way to tag them with attribution information so they’re easy to find and link together, creating a decentralized alternative to popular video streaming or image sharing websites. These examples help to demonstrate the powerful potential of Blockstack to fundamentally change the way modern applications are built by removing the need for a “trusted third party” to host applications, and by giving users more control.” More here.
  • IPFS (short for InterPlanetary File System) is a “peer to peer hypermedia protocol” that “enables the creation of completely distributed applications.”
  • OpenBazaar is “an open peer to peer marketplace.” How it works: “you download and install a program on your computer that directly connects you to other people looking to buy and sell goods and services with you.” More here and here.
  • Mediachain, from Mine, has this goal: “to unbundle identity & distribution.” More here and here.
  • telehash is “a lightweight interoperable protocol with strong encryption to enable mesh networking across multiple transports and platforms,” from @Jeremie Miller and other friends who gave us jabber/xmpp.
  • Etherium is “a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”
  • Keybase is a way to “get a public key, safely, starting just with someone’s social media username(s).”
  • ____________ (your project here — tell me by mail or in the comments and I’ll add it)

In tweet-speak, that would be @BlockstackOrg, @IPFS, @OpenBazaar, @OneName, @Telehash, @Mine_Labs #Mediachain, and @IBMIVB #ADEPT

On the big company side, dig what IBM’s Institute for Business Value  is doing with “empowering the edge.” While you’re there, download Empowering the edge: Practical insights on a decentralized Internet of Things. Also go to Device Democracy: Saving the Future of the Internet of Things — and then download the paper by the same name, which includes this graphic here:

ibm-pyramid

Put personal autonomy in that top triangle and you’ll have a fine model for VRM development as well. (It’s also nice to see Why we need first person technologies on the Net , published here in 2014, sourced in that same paper.)

Ideally, we would have people from all the projects above at IIW. For those not already familiar with it, IIW is a three-day unconference, meaning it’s all breakouts, with topics chosen by participants, entirely for the purpose of getting like-minded do-ers together to move their work forward. IIW has been doing that for many causes and projects since the first one, in 2005.

Register for IIW here: https://iiw22.eventbrite.com/.

Also register, if you can, for VRM Day: https://vrmday2016a.eventbrite.com/. That’s when we prep for the next three days at IIW. The main focus for this VRM Day is here.

Bonus link: David Siegel‘s Decentralization.

 

 

 

What if we don’t need advertising at all?

advertisinggraveI’m serious.

Answer this question: Would you pay for any publication that is only advertising? If not, Do you believe advertising adds or subtracts value from the media it funds?

It depends, right? Ads add value to The New Yorker, Vogue, Brides, Guns & Ammo and the Super Bowl. Readers and viewers actually like the ads that show up in those places. In some others, well, kinda. As for the rest? No.

The rest rounds to everything. The italicized items in the paragraph above are exceptions to a  rule that is yucky in the extreme, especially on the Web and (increasingly) on our mobile devices.

So let’s say we normalize supply and demand to the Internet, which puts a giant zero — no distance — between everybody and everything.  All that should stand between any two entities on the Net are manners, permission and convenience. Any company and any customer should be able to connect with any other, without an intermediary, any time and in any way they both want — provided agreements and methods for doing that are worked out.

So far they aren’t, and that’s the reason we have so much icky advertising on the Web and on our phones: most of the pushers have no manners, and there are no mutually accepted ways to allow or deny permission for being bothered, so those being bothered have responded with ad and tracking blockers. In other words, in the absence of manners, we’ve created an inconvenience.

Naturally, publishers, agencies and ad industry associations are crying foul, but too bad. Blocking  that shit reduces friction and  feels good. (Thank you, Bob Garfield, for both of those.)

What we need next are better ways for demand and supply to inform and connect. Not just better ways to pay for media. (That would be nice, but media have mostly been a one-way channel for informing, and at best a secondary way to connect.)

Think about what will happen to markets when any one of us can intentcast our needs for products or services, and do so easily and in standard ways that any supplier can understand. Then think about what will happen when any company can inform existing or potential customers directly, without the intermediation of the media we know today — and with clear and well-understood permissions for doing that on both sides.

The result will be the intention economy, which will work far better for demand and supply than the attention economy we have today, simply because there will be so many more and better ways to inform and connect, in both directions.

Asking today’s media to give us the intention economy is like asking AM radio to give us cellular telephony.

They can’t, and they won’t. At best they’ll serve the remaining needs of the attention economy: namely, old-fashioned Madison Avenue type branding, like we get from the best ads in the Super Bowl and in your better print magazines. This is the wheat I talk about in Separating Advertising’s Wheat and Chaff, and that Don Marti calls “signalful” advertising. Maybe that stuff will be with us forever. For the sake of the good things they fund, I hope so.

But I don’t know, because I’m sure if we zero-base the intention economy in our new all-digital world, it is unlikely that we’ll invent any of the media we have today.

It would be easy to call the intention economy utopian hogwash, and I expect some comments to say as much. But one could have said the same thing about personal computing in 1973, the Internet in 1983 and smartphones in 1993. All of those were unthinkable at those points in history, yet inevitable in retrospect.

