Sunday, May 28, 2017

So, A Florida Man, An FT Journalist and an A16Z Venture Capitalist Walk Into A ....

...ICO.
ICO?

First up. Balaji Srinivasan the Andreessen Horowitz partner who's also CEO of 21.co and a 2015 winner of the prestigious Climateer Line of the Day, see below.

Thoughts on Tokens
Tokens are early today, but will transform technology tomorrow.
In 2014, we wrote that “Bitcoin is more than money, and more than a protocol. It’s a model and platform for true crowdfunding — open, distributed, and liquid all the way.”

That new model is here, and it’s based on the idea of an appcoin or token: a scarce digital asset based on underlying technology inspired by Bitcoin. While indisputably frothy, as of this writing the token sector sits at a combined market cap in the tens of billions. These new “fat protocols” may eventually create and capture more value than the last generation of Internet companies.
Here we discuss many concepts related to tokens, beginning with the basics for folks new to the space and then moving to advanced ideas.

The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids. This in turn opens up the space for funding new kinds of projects previously off-limits to venture capital, including open source protocols and projects with fast 2X return potential.

But let’s start with the basics first. Why now?

1. Tokens are possible because of four years of digital currency infrastructure
The last time the public at large heard much about digital currency was in late 2013 to early 2014, when the Bitcoin price last touched its then all-time high of $1242 dollars. Since then, several things happened:
In 2013, the legality of digital currency was still in question, with many predicting death and others going so far as to call Bitcoin “evil”. Those kneejerk headlines eventually gave way to Satoshi billboards in Davos and the Economist putting the technology behind Bitcoin on its cover.

By 2017, every major country has a digital currency exchange and every major financial institution has a team working on blockchains. The maturation of infrastructure and societal acceptance for digital currencies has set the stage for the next phase: internet-based crowdfunding of novel Bitcoin-like tokens for new applications.

2. Tokens vary in their underlying blockchains and codebases
To first order, a token is a digital asset that can be transferred (not simply copied) between two parties over the internet without requiring the consent of any other party. Bitcoin is the original token, with bitcoin transfers and issuances of new bitcoin recorded in the Bitcoin blockchain. Other tokens also have transfers and changes to their monetary base recorded in their own blockchains.
One key concept is that a token’s codebase is different from its blockchain database. As an offline analogy, imagine if the US banking infrastructure was repurposed to manage Australian dollars: both are “dollars” and have a shared cultural origin, but a completely different monetary base. In the same way, two tokens may use similar codebases (monetary policies) but have different blockchain databases (monetary bases).
The success of Bitcoin inspired several different kinds of tokens:
  • Tokens based on new chains and forked Bitcoin code. These were the first tokens. Some of these tokens, like Dogecoin, simply changed parameters in the Bitcoin codebase. Others like ZCash, Dash, and Monero innovated on privacy-preserving features. Still others like Litecoin also began as simple tweaks to Bitcoin’s code, but eventually became test grounds for new features. All of these tokens initiated their own blockchains, completely separate from the Bitcoin blockchain.
  • Tokens based on new chains and new code. The next step was the creation of tokens based on wholly new codebases, of which the most prominent example is Ethereum. Ethereum is Bitcoin-inspired but has its own blockchain and was engineered from the ground up to be more programmable. Though this comes with an increased attack surface, it also comes with new capabilities.
  • Tokens based on forked chains and forked code. The most important example here is Ethereum Classic, which was based on a hard fork of the Ethereum blockchain that occurred after a security issue was used to exploit a large smart contract. That sounds technical, but essentially what happened is that a crisis caused the Ethereum community to split 90/10 with two different go-forward monetary policies for each group. A real world example would be if all the citizens of the US who disagreed with the 2008 bailouts changed in their dollars for “classic dollars” and adopted a different Fed.
  • Tokens issued on top of the Ethereum blockchain. Examples include Golem and Gnosis, all based on ERC20 tokens issued on top of Ethereum.
In general, it is technically challenging to launch wholly new tokens on new codebases, but much easier to launch new tokens through Bitcoin forks or Ethereum-based ERC20 tokens.

The latter deserves particular mention, as Ethereum makes it so simple to issue these tokens that they are the first example in the Ethereum tutorial! Nevertheless, the ease with which Ethereum-based tokens can be created does not mean they are inherently useless. Often these tokens are a sort of public IOU intended for redemption in a future new chain, or some other digital good.

3. Token buyers are buying private keys
When a new token is created, it is often pre-mined, sold in a crowdsale/token launch, or both. Here, “pre-mining” refers to allocating a portion of the tokens for the token creators and related parties. A “crowdsale” refers to a Kickstarter-style crowdfunding in which internet users at large have the opportunity to purchase tokens.

Given that tokens are digital, what do token buyers actually buy? The essence of what they buy is a private key. For Bitcoin, this looks something like this:
5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF
For Ethereum, it looks something like this:
3a1076bf45ab87712ad64ccb3b10217737f7faacbf2872e88fdd9a537d8fe266
You can think of a private key as being similar to a password. Just like your private password grants you access to the email stored on a centralized cloud database like Gmail, your private key grants you access to the digital token stored on a decentralized blockchain database like Ethereum or Bitcoin.
There is one major difference, however: unlike a password, neither you nor anyone else can reset your private key if you lose it. If you have the private key, you have possession of your tokens. If you do not, you have lost access.

4. Tokens are analogous to paid API keys
The best existing analogy for tokens may be the concept of a paid API key. For example, when you buy an API key from Amazon Web Services for dollars, you can redeem that API key for time on Amazon’s cloud. The purchase of a token like ether is similar, in that you can redeem ETH for compute time on the decentralized Ethereum compute network.

This redemption value gives tokens inherent utility.

Tokens are similar to API keys in another respect: if someone gains access to your Amazon API keys, they can bill your Amazon account. Similarly, if someone sees the private keys for your tokens, they can take your digital currency. Unlike traditional API keys, though, tokens can be transferred to other parties without the consent of the API key issuer.

So, tokens are inherently useful. And tokens are tradeable. As such, tokens have a price....MUCH MORE
I stopped reading when I got to:
Tokens aren’t equity, because they have intrinsic use and because they are non-dilutive to the company’s capitalization table. A token sale is more similar to a Kickstarter sale of paid API keys than equity crowdfunding....
Because I remembered the tulip quote and combined with "intrinsic" anything, needed to take a break.
The tulip quote long-suffering reader asks warily?

