China importing more than $300bn of chips last year famously more than it spent importing oil.
McKinsey, noting China’s modest progress in the field, points to the exponential growth in money and effort required as chips advance: it takes about 500 steps to create a 20nm chip, but 1,500 steps for a smaller 7nm chip.
That is from Louise Lucas at the FT.
A cat flap that automatically bars entry to a pet if it tries to enter with prey in its jaws has been built as a DIY project by an Amazon employee.
Ben Hamm used machine-learning software to train a system to recognise when his cat Metric was approaching with a rodent or bird in its mouth.
When it detected such an attack, he said, a computer attached to the flap’s lock triggered a 15-minute shut-out.
Mr Hamm unveiled his invention at an event in Seattle last month.
As he prepared for Apollo 11’s lift-off, Neil Armstrong thought he had a 10 per cent chance of dying during the mission, and a 50 per cent chance of not walking on the Moon. “There was still a debate about if you stepped on to the Moon, would you step into 10ft of dust?” says former Nasa official Scott Hubbard.
The entire mission was vulnerable to a single-point failure: if the service module’s engine had failed, for example, there was no back-up.
Nasa’s whole attitude to risk has now changed. Until recently, each system was built to tolerate any two faults. This is now seen as a blunt approach, treating all components as equally important. So Nasa instead tries to limit the probability of failure. The chance of losing SLS and Orion on its first mission is one in 140, according to the agency’s analysis.
That is by Henry Mance and Yuichiro Kanematsu, in the FT, from their splendid look at the current attempt to drive a moon mission. And this:
“We do not have time or funds to build unique, one-of-a-kind systems,” William Gerstenmaier, a senior Nasa official, said recently. The agency’s biggest rocket — Boeing’s troubled Space Launch System (SLS) — will use some of the same engines as the Space Shuttle. Blake Rogers, an engineer at the Aerospace Corporation, a government-funded research agency, told the FT: “2024 is really soon. So there’s not a lot of brand-new technology…Today, Orion’s processing power will still be below 500MHz — significantly less than a MacBook.
Recommended, gated but of course you should subscribe to the FT.
That is a long blog post from my colleague Lawrence H. White, who has thought about these matters for many years. Here is one excerpt:
If we take the white papers’ talk of “backing” seriously, it suggests that the value of Libra coins in circulation is matched by the value of assets held in the Reserve, ready to buy back or redeem the coins. The papers say that Libra will be backed by a portfolio of $-denominated, €-denominated, and other fiat-denominated securities. But is a coin in the hands of a Reseller a debt claim or an equity claim on the Reserve? In particular, when a Reseller bring Libra 1 to the Reserve, she might either have an IOU, entitling her to a specified medium of redemption, like a Paypal account balance or a Hong Kong Dollar note redeemable in US Dollars. Or she might have a share claim on the Libra Reserve portfolio, like a mutual fund share. For the Reserve portfolio to provide full backing, the share claim will have to be redeemable in a bundle of currencies whose composition mirrors the composition of the portfolio.
The official papers ambiguously suggest both debt and equity characteristics. in places, they liken the Libra Reserve to a currency board. An orthodox currency board note issues debt claims (local currency notes), each redeemable for a fixed amount of the anchor currency (HK$7.8 = US$1), and holds at least 100 per cent reserves in the anchor currency. If that is the Libra arrangement, then there is a fixed exchange rate between Libra and a pre-specified fiat currency basket. The proportions of fiat currencies in the medium-of-redemption basket would be pre-specified. To provide full backing the proportions would have to correspond exactly to the proportions of currency-denominated assets in the Reserve’s portfolio. Otherwise adverse exchange rate movements could reduce the portfolio value below 100 percent of the par value of Libra in circulation.
