Welcome to the CoinDesk Weekly Review 19th July 2013 — a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder. Your host … John Law
Gambling would be enormous fun, were it not for the fact that you will lose. You’re free to think otherwise, but you don’t get many mathematicians in William Hill.
There is one exception to this otherwise golden rule, and that’s if you’re the bookie. Bookies make a lot of money from gambling, mostly by knowing more statistics than their punters do, but there are other ways. Take SatoshiDice, for example, which is an online bitcoin-only gambling establishment designed to take just under two percent of all bets placed - a nice rake-off, but not as nice as the 126k BTC that the site’s just been flogged for. That’s $11 million in the sort of currency that buys sandwiches.
Which isn’t bad for a site that’s been around for about a year and was traded on the Romanian bitcoin securities exchange - yes, Martha, there is such a thing. Admittedly, there are a few unknowns such as who bought it, but it looks like there are independent investors who’re getting a chunk of money out of it.
It is of course easy to wring hands and sigh deeply over the vices of mankind driving the technology, but despite the constant efforts of the deeply moral over thousands of years, the urge to spend extensively on the pursuit of cheap thrills remains one of the most basic forces for innovation. It may even be a good thing that it’s easy for motivated third parties to give bitcoin-focused businesses a decently skeptical going-over; scams, especially in the shadier regions, rely heavily on would-be investors not asking too many of the wrong sort of questions.
And asking a lot of questions before ponying up isn’t really gambling at all. It’s more, well, investing sensibly. A lot more of that would be no bad thing.
A long time ago in a venue far, far away (OK, New York, 1995) a much younger John Law experienced the first Java Day, where a brand-new language linked to a brand-new system called the World Wide Web was getting one of its first real airings.
It was terribly exciting. The language’s developer, Sun Microsystems, was one of the tech world’s star players, with the brightest brains and the hottest hardware. Java, it promised, would be ‘write once, run anywhere’; it didn’t care what computer it ran on, or where on the Internet it lived. Programmers could write one piece of software and have it appear with no further fuss, securely and swiftly, on anything that could be made Java-compatible. Which would be anything, really.
Eighteen years later, and Sun Microsystems is no more. Its battered corpse was swallowed by Oracle, which makes expensive databases for big companies, and a lot of Java’s potential has gone cold: the phrase “write once, crash anywhere” may yet outlive the original.
Which is a problem for programs that still need to slip easily across different sorts of computer, like bitcoin. Java is still pretty much the only game in town for that, as you can guarantee to find variants of it on Android phones, most online PCs and elsewhere, but its rather rickety reputation and industry politics has distanced it from the iPhone and iPad world.
Fortunately, as bitcoin is open source, gaps like this can be filled without having to wait for Apple itself to do the work, which is unlikely to happen before the heat death of the Universe. Instead, an independent group of developers has built the raw components of bitcoin for Cocoa (what is it with developers and hot drinks?), the standard way to put software on Apple products. That’s the beauty of open software: you don’t need to ask - or pay - for permission.
And so, if you’re smart and motivated, you can route around the problems of old or unloved software and build it yourself. And if you don’t know your stack from your pointers and are irredeemably lazy, you can just wait for someone else to do it. It’s also proof that, whatever happens in the future to our computers and mobile devices, bitcoin is ready to move with the times: another sign that it’s here to stay.
John Law was very pleased to note the Financial Times opinion on the similarities of the bitcoin and the art markets. Which, indeed, the paper described as “the sophisticated man’s bitcoin”.
Stepping smartly over the insinuation that those engaged in cryptocurrency are unsophisticated - ipse dixit, eh, readers? - it is amusing to follow the comparisons that the FT drew. There is little relation between any sort of quantifiable worth and the actual valuation of art, and the market resists such discovery through being run by a cabal of experts, collectors, writers and pundits. Also, most of the stuff isn’t looked at very much, which you might suppose art should be. Instead, it sits around in secretive vaults, stored and traded away from the prying eyes of the taxman and other sundry suits.
Well, yes, you could say all that about bitcoin, although John Law considers the differences to be far more significant - try buying and selling art on your mobile to people you’ve never met, with no human intermediaries running the market.
Yet the germ of an idea has taken hold. If art and bitcoin are such similar beasts, then what would their offspring be like? Last week, the first part of the interview with developer Jeff Garzik covered coloured coins, the ability to attach data such as images to digital currency (the second part is just as interesting and now online). This led, of course, to the realisation that kittens would be the secret power behind ultimate domination.
But the ability to link unique artwork with bitcoin goes beyond that. Imagine the interest if Banksy, say, started spewing forth BTC with unique anti-capitalism graphics attached. Or some hip young street muso put out a hundred copies of their latest banging dubstep-skiffle mashup, attached to individual coins. You could of course make copies of the pictures or the music because that’s what the Internet does and there’s no stopping it. But only the originals would be authenticated by the BTC mechanism.
Authenticity, of course, is the gold standard of the art world - and of cybercurrency. It is the entire value of the proposition, and ever more so in the digital world of perfect copying and instantaneous transmission. The underlying mechanisms of bitcoin are all about generating unique objects and guaranteeing their uniqueness while enabling a near-perfect market mechanism for transferring them. It would seem a perfect match to art, and might even democratise what is by any measure a profoundly opaque and controlled market.
As the FT and others have noted, there’s a good track record in coupling cash to creativity - and canny exploitation. John Law has no problem whatsoever in predicting that the first artwork involving BTC will see the light of day before this time next year.
is an 18th century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took three hundred years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.