"Climateer Line of the Day: Uh Oh Andreessen Edition":
...Bitcoins are like “tulips you can send anywhere in the world in arbitrary quantities”.
-Andreessen Horowitz partner Balaji Srinivasan 
Mr.Srinivasan may not be aware that, since ca. 1637 or so, tulips have not had the best connotation in the world of finance....
If you have any questions you can email Mr. Srinivasan for twenty bucks or do the whole A16Z team for $600, a discount of $40 from the rack price:
Here are a selection of 21’s prices per list:
  • Andreessen Horowitz partners: $600 for 32 partners and top execs, like its head of marketing
  • CEOs: $1,000 for 77 CEOs, mainly at biotech, bitcoin, and blockchain companies
  • VCs: $1,100 for 39 VCs, including man of the moment Jeremy Liew, who invested in Snapchat early
Users can email everyone on a list for one price, and they only pay if they get a response. Those receiving money can choose to keep the bitcoins or automatically donate them to one of three charitie
On my break I listened to the Financial Times' Izabella Kaminska and the man from Florida, Joshua Unseth:
And then I listened again today.

A superb specimen of the interviewer's art and a perfect exemplar of the oft-violated-but-not-here ProTip™ admonition "If you've got a live one, let the interviewee talk!"
Unseth ain't bad either.

The World Is Running Out of Sand (Elon Musk to the rescue!)

I wasn't going to say anything but since the New Yorker, not exactly your go-to for all things silica, has this story, let's bust it wide open. We've got the scoop on grainy goodness.
The looming shortfall was the real reason the G-7 leaders got together this week and there are rumors Elon Musk may be working on a solution, see below.

From the New Yorker, May 29 edition:
It’s one of our most widely used natural resources, but it’s scarcer than you think.

The final event of last year’s beach-volleyball world tour was held in Toronto, in September, in a parking lot at the edge of Lake Ontario. There’s a broad public beach nearby, but few actual beaches meet the Fédération Internationale de Volleyball’s strict standards for sand, so the tournament’s sponsor had erected a temporary stadium and imported thirteen hundred and sixty tons from a quarry two and a half hours to the north. The shipment arrived in thirty-five tractor-trailer loads.

I visited the site shortly before the tournament, and spoke with Todd Knapton, who was supervising the installation. He’s the vice-president of the company that supplied the sand, Hutcheson Sand & Mixes, in Huntsville, Ontario. He’s in his fifties, and he was wearing a white hard hat, a neon-yellow-green T-shirt, dark-gray shorts, and slip-on steel-toed boots. We walked through a gate and across an expanse of asphalt to a pair of warmup courts, which from a distance looked like enormous baking pans filled with butterscotch-brownie batter. “You want to see the players buried up to their ankles,” he said, and stuck in a foot, to demonstrate. “Rain or shine, hot or cold, it should be like a kid trying to ride a bicycle through marbles.”
Ordinary beach sand tends to be too firm for volleyball: when players dive into it, they break fingers, tear hamstrings, and suffer other impact injuries. Knapton helped devise the sport’s sand specifications, after Canadian players complained about the courts at the 1996 Olympic Games, in Atlanta. “It was trial and error at first,” he said. “But we came up with an improved recipe, and we now have a material that’s uniform from country to country to country, on five continents.” The specifications govern the shape, size, and hardness of the sand grains, and they disallow silt, clay, dirt, and other fine particles, which not only stick to perspiring players but also fill voids between larger grains, making the playing surface firmer. The result is sand that drains so well that building castles with it would be impossible. “We had two rainstorms last night, but these courts are ready to play on,” he said. “You could take a fire hose to this sand and you’d never flood it.”
Beach-volleyball promoters all over the world have to submit one-kilogram samples to Knapton for approval, and his office now contains hundreds of specimens. (He also vets beach-soccer sand for FIFA.) Hutcheson doesn’t ship its own sand to events overseas, but Knapton and his colleagues often create courts in other countries, after sourcing sand where they can. He took off his hard hat and showed me the underside of the brim, on which he had recorded, in black Sharpie, the names and dates of big events they’ve handled, among them the Olympic Games in Sydney, Athens, Beijing, and London. (The sand for London came from Redhill, in Surrey; the sand for Athens came from Belgium.) The company’s biggest recent challenge was the first European Games, which were held in Baku, Azerbaijan, in 2015. Baku has beaches—it’s on a peninsula on the western shore of the Caspian Sea—but the sand is barely suitable for sunbathing, much less for volleyball. Knapton’s crew searched the region and found a large deposit with the ideal mixture of particle sizes, in a family-owned mine in the Nur Mountains, in southern Turkey, eight hundred miles to the west.
The mine is within shelling distance of the Syrian border. Knapton had planned to transport the sand across central Syria, through Iraq, around Armenia, and into Azerbaijan from the northwest, in two convoys of more than two hundred and fifty trucks each. But geopolitics intervened. “You can cross those borders only at certain hours of the day, and ISIS was making the guys antsy,” he said. “In the end, we said, ‘Well, we could have handled one war.’ ” Instead, Knapton and his crew bagged the sand in one-and-a-half-ton fabric totes, trucked it west to Iskenderun, and craned it onto ships. “We did five vessels, five separate trips,” Knapton said. “The route went across the Mediterranean, up the Aegean, through the Bosporus, across the Black Sea, and into Sochi.” From there, they took the sand by rail through Russia and Georgia, around Armenia, and across Azerbaijan. “The Syrian exodus was on at that time, and we saw people walking for their lives,” he said. “But these were the first-ever European Games, so everything had to be right.”
Sand covers so much of the earth’s surface that shipping it across borders—even uncontested ones—seems extreme. But sand isn’t just sand, it turns out. In the industrial world, it’s “aggregate,” a category that includes gravel, crushed stone, and various recycled materials. Natural aggregate is the world’s second most heavily exploited natural resource, after water, and for many uses the right kind is scarce or inaccessible. In 2014, the United Nations Environment Programme published a report titled “Sand, Rarer Than One Thinks,” which concluded that the mining of sand and gravel “greatly exceeds natural renewal rates” and that “the amount being mined is increasing exponentially, mainly as a result of rapid economic growth in Asia.”