On the other hand, the Resellers are not described as redeeming Libra at the Reserve. A different backing arrangement would provide that returning Libra 1 always gives the Reseller a fixed-proportions fiat currency basket equal in value to 1/N, where the portfolio’s market value is Libra N. The Reserve is then a kind of mutual fund, and Libra 1 in the hands of a Reseller is a mutual fund share (a possibility Williamson identifies). This would be novel arrangement – a mutual fund redeemable in a multi-fiat medium of redemption, with shares used as a medium of exchange. The value of the Libra 1 share would not be perfectly steady in terms of the defined currency basket, but would be as steady as the nominal net asset value of the portfolio in currency baskets.
There is much more detail at the link.
Agents with the Federal Bureau of Investigation and Immigration and Customs Enforcement have turned state driver’s license databases into a facial-recognition gold mine, scanning through millions of Americans’ photos without their knowledge or consent, newly released documents show.
Thousands of facial-recognition requests, internal documents and emails over the past five years, obtained through public-records requests by Georgetown Law researchers and provided to The Washington Post, reveal that federal investigators have turned state departments of motor vehicles databases into the bedrock of an unprecedented surveillance infrastructure.
Police have long had access to fingerprints, DNA and other “biometric data” taken from criminal suspects. But the DMV records contain the photos of a vast majority of a state’s residents, most of whom have never been charged with a crime.
Here is the full story by Drew Harwell.
My point: If your overall reaction to business progress over the last fifteen years is even mildly negative, no sensible person will try to please you, because you are impossible to please. Yet our new anti-tech populists have managed to make themselves a center of pseudo-intellectual attention.
Angry lamentation about the effects of new tech on privacy has flabbergasted me the most. For practical purposes, we have more privacy than ever before in human history. You can now buy embarrassing products in secret. You can read or view virtually anything you like in secret. You can interact with over a billion people in secret.
Then what privacy have we lost? The privacy to not be part of a Big Data Set. The privacy to not have firms try to sell us stuff based on our previous purchases. In short, we have lost the kinds of privacy that no prudent person loses sleep over.
There is more good material at the link.
No American company makes the devices that transmit high-speed wireless signals. Huawei is the clear leader in the field; the Swedish company Ericsson is a distant second; and the Finnish company Nokia is third.
It is almost surprising that the Defense Department allowed the report to be published at all, given the board’s remarkably blunt assessment of the nation’s lack of innovation and what it said was one of the biggest impediments to rolling out 5G in the United States: the Pentagon itself.
The board said the broadband spectrum needed to create a successful network was reserved not for commercial purposes but for the military.
To work best, 5G needs what’s called low-band spectrum, because it allows signals to travel farther than high-band spectrum. The farther the signal can travel, the less infrastructure has to be deployed.
In China and even in Europe, governments have reserved low-band spectrum for 5G, making it efficient and less costly to blanket their countries with high-speed wireless connectivity. In the United States, the low-band spectrum is reserved for the military.
The difference this makes is stark. Google conducted an experiment for the board, placing 5G transmitters on 72,735 towers and rooftops. Using high-band spectrum, the transmitters covered only 11.6 percent of the United States population at a speed of 100 megabits per second and only 3.9 percent at 1 gigabit per second. If the same transmitters could use low-band spectrum, 57.4 percent of the population would be covered at 100 megabits per second and 21.2 percent at 1 gigabit per second.
In other words, the spectrum that has been allotted in the United States for commercial 5G communications makes 5G significantly slower and more expensive to roll out than just about anywhere else.
That is a commercial disincentive and puts the United States at a distinct disadvantage.
Here is more from Andrew Ross Sorkin (NYT).
That is the topic of my latest Bloomberg column, here is one excerpt:
It is striking and sad that there is so much over-the-top criticism of social media yet so little faith in education as a possible remedy.
Public school is supposed to be good and effective, right? The internet is supposed to be destroying our world, or at least democracy and sanity, right? So why not teach people — in school — how to use the internet better?
As it stands, plenty of teachers give informal advice about how to use the internet, but there isn’t much in the way of formal institutions or curriculums. I am not saying this needs to be a full, semester-long class. But surely internet usage and understanding is worthy of a formal dedication of at least a few weeks of attention, maybe more.
Somehow America has moved very, very far away from a problem-solving mindset.