The fact is, we are now in a digital world as well as an analog one. That alone rewrites the future in a huge way. Digital itself is the only medium, and the whole environment. It’s also us, whether we like it or not. We are digital as well as cellular.

In the past we put up with being annoyed and yelled at by advertising. And now we’re putting up with being spied on and guessed at, personally, as well. But we don’t have to put up with any of it any more. That’s another thing digital life makes possible, even if we haven’t taken the measures yet. The limits of invention are a lot farther out on the Giant Zero than they ever were in the old analog world where today’s media — including  digital ones following analog models — were born.

Advertising is an analog thing. The arguments for its survival in the digital world need to be ones that start with demand. Is it something we want? Because we’ll get what we want. Sooner or later, we’ll have the digital versions of clothing and shelter (aka privacy), of terms and permissions, of ways to signal our intentions. If advertising fits in there somewhere, great. If not, R.I.P.

 

 

 

 

 

 

 

 

 

 

On #Bitcoin, #Blockchain, #Linux and Minimum Viable Centralization

BrokenBitcoinBitcoin and the block chain have been getting  bad PR lately.

Bad PR is when even your friends turn on you.

Bitcoin ex-friend #1 is Mike Hearn, writing in Medium. He opens with his credentials…

I’ve spent more than 5 years being a Bitcoin developer. The software I’ve written has been used by millions of users, hundreds of developers, and the talks I’ve given have led directly to the creation of several startups. I’ve talked about Bitcoin on Sky TV and BBC News. I have been repeatedly cited by the Economist as a Bitcoin expert and prominent developer. I have explained Bitcoin to the SEC, to bankers and to ordinary people I met at cafes.

… and then, after a short digression, brings out the knife:

But despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly. The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards. I will no longer be taking part in Bitcoin development and have sold all my coins.

Why has Bitcoin failed? It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.

Think about it. If you had never heard about Bitcoin before, would you care about a payments network that:

  • Couldn’t move your existing money
  • Had wildly unpredictable fees that were high and rising fast
  • Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
  • Is suffering large backlogs and flaky payments
  • … which is controlled by China
  • … and in which the companies and people building it were in open civil war?

I’m going to hazard a guess that the answer is no.

Then comes Bitcoin friend #2: Fred Wilson, with Bitcoin is Dead, Long Live Bitcoin. Fred hedges the headline in the text below, which he should since his firm has investments in the category. He also offers some hope, and a call to action:

I personally believe we will see a fork accepted by the mining community at some point this year. And that will come with a new set of core developers and some governance about how decisions are made among that core developer team. But it could well take a massive collapse in the price of Bitcoin, breakdowns in the Bitcoin network, or worse to get there. And all of that could cause the whole house of cards to come crashing down. Anything is possible. Even the return of Satoshi to fix things as an AVC regular suggested to me in an email this morning.

The Bitcoin experiment is six years old. There has been a significant amount of venture capital investment in the Bitcoin ecosystem. There are a number of well funded companies competing to build valuable businesses on top of this technology. We are invested in at least one of them. And the competition between these various companies and their visions has played a part in the stalemate. These companies have a lot to gain or lose if Bitcoin survives or fails. So I expect that there will be some rationality, brought on by capitalist behavior, that will emerge or maybe is already emerging.

Sometimes it takes a crisis to get everyone in a room. That’s how the federal budget has been settled for many years now. And that may be how the blocksize debate gets settled to. So if we are going to have a crisis, let’s get on with it. No better time than the present.

Much tweetage is going on. The best of it, to me at least, involves Vinay Gupta (@Leashless), who does an amazing job of unpacking Bitcoin politics, which seems to be most at issue here. (As Craig Burton (@craigburton) says, “All technical problems are technical and political. And you can always solve the technical stuff.”)

So take a look at this 12-minute video of Vinay holding forth on Bitcoin last August, when at least some of today’s problems were already surfaced. In it he talks about Bitcoin having “anarchist infrastructure producing a libertarian trading environment,” among other wise one- (and few-) liners. Great make-ya-think stuff there.

Bitcoin and the blockchain matter for VRM, because they can both help liberate individual customers (and groups) from the highly centralized systems that have reduced the free market to “your choice of captor.” And, though flawed, they are already in the world. If we are to prove that free customers are better than captive ones, we need systems that break us out of captivity. Bitcoin and the blockchain can do that.

I also want to pause here to express my love for Chris EllisProtip (@ProtipHQ), which allows anybody to pay whatever they want for anything on the Web, facilitated by a bit of open source code added to a site or service. One click and the cash moves. No intermediators required. No governments. No settlement systems. No credit card cruft. Consider the implications of that.

To solve Bitcoin’s problems (if they can be solved), I believe we need what Brian Behlendorf calls minimum viable centralization. That’s what Fred proposes in his post, and what — in some way or other — we will have at the end of the day. (Or the week, year or decade.)

The best example I know of mimimum viable centralization is Linux, which has a cluster of kernel maintainers at the top. All are benevolent dictators who earned their roles by proven merit. At the top sits Linus Torvalds, who started the whole thing and remains no less involved than he was in the first place. Linux isn’t in everything, but it’s close enough. Consider the implications for Bitcoin/Blockchain and other things like it.

Makes me think  maybe it’s time for Satoshi Nakamoto (whoever he or she really is) to step up.

Bonus links:

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