Pascal Peduzzi, a Swiss scientist and the director of one of the U.N.’s environmental groups, told the BBC last May that China’s swift development had consumed more sand in the previous four years than the United States used in the past century. In India, commercially useful sand is now so scarce that markets for it are dominated by “sand mafias”—criminal enterprises that sell material taken illegally from rivers and other sources, sometimes killing to safeguard their deposits. In the United States, the fastest-growing uses include the fortification of shorelines eroded by rising sea levels and more and more powerful ocean storms—efforts that, like many attempts to address environmental challenges, create environmental challenges of their own.
Geologists define sand not by composition but by size, as grains between 0.0625 and two millimetres across. Just below sand on the size scale is silt; just above it is gravel. Most sand consists chiefly of quartz, the commonest form of silica, but there are other kinds. Sand on ocean beaches usually includes a high proportion of shell pieces and, increasingly, bits of decomposing plastic trash; Hawaii’s famous black sand is weathered fragments of volcanic glass; the sand in the dunes at White Sands National Monument, in New Mexico, is mainly gypsum. Sand is almost always formed through the gradual disintegration of bigger rocks, by the action of ice, water, wind, and time, but, as the geologist Michael Welland writes, in his book “Sand: The Never-Ending Story,” many of those bigger rocks were themselves formed from accumulations of the eroded bits of other rocks, and “perhaps half of all sand grains have been through six cycles in the mill, liberated, buried, exposed, and liberated again.”
Sand is also classified by shape, in configurations that range from oblong and sharply angular to nearly spherical and smooth. Desert sand is almost always highly rounded, because strong winds knock the grains together so forcefully that protrusions and sharp edges break off. River sand is more angular. William H. Langer, a research geologist who retired from the U.S. Geological Survey a few years ago and now works as a private consultant, told me, “In a stream, there’s a tiny film of water around each grain, so when the grains bang together there’s enough energy to break them apart but not enough to let them rub against each other.” The shape of sand deposited by glaciers and ice sheets depends partly on how far the sand was moved and what it was moved over. Most of the sand in the Hutcheson quarry is “sub-angular”: the grains have fractured faces, but the sharp edges have been partly abraded away. Sand that’s very slightly more smooth-edged is “sub-rounded.”
Aggregate is the main constituent of concrete (eighty per cent) and asphalt (ninety-four per cent), and it’s also the primary base material that concrete and asphalt are placed on during the building of roads, buildings, parking lots, runways, and many other structures. A report published in 2004 by the American Geological Institute said that a typical American house requires more than a hundred tons of sand, gravel, and crushed stone for the foundation, basement, garage, and driveway, and more than two hundred tons if you include its share of the street that runs in front of it. A mile-long section of a single lane of an American interstate highway requires thirty-eight thousand tons. The most dramatic global increase in aggregate consumption is occurring in parts of the world where people who build roads are trying to keep pace with people who buy cars. Chinese officials have said that by 2030 they hope to have completed a hundred and sixty-five thousand miles of roads—a national network nearly three and a half times as long as the American interstate system.
Windowpanes, wineglasses, and cell-phone screens are made from melted sand. Sand is used for filtration in water-treatment facilities, septic systems, and swimming pools. Oil and gas drillers inject large quantities of hard, round sand into fracked rock formations in order to hold the cracks open, like shoving a foot in the door. Railroad locomotives drop angular sand onto the rails in front of their wheels as they brake, to improve traction. Australia and India are major exporters of garnet sand, which is crushed to make an abrasive material used in sandblasting and by water-jet cutters. Foundries use sand to form the molds for iron bolts, manhole covers, engine blocks, and other cast-metal objects. I once visited a foundry in Arizona whose products included parts for airplanes, cruise missiles, and artificial hip joints, and I watched a worker pouring molten stainless steel into a mold that had been made by repeatedly dipping a wax pattern into a ceramic slurry and then into sand. The work area was so hot that I nervously checked my arm, because I thought my shirt was on fire. Factories that produce plate glass—by pouring thin layers of molten silica onto baths of molten tin—can be hotter....MUCH MORE
However...
Elon Musk (pictured, with two "volunteers")

From Science Times, May 16:

NASA’s Curiosity Mars Rover Find Another Breakthrough Discovery On Sand Dunes Of Mount Sharp
http://images.sciencetimes.com/data/thumbs/full/14638/600/0/0/0/nasa-rover-samples-of-active-linear-dune-on-mars.jpg
NASA's Curiosity Mars rover had another breakthrough discovery on the Red Planet. The robotic land vehicle got some active samples of sand dunes on Mount Sharp that will finish their analysis on those dunes. So, what latest findings did the US space agency have gathered on its Mars mission?...MORE
And from NASA via Space.com:





Mars Curiosity Rover, Mars surface, Mars sand waves, Mars water, Mars images
Credit: NASA/JPL-Caltech
That explains that, eh?

Previously (waay too much):
Nov 2016 
Commodities: The Next Big Thing Is Sand

....The link that starts this piece goes to Sand Wars: Beijing’s Hidden Ambition in the South China Sea a 22 page PDF, hosted at the College of William & Mary.

Now back to my secret shame. After the jump to the Bloomberg sand article my commentary continued:

We were on the story from the publicly traded get-go (almost), going back to April 2012's "What the Frack? U.S. Silica Up 24% since Feb. 1 IPO (SLCA)". Followed by "Commodities: "Midwest Sees a Sand Rush"". In 2013 growth was so good that a little Ouroboros turnabout was fair play, "More Natural Gas Needed For Frack Sand Suppliers"

By 2014 they were fine, strapping businesses:
"Sand: The Hot New Investment Opportunity" (SLCA)
State of Sand, 2014 
What the Frac: "The Past Year’s Hottest IPO Is… " (EMES; SLCA)
From MoneyBeat:
The hottest initial public offering from 2013 isn’t a cloud technology stock, or a biotech company with a promising cancer drug.

The company behind the top-performing IPO in the past 18 months digs sand.