Addendum: As a side note:
Twitter search is one of the most underrated parts of the internet. If I am looking to learn more about a current event, I typically go to Twitter before Google and type in the relevant search term. The results seem more up-to-date, and I will probably be exposed to a wider range of opinions.
That is the theme of my latest Bloomberg column, here is one excerpt:
One reason for the rise in Bitcoin’s price may have to do with the U.S. and China and the trade war. It no longer seems that China will join the international economic order as that term might have been understood 15 years ago. Instead, there will be an ongoing cold war; China will not liberalize, and capital controls may persist. In that world, Bitcoin will continue to prove a useful way of getting funds out of China. The Chinese Communist government may or may not crack down on that practice, but outright liberalization would have ended this use of Bitcoin altogether.
For related reasons, a China that does not liberalize may influence the broader tenor of the global economy away from freedom, again giving Bitcoin additional uses around the world for evading central authorities.
A second development is that the Democratic Party in the U.S. continues to shift to the left, including on the possibility of a wealth tax. As America’s fiscal deficits grow (due often to the Republicans, I might add), there will be a long-term need to restore fiscal sanity. Presidential candidate Elizabeth Warren, for one, advocates a 2% wealth tax (over $50 million) toward this end.
No matter what you think of this idea, it likely would boost the demand for Bitcoin and other crypto assets, as cryptocurrencies are potentially a way to store assets out of reach of many tax authorities. And the U.S. is hardly the only nation that may be looking to a wealth tax in the future to balance the books. In essence, the new and higher price of Bitcoin is telling us that fiscal solvency will be hard to come by, and the wealthy will not give up their assets without a fight.
Do read the whole thing.
Press TV: A report by Iran’s Mehr news agency last week showed that bitcoin miners were using power in buildings and properties that enjoy a lower price for electricity, including factories, greenhouses, government offices and mosques.
…A spokesman of Iran’s Ministry of Energy said on Monday that the country’s power grid had become unstable as a result of increased mining of cryptocurrencies.
Bitcoin mining in a mosque may seem outré but at least it’s not money lenders in the mosque. In fact, Bitcoin is halal, at least according to one source (quoted here):
As a payment network, Bitcoin is halal. In fact, Bitcoin goes beyond what more conventional closed banking networks offer. Unlike conventional bank networks which use private ledgers where there’s no guarantee that the originator actually owns the underlying assets, Bitcoin guarantees with mathematical certainty that the originator of the transfer owns the underlying assets. Conventional banks operate using the principle of fractional reserve, which is prohibited in Islam.
Muhammad was a merchant and much more open to business than some traditional Christian interpretations. For example, compare Jesus, “it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God” with one of Muhammad’s sayings:
Abu Said related that the Prophet said: The truthful and trustworthy businessman will be in the company of Prophets, saints and martyrs on the Day of Judgment. (Darimi, Tirmidhi)
I’ve already outlined the case for how Libra might be able to significantly lower the 7-8% costs and commissions currently charged for making remittances. That would make Libra a widely used means of payment. I am less optimistic, however, about Libra being widely used as a medium of exchange.
Let’s say the core rate of inflation in a country is eight percent, which is about the current rate of price inflation in Myanmar. It is still not the case that an unbanked farmer holds currency for the entire year (he is more likely to buy land or animals as a means of large-scale saving). I am not sure what monetary velocity is for this group of people (readers?), but say currency turns over four times a year on average. That is in essence a two percent tax on currency holdings, not an eight percent tax. I don’t think that individuals will switch monies for such a small gain, noting that decreasing their demand for money (i.e., increasing currency velocity) is another possible response.
If an unbanked farmer is in debt, I would think the velocity of currency would be well over 4x a year (consider monthly microcredit borrowings and repayments), although certainly some MR readers can enlighten us here.
A few decades ago, when inflation was much more common, it was generally believed that people were not very interested in switching monies until inflation rates hit about forty percent. I am not sure if that same number would hold today, but of course that is pretty high. Furthermore, the countries with the highest inflation rates, such as Venezuela, can be impossible to do business in.
Don’t forget that Libras are specified as paying zero nominal interest throughout.