Through Friday, sand-mining company Emerge Energy Services LP has rallied 462% since its debut on May 8, 2013, for the biggest share-price gain since its IPO among companies that went public last year, according to Dealogic....
Having concluded that oil and gas were just a passing fad, this is what we were posting the month Emerge came public:
The Internet of Things: Huggies App Sends You a Tweet Whenever Your Kid Pees...
The Ethics of Torturing Robots
British Psychologists Bashing British Psychiatrists
Shaman               Witch Doctor
Psychologist            Psychiatrist
I so wish I were kidding.
By January of this year we knew it was ending:
What the Frack: "Good Times Run Out for Sand Producers"
with, maybe a bit of forced jollity in March:
Basic Materials: What's New In the Sand Business? (SLCA; EMES)
But there was nothing new, it's sand.

EMES Emerge Energy Services LP weekly Stock Chart
Great timing eh, posting stupid pictures of shamans and witch doctors when the hottest IPO of the year came out and then later calling the bottom, at...the...bottom, and just a few months before the group started a run to a triple,
Fortunately the stock we've been pitching, NVIDIA also a bit better than tripled but still, doing this stuff out in public can be a little embarrassing.

See also:  
Equities: "Being fluent at swearing is a sign of healthy verbal ability"--UPDATED" from the same British Psychological Society that supplied the Shaman/Witch Doctor pics.

Or maybe "Feeling Like You're an Expert Can Make You Closed-minded" also from the BPS and which we linked to a month after the Death of Equities Sand post.

Something Is Very Wrong In Connecticut

First it was this November post:
"One of America’s Richest Towns Could Be In For a Housing Market Meltdown"

Then we watched it in residential real estate listings, month after month, for homes in the $4 to $40 million range:
$11.5 Million Stone Georgian Mansion In Greenwich, CT
$6.75 Million Estate In Greenwich, CT
Billionaire Businessman Lists Historic Connecticut Estate For $31.5 Million
$16.5 Million Historic Georgian Mansion In Greenwich, CT
11,000 Square Foot Stone Mansion In Greenwich, CT
Lionshare Farm – A 95 Acre Equestrian Estate In Greenwich, CT
$25 Million Historic Waterfront Mansion In Greenwich, CT
50 Cent Re-Lists Connecticut Mega Estate For $5.995 Million 
There are dozens and dozens of these things that hit the market over the last six months.

On May 14 it was:
Big Old Connecticut Estate Going to Auction, No Reserve
Well this is interesting....

General Electric is moving their headquarters from Fairfield, CT to Boston, broke ground on the new place a couple weeks ago.

Yesterday we read:
...The state’s population is falling: Its net domestic out-migration was nearly 30,000 from 2015 to 2016. In 2016, it lost slightly more than 8,000 people, leaving its population at 3.6 million. Indeed, recent national moving company surveys underscore the trend, showing more people leaving Connecticut than moving in. In 2016, the state also saw a population decline for the third consecutive year, according to Census Bureau estimates.

One of the companies, United Van Lines, reported that of all their Connecticut customers, 60 percent were leaving compared to 40 percent who were moving there. Only three other states had higher rates of people moving out – New York, New Jersey and Illinois. One out of five of those leaving said they were retiring....
Later in the day ZeroHedge posted:
Connecticut Credit Risk Soars To Record High As Tax Receipts Tumble
Connecticut’s general-obligation bonds are riskier than ever as plummeting income-tax collections and a $2.3 billion budget deficit moved all three credit rating companies to downgrade its debt.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170526_CT.jpg
As Bloomberg details, tax receipts for the current fiscal year ending in June will be about $451 million short of estimates from January, prompting Governor Dannel Malloy to empty the state’s already small budget stabilization fund. To help close the gap, public employees agreed to accept a 3-year wage freeze and to contribute more for their pension and health-care benefits under a tentative deal that would save more than $1.5 billion over the next two years.

As we previously detailed, The state of Connecticut has been hit hard by the double whammy of a deteriorating local economy, coupled with a plunge in hedge fund profits - as well as hedge fund managers permanently relocating to Florida - leading to a collapse in tax revenues. According to the the latest Connecticut budget released last week, the state is reeling from the consequences of sliding tax revenue from the super-rich, i.e. the state's hedge fund managers. The latest figures showed that tax revenue from the state’s top 100 highest-paying taxpayers declined 45% from 2015 to 2016. The drop adds up to a $200 million revenue loss for Connecticut....MORE
Two quick thoughts:

1) I appreciate the arrows-for-the-directionally-challenged on ZeroHedge charts.

2) The only people who seem to have any money are the colleges and universities.
The GE campus, appraised at $70 million was sold to Sacred Heart University for $31.5 mil. and taken off the tax rolls due to the uni's tax status.
And the state is eyeing Yale's $25.6 billion tax-free endowment, introducing a bill to tax the unspent earnings of any endowment located in the state with assets over $10 billion.
There's only one institution that fits the bill, so to speak.

That last is illegal as hell but Hartford is already trying to craft another way to get at the moola moola held in New Haven.
The school is resisting fiercely, here's the Yale fight song:

Alphaville's Kadim Shubber Discovers Some World Class Bloviating

As a self-proclaimed connoisseur of orotund obsfucation I appreciate a fine bit o'bloviation from a scammer:
How to Spot a Hedge Fund Fraudster 
Bombast. In my experience they are all bombastic.
And stripper poles.
You would not believe the number of stripper poles that crooks collect....
That's me, quoting myself quoting myself.
More below.

Here's Mr. Shubber's latest piece on his favorite fallen unicorn, valuation gone from £1 1/2 billion to £2 million (maybe):
Ve Interactive: The rise and fall of a tech unicorn
And here's the CEO, David E. Brown, Esq. on Twitter:
Ridiculous cheap jibes & misinformation published by Sunday Times this weekend, not to be believed. False allegations and distorted facts.


They will be hearing from my lawyers. The truth will come out....


Amazing: tech industry more attracted to twisted bullshit & self-destruction rather than recognising real champions & UK success builders!




...Peter Uttley, Equisure's chairman and a former Lloyds of London executive, took control of the company this week, assuming the chief executive post....

...Uttley said in the press release that his chairman role had been a "passive" one, but he now plans an active reorganization of the company, whose reputation has been stained by allegations that it is a scam insurance operation....
...In an unusually emotional statement to the press, sent from an Equisure board meeting Friday in London, Uttley told his version of events over the summer, which eventually led to the delisting of Equisure shares on the American Stock Exchange.
"The simple truth was consumed in the belly of deception, but now has been vomited for the world to see," Uttley began.
He then proceeded to tell a story of three men, whom he described as "liars," "cheats," and "scallywags," who worked with law enforcement officials and the press to spread false rumors about the company with the intent of buying Equisure out at 50 cents a share, a tiny fraction of the stock's trading price of $15, before AMEX suspended trading Aug. 1.
Isn't that damn fine bloviating? It's hard to research but I think Uttley et. al. got away with $100 mil....

As they say on the nature shows:
"Sadly now, there can be but one outcome"

Download 200 Free Art Books, Courtesy of the Guggenheim, or 2.2 Million Early Photographs From the Met or 25 Million Records from the Library of Congress

From Smithsonian Magazine:

Titles devoted to Picasso, Rothko, Lichtenstein, Klimt and more are now available for your reading pleasure
Perusing through a beautiful, hefty art book is one of life’s simple pleasures, but beautiful, hefty art books can be pretty expensive. Fortunately, the Guggenheim is on a mission to digitize its vast collection of titles. As Beckett Mufson reports for Vice, the museum has made 205 art books available for free download.

The project began in 2012, when 65 titles were released online, and the Guggenheim has slowly been growing its digital archive ever since. Among the latest additions are works devoted to Pablo Picasso, Mark Rothko, Roy Lichtenstein, Egon Schiele and Gustav Klimt. Fans of Wassily Kandinsky can browse through a 1946 copy of On the Spiritual in Art, an influential treatise by the pioneering abstract artist.

As KC Ifeanyi notes in Fast Company, most of the available books are rare or out-of-print titles, making the archive a great resource for art lovers—even those who aren’t strapped for cash.....MORE
From My Modern Met:
New Digital Archive Features Over 2 Million Photos from the First 100 Years of Photography
In the age of the Internet, the digitization of historical materials has proven to play a crucial role in the preservation and proliferation of cultural heritage. In addition to major museums and large-scale libraries, archives around the world have adopted this practice. This phenomenon has been made particularly apparent by Europeana Collections, an online platform that has digitized over 53 million “artworks, artifacts, books, videos and sounds from across Europe.” For its most recent project, Europeana Photography, the website has reproduced photographs from the first 100 years of photography and shared them with the public—all for free.

Europeana Photography features over 2.2 million historical photographs with origins that span 50 European institutions sprawled across 34 different countries. As they were taken over the course of 100 years, the photographs that compose the collection present a wide range in style, quality, and subject matter (though, much like contemporary photography, landscapes, portraits, and still-life depictions seem to dominate). In addition to presenting photography's evolving sensibilities, Europeana Photography also showcases the work of prolific photographers, including “important pioneers like Julia Margaret Cameron, Eadweard Muybridge and Louis Daguerre” through curated galleries and museum-inspired online exhibitions....
...You can find the digital archive here.
....MORE, including four other collections

HT: Mental Floss who write:
"The database is searchable, downloadable, and shareable, and many of the images are in the public domain. So get clicking, because those 19th-century memes aren’t going to make themselves."
Finally, from the Library of Congress, something a little different.
From Open Culture:

The Library of Congress Makes 25 Million Records From Its Catalog Free to Download
A quick fyi: According to Fortune, The Library of Congress announced that it “will make 25 million records from its catalog available for the public to download.” They add:
Prior to this, the records—which include books and serials, music and manuscripts, and maps and visual materials spanning from 1968 to 2014—have only been accessible through a paid subscription. These files will be available for free download on [the Library of Congress site] and are also available on data.gov.
This move helps free up the library’s digital assets, allowing social scientists, data analysts, developers, statisticians and everyone else to work with the data “to enhance learning and the formation of new knowledge.” The huge data sets will be available here.

Saturday, May 27, 2017

How Cool Is This: State House Prices and Unemployment Rates

The creator is Deputy Chief Economist at Freddie Mac.
He's also pretty good at coding for data visualization.



"The Domino Effect: How machine logic infects our tastes"

From Real Life:
Americans order a lot of pizza: A 2014 survey by the U.S. Department of Agriculture suggested that one in eight Americans eats pizza on any given day. Nowadays it feels as if there are as many options for having a pizza delivered as there are available toppings. If picking up the phone fills you with anxiety, Pizza Hut offers a pair of sneakers with a built-in button for ordering pizza. “Host Hungrybot in your Twitch channel to let your fans order pizza delivery right from your stream,” a startup targeting eSports fans trumpeted. Twitch is one of the few digital realms left untouched by Domino’s, which now offers a series of apps, chatbots, and even the option of tweeting an order using the pizza emoji. Some of these ordering options may exist primarily as marketing gimmicks, but their aggregate effect remains notable: Any interface to which you have access can likely be used to order pizza.

This in part stems from pizza’s popularity, but taste is only a small part of the story: The delivery pizza is highly adaptable to the logic and formatted language of communication interfaces. The typical consumer’s mental model of a pizza — dough with sauce, cheese, and toppings baked in an oven — is quite similar to a machine’s conception of pizza, which is quite similar to how a pizza is actually made. The algorithm for pizza is not complex. Ordering a pizza through a chatbot or within a Twitch stream is possible because all parties in the transaction are imagining the same simple process and speaking from the same restricted phrasebook.
Because it is streamlined to be easy to assemble, Pizza (and not the Verace Pizza Napoletana-certified kind) is well-suited for digital abstraction. The fast food burger and the burrito have undergone similar transformations, along with plenty of foods desirable not only for their taste but because they are rationalized and efficient, capable of individual customization without requiring any special trust in the person preparing it at the other end of the interface. Do these interfaces make it simpler to satisfy our tastes, or do they subtly simplify them?

After a bad day at work, you return home to find a turnip, some lettuce, and a desultory chicken breast. That problem was the basic premise of the British cooking show Ready Steady Cook: Members of the public would throw together bags of groceries for a few pounds, and chefs would then make a serviceable meal out of these ingredients. This premise lasted 16 years and 1,895 episodes. Beyond their knife skills, what the chefs on Ready Steady Cook really offer is improvisational intelligence: the ability to come up with solutions to new problems on the spot.
Improvisational intelligence, or the appearance thereof, is a dream of consumer technology. DARPA hired a jazz musician to help teach an AI system to improvise. IBM engineers fed Watson, of Jeopardy! fame, the entirety of Bon Appétit’s archive, combined with insights into human taste and analysis of what ingredients tend to be used together. “With Watson’s help, I cooked some eggplant fritters that made convenient use of every sad, wrinkling root in my refrigerator’s crisper,” Alexandra Kleeman wrote in the New Yorker. But Watson is not in your kitchen yet, and may never be; instead, its example is used to show what the current range of culinary companions cannot do.

The Allrecipes skill for Amazon’s Alexa claims to “quickly [find] recipes that match your desired dish type, ingredients you have on hand, your available cooking time, and/or your preferred cooking method.” But it’s just an interface over a simple dataset — the recipes written and documented by contributors to allrecipes.com — and the appearance of improvisational intelligence is purely a function of the search terms a user enters. JULIA, a chatbot that aims to be “your new BFF in the kitchen” by demonstrating the improvisational power of a master chef, can only answer questions one ingredient at a time — it can provide a recipe for turnip, lettuce, or chicken breast, but not all at once. You can feel your new BFF querying a database in the background. The app regularly responds to queries with “I don’t think I’m qualified to answer that yet,” before linking to a page of tips about how best to chat with the bot.

Generally, predictive services are not predictive so much as reliant on someone else having been in your position before — if you search for the contents of your fridge, odds are someone else will have previously cooked these items together, but you will have sift through their results yourself. The appealing complications of actually cooking a meal remain messy, inconvenient, and human. Apps encourage us not to improvise and trust ourselves, but to undertake the process of itemizing and analyzing our ingredients as data for machines to process; to think of ourselves as a component of the machine itself. These tools simplify our lives on the condition that we simplify ourselves for them.

Ordering in is meant to outsource problems — and labor — to other parties: You pay for other people to buy ingredients, prepare them, and bring them to your door. That workforce is largely invisible, and interfaces like those employed by Seamless or UberEats are designed to conceal the labors of the unknowable number of people involved in preparing your food, making the process appear as little more than a hand-off at the door. These apps make a contradictory promise: to simplify the multipart process involved in creating a meal to a series of clicks, while offering enough options to satisfy an infinite number of cravings. You agree to meet the interface somewhere between what you want and what it knows how to offer, until you want what it knows how to offer...MUCH MORE.

Complex Systems (more than the sum of their parts)

I have a real love-hate relationship with the academic study of complexity. On the one hand, some topics that are of interest to this blog are complex-chaotic systems: the economy, weather, markets etc. but on the other hand the application of the terminology of complexity to broad swaths of human stuff seems a bit too facile.
Which is the right approach? Who knows.
I do know people are "explaining" animals and sometimes our explanations end up corresponding in some degree with what is going on.

From Aeon:

The mathematics of mind-time
The special trick of consciousness is being able to project action and time into a range of possible futures
I have a confession. As a physicist and psychiatrist, I find it difficult to engage with conversations about consciousness. My biggest gripe is that the philosophers and cognitive scientists who tend to pose the questions often assume that the mind is a thing, whose existence can be identified by the attributes it has or the purposes it fulfils.

But in physics, it’s dangerous to assume that things ‘exist’ in any conventional sense. Instead, the deeper question is: what sorts of processes give rise to the notion (or illusion) that something exists? For example, Isaac Newton explained the physical world in terms of massive bodies that respond to forces. However, with the advent of quantum physics, the real question turned out to be the very nature and meaning of the measurements upon which the notions of mass and force depend – a question that’s still debated today.

As a consequence, I’m compelled to treat consciousness as a process to be understood, not as a thing to be defined. Simply put, my argument is that consciousness is nothing more and nothing less than a natural process such as evolution or the weather. My favourite trick to illustrate the notion of consciousness as a process is to replace the word ‘consciousness’ with ‘evolution’ – and see if the question still makes sense. For example, the question What is consciousness for? becomes What is evolution for? Scientifically speaking, of course, we know that evolution is not for anything. It doesn’t perform a function or have reasons for doing what it does – it’s an unfolding process that can be understood only on its own terms. Since we are all the product of evolution, the same would seem to hold for consciousness and the self.

My view on consciousness resonates with that of the philosopher Daniel Dennett, who has spent his career trying to understand the origin of the mind. Dennett is concerned with how mindless, mere ‘causes’ (A leads to B) can give rise to the species of mindful ‘reasons’ as we know them (A happens so that B can happen). Dennett’s solution is what he calls ‘Darwin’s dangerous idea’: the insight that it’s possible to have design in the absence of a designer, competence in the absence of comprehension, and reasons (or ‘free-floating rationales’) in the absence of reasoners. A population of beetles that has outstripped another has probably done so for some ‘reason’ we can identify – a favourable mutation which produces a more camouflaging colour, for example. ‘Natural selection is thus an automatic reason-finder, which “discovers” and “endorses” and “focuses” reasons over many generations,’ Dennett writes in From Bacteria to Bach and Back: The Evolution of Minds (2017). ‘The scare quotes are to remind us that natural selection doesn’t have a mind, doesn’t itself have reasons, but is nevertheless competent to perform this “task” of design refinement.’

I hope to show you that nature can drum up reasons without actually having them for herself. In what follows, I’m going to argue that things don’t exist for reasons, but certain processes can nonetheless be cast as engaged in reasoning. I use ‘reasoning’ here to mean explanations that arise from inference or abduction – that is, trying to account for observations in terms of latent causes, rules or principles. 
This perspective on process leads us to an elegant, if rather deflationary, story about why the mind exists. Inference is actually quite close to a theory of everything – including evolution, consciousness, and life itself. It is abduction all the way down. We are thrown into the world as a process already in motion; and processes can only reason towards what is ‘out there’ based on sparse (if carefully selected) samples of the world. This view dissolves familiar dialectics between mind and matter, self and world, and representationalism (we depict reality as it is) and emergentism (reality comes into being through our abductive encounters with the world). But just how did inference happen before there were inferrers around to do it? How did inert matter ever begin the processes that led to consciousness?

Let’s first establish a few ground rules about the nature of processes, and see how far we get. We’re interested only in the processes that make up complex systems, those objects of study that are more than the sum of their parts. A good way to understand this notion is to look at its opposite. If you fire a gun at a target, it’s easy enough for a physicist to anticipate which part of the bullseye it will hit, based on the angle and momentum of the bullet as it leaves the barrel. That’s because the firing range is nearly a linear system, whose overall behaviour is determined by the interaction of its constituent bits, in a one-way fashion. But you can’t pinpoint the precise position of an electron when it’s circling an atom, or say for sure if and when a hurricane will hit New York next year. That’s because the weather and atoms – like all natural processes – are not reliably determined by their initial conditions, but by the system’s own behaviour as it feeds back into the interactions of its component parts. In other words, they are complex systems.

According to physicists, complex systems can be characterised by their states, captured by variables with a range of possible values. In quantum systems, for example, the state of a particle can be described by a wave function that entails its position, momentum, energy and spin. For larger systems, such as ourselves, our state encompasses all the positions and motions of our bodily parts, the electrochemical states of the brain, the physiological changes in the organs, and so on. Formally speaking, the state of a system corresponds to its coordinates in the space of possible states, with different axes for different variables.
Everything should actually get more random, dispersed and chaotic as time marches on. So what’s going on?
The way something moves through this space depends on its Lyapunov function. This is a mathematical quantity that describes how a system is likely to behave under specific conditions. It returns the probability of being in any particular state as a function of that state (or, put differently, as a function of the system’s position in the state space, similar to how air pressure is a function of the density of air molecules at the point at which it’s measured). If we know the Lyapunov function for each state of the system, we can write down its flow from one state to the next – and so characterise the existence of the whole system in terms of that flow. It’s like knowing the height of a mountainous landscape at every location, and then being able to describe how a stream of water will run over its surface. The topography of the mountain stands for the Lyapunov function, and the movement of water describes how the system evolves over time....MORE

"Early farmers and hunter-gatherers got it on with each other, study says" (looked vaguely like Fabio)

If you blur Fabio.
A lot.
https://cdn.vox-cdn.com/thumbor/zI1ANA_DTrs_w5XVWj6w1vuug20=/0x0:720x937/920x613/filters:focal(303x412:417x526)/cdn.vox-cdn.com/uploads/chorus_image/image/54933521/141031_web.0.jpg
The facial reconstruction of a hunter-gatherer from Spain (somehow clean-shaven). Illustration by Serrulla y Sanín
http://i.dailymail.co.uk/i/pix/2015/05/12/00/2890C67500000578-0-image-a-14_1431387483272.jpg
From The Verge:
It helps us understand how farming spread in Europe

Ancient farmers and hunter-gatherers living thousands of years ago in today’s Romania had sex, according to a new study. The finding adds to our understanding of how different groups of ancient humans interacted with each other — painting a more nuanced picture of how farming spread across Europe.
Researchers analyzed the ancient DNA of three individuals dated to over 8,000 years ago, as well as one individual dated to 5,000 years ago — all found in Romania. The DNA of the more recent specimen showed that farmers and hunter-gatherers in this area of Europe were intermixing with each other and having children. The study was published today in the journal Current Biology.

The advent of farming is one of the most revolutionary advances in human history. People began domesticating plants and animals, forever changing the world around them. Farming is believed to have started around 10,000 years ago in the Near East, an area roughly comprising today’s Syria, Lebanon, Jordan, Iraq, and Turkey. From there, it spread across Europe — but when and how exactly people gave up hunting and gathering for farming has been at the center of long-standing debates.
Did farmers just spread across Europe, bringing the technology with them, and outcompete local hunter-gatherers? Or did hunter-gatherers get in contact with farmers, learn their technological advances, and switch to farming? Recent research shows that the answer is complicated, and how farming spread differs from place to place. Studies suggest that in Western and Central Europe, farmers from Anatolia (the Asian portion of Turkey) came in and replaced hunter-gatherer populations. But in the Baltic region, local hunter-gatherers seem to have just adopted farming, without being overtaken by farmers....
...MORE 

On a bizarrely related note, yesterday I was asked "How did the Anatolian cows reach Europe?".
I ventured "swam the Bosphorus?"
Their Latin name is Bos Taurus, kinda rhymes.
It was all I had.

"Bitcoin and Tech Stocks: A 21st Century Tulipmania?"

From Barron's Up and Down Wall Street column:
Investors’ enthusiasm is reminiscent of the mania that struck the Dutch in the 1600s.

It was 50 years ago today Sgt. Pepper taught the band to play, if that can be believed by aging baby boomers. It seems only yesterday that we were listening to the Beatles’ iconic album of the Psychedelic ’60s while driving around in our VW Beetles, Mustangs, Minis, or Fiat 500s. Plus ça change and all that.

The release on Friday of the newly remastered version of Sgt. Pepper’s Lonely Hearts Club Band on the occasion of its half-century anniversary inspired more than a bit of déjà vu. But it was more about partying like it’s 1999, as in the immortal anthem of the late, great Prince.

Instead of internet stocks, Bitcoin was the center of attention. The crypto-currency has taken flight and taken hold of the public’s imagination like the dot-com bottle rockets before the turn of century.

The story of bootblacks offering stock tips in the 1920s is the oft-told fable warning of the Great Crash. My experience relates to my commuter train, where topics of conversation typically are the polite ones about kids and work—except when markets heat up. On one memorable ride in the late 1990s, I listened to a quite exuberant passenger chatting rather too loudly on his cellphone, a device far from ubiquitous then: “Do you have Sun Microsystems? It split again. Life is goooood!”

Sun would increase 100-fold to a split-adjusted peak over $309 a share by 1999. Between 1988 and 2000, Sun’s stock split six times, including twice in 2000 alone. Then came the dot-com crash. In 2007, there was a 1-for-4 reverse split, after which it was acquired by Oracle (ticker: ORCL) for $9.50, some 300 bucks below its peak.

What brought that to mind was the overheard conversation of a couple of fellow travelers last week, in which one extolled the potential of Bitcoin, whose price has gone parabolic in recent days. Bitcoin has more than doubled since mid-April, from under $1,200, to a peak around $2,800 Thursday, before settling into a range between $2,052 and $2,583 Friday. Where it stops, nobody knows, although it was trading around $2,300 at this writing.

The favorite way to play at home is the Bitcoin Investment Trust (GBTC), a fund that’s supposed to track 1/10th the price of the crypto-currency. But the trust’s closing price of $405 on Friday represented a 76% premium over Bitcoin’s intrinsic value (if you believe Bitcoin has such a thing).

There probably is great potential for electronic currencies not controlled by governments. But for something to be a viable medium of exchange or store of value, it needs stability, which clearly is not evident. Bitcoin’s fans claim it is a technology and not something that can be valued like a stock, which probably echoes conversations in Amsterdam coffee houses in the 1600s to rationalize paying any price for tulip bulbs.

There also was an echo of such exuberance, rational or not, in the stock market as it hit records again last week. The Nasdaq Composite ended Friday at a record, with a 2% gain for the week, while the Standard & Poor’s 500 index added 1.4% on the week, also a record, and the Dow industrials ended just shy of their peak, but advanced 1.3% on the week.

What’s striking is the role played by the biggest technology leaders, again reminiscent of the dot-com era. According to Bespoke Investment Group, Apple (AAPL), Facebook (FB), Amazon.com (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) accounted for 4.6 of the 7.89 percentage-point gain this year in the S&P 500. Through Thursday, S&P data maven Howard Silverblatt calculated, the top 15 S&P 500 stocks generated half of the big-cap benchmark’s year-to-date increase. (What has changed is that Amazon and Alphabet both flirted with $1,000 share prices, while two decades ago stock splits were all the rage.)...
...MUCH MORE 

Friday, May 26, 2017

"Why Google Is Suddenly Obsessed With Your Photos"

Not "suddenly".
For both Facebook and the GOOG images have been an artificial intelligence/machine learning target for a half-decade, at least.

From The Ringer:

The next great Google product offers a window into a company reshaping itself around images, artificial intelligence, and even more of your personal data
Google tends to throw lots of ideas at the wall, and then harvest the data from what sticks. Right now the company is feasting on photos and videos being uploaded through its surprisingly popular app Google Photos. The cloud-storage service, salvaged from the husk of the struggling social network Google+ in 2015, now has 500 million monthly active users adding 1.2 billion photos per day. It’s on a growth trajectory to ascend to the vaunted billion-user club with essential products such as YouTube, Gmail, and Chrome. No one is quite sure what Google plans to do with all of these pictures in the long run, and it’s possible the company hasn’t even figured that out. But in a landscape fast becoming dominated by artificial intelligence, data — in this case, your photos — has become its own reward.

At the company’s annual I/O developers conference, Google touted Photos as a signature platform getting a bevy of valuable updates. Users will soon be able to automatically share all their uploaded photos with a loved one, or filter which specific photos are auto-shared by date or topic. A new Suggested Sharing feature will use facial recognition to prompt users to send photos of their friends directly to them, similar to Facebook’s Moments app. The service already uses machine-learning algorithms to classify the objects in photos and make them searchable, so that users can easily find all their pictures of dogs or beer or sunsets. With all these perks, plus unlimited storage, Google Photos is set to become the most convenient, powerful option available for managing a large media library. No wonder the app’s user base has grown so fast. (Though I have my doubts about how “active” these users are — Photos comes preinstalled on Android devices and automatically collects your photos; I mostly use it to look up a friend’s dad’s HBO password that I screencapped once in 2014.)
But the question remains: Why is Google offering such a feature-rich product that doesn’t appear to be readily monetizable, outside of the few print photo books the company plans to sell? The simplest answer is that the company wants to keep people within its all-encompassing ecosystem. Today’s tech giants now offer to serve as caretakers to our digital lives across a suite of services in exchange for access to our personal information. “Even if Google doesn’t make any money directly from something that it offers, it’s still gathering data,” says Pedro Domingos, a computer science professor at the University of Washington and author of The Master Algorithm. “Increasingly these days, what people perceive at companies is that data is one of your biggest assets.”

What more data could Google possibly need? The search giant has effectively achieved its longstanding goal of “organizing the world’s information,” if you consider only the written word. But even cofounder Larry Page has acknowledged that the company’s mission statement is outdated. The internet is fast becoming dominated by visual messaging, benefiting platforms such as Facebook, Instagram, and Snapchat. Google Photos, especially now that it’s been fine-tuned for sharing, is a back door into the social networking and chat functionalities that Google has been trying and failing to pitch to customers for the last decade. While we allow the company to passively track us through platforms like Chrome and Maps, Google Photos may be the first Google product that persuades people to actively share their personal information with the company en masse since Gmail.
The data obtained from a photo, though, has the potential to be much more sensitive than what’s contained in an email. Google already has plenty of pictures of objects that it’s indexed across the web with its search engine, but it still doesn’t know that much about what individual people look like. To make the Photo app’s sharing and tagging features work, Google has to analyze a photo subject’s facial structure and create a unique “faceprint” for them. The company is currently fighting a lawsuit in Illinois alleging that this facial-recognition technology violates a state law protecting citizens’ biometric data, and the tech hasn’t been rolled out in many parts of Europe for fear it might run afoul of privacy laws.

The ability to quickly categorize people, places, and things is the entire selling point of Google Photos, of course, and facial recognition helps achieve that aim. But as Google’s AI techniques become more sophisticated, the company is weaving an ever-growing web of relational data about the world. Some of it is user-submitted (you can ID your own face in Photos or tag friends’ faces), but much of it is derived from the unknowable calculations of the company’s powerful algorithms, which are being trained to be able to teach themselves in the same way a human can use current knowledge to interpret new information. When I Google my mother’s name, her picture doesn’t come up in the public search results. But if I search “Mom” in my Google Photos library, there’s a picture of us at a restaurant in October, which I definitely never tagged “Mom.” (I asked Google to explain how this happened. A spokesperson said Google Photos doesn’t analyze facial structure to look for familial similarity and that the result may have occurred because characteristics of the photo matched images labeled “mom” in Google’s public image search database.) Accurately ID’ing my mom is an example of Google’s machine-learning systems getting smarter. It’s also extremely creepy...MORE.
We have so many posts on artificial intelligence and neural networks it is almost overwhelming.
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