You might think that Libras have some advantages over current e-monies and smart phone banking systems. It is hard to make that judgment for a product which does not exist yet, but it is unlikely those advantages will run close to the range of seven to eight percent.
For those reasons I am more optimistic about Libra as a means of payment — most of all for remittances — than as a general medium of exchange.
That is the theme of my latest Bloomberg column, here is one excerpt:
How could L.A.’s tech scene develop even further? Imagine that virtual reality is the “next big thing” and the gamification of just about everything, including education, proceeds apace. For the next generation of startups, that might throw the balance of power in the direction of expertise in entertainment and design — a sense of the theatrical, in other words, intermediated through tech. That could favor the culture of Los Angeles and Hollywood. Southern California also has a strong background in aerospace and military contracting, two areas that could produce a spillover effect for the next tech booms, especially if they involve transportation. The region also remains the leading U.S. manufacturing center, and that too could be a source of future synergies.
Northern California had an original advantage over Southern California as a center of free thinking and thus as a tech hub. Think back to Haight-Ashbury, the 1960s, Beatniks, LSD and the Whole Earth Catalog, the psychedelic movement, the bohemian and gay cultures of San Francisco. All of that bred an atmosphere of rebellion, and it helped birth the personal computer and a large movement of non-conformist hippie programmers, often working out of their proverbial garages.
But those cultural roots have largely faded, and if anything today San Francisco and the Bay Area are better known for political correctness and a conformist culture of scolding and groupthink. That can’t be good for the region’s long-term creativity.
There is much more at the link.
Dante Disparte, as interviewed by Ben Thompson ($$, but you should subscribe to Ben):
One example is the use case of international money transfers or remittances. Globally, the remittance cash flow is projected to be about $715 billion in 2019, and on average…you are seeing between seven and ten percent of transfer costs, and in some instances much higher than that in the teens. For a product and an outcome from the sender and receiver point of view, that is not only very slow, it often takes a few days to clear on the receiving end, it is [extremely expensive]. There are direct payment rails that are just technology powered that do a lot in terms of advancing efficiency, but pre-blockchain it would have been very, very hard to conceive of a network of international payments that could do that at near zero cost instantaneously while at the same time not sacrificing the type of ledgering and transaction information that would enable the world to begin to do that securely. So that would be one amazing use case that could put billions and billions of dollars back into the market by eliminating as many of these fees as possible, while at the same time putting billions of dollars into the hands of people around the world in real time.
Here is my current understanding of Libra/Calibra, at least within this particular context, noting again that my understanding may be wrong or incomplete. These transfers would not go through the current banking system as we know it, but rather through a blockchain with say 100 or so (quite legitimate) participants enforcing some kind of “proof of stake” standard. Some form of “proof of stake-equivalent of mining fees” would have to be paid, either explicitly or implicitly, and those arguably could be much lower than current remittance costs, noting that the actual operation of proof of stake in this setting remains to me murky. Still, it would largely avoid the current mining fees associated with Bitcoin. On net, one is trading in the current regulatory and clearing and Western Union branch costs for these future proof of stake costs. Do you think the Libra Association can run a proof of stake system for less say than $100 billion?
“But don’t you have to convert your Libras back into mainstream fiat currencies?” Well, maybe you might, but that is simply the cost of showing up at the relevant financial institutions and claiming redemption. Those costs also could be much lower than the current fees associated with remittances. What is sent through the blockchain network simply can be Libras, as I understand it, with varying assumptions on how much people will hold Libras rather than converting them.
To use a historical analogy, think of this as substituting “the transfer of paper claims to gold” for “claims to gold,” but in a one hundred percent reserves setting. It can be (and indeed was) much cheaper to send around the paper than the gold, and yet the paper still was a claim to the gold. The Libra is a kind of parallel, redeemable currency, legally not within standard banking systems, but still redeemable in terms of mainstream fiat currencies which are within standard banking systems. “Create a synthetic claim which can be traded more cheaply” would be my version of the ten-word slogan.
Another slightly wordier slogan might be: “let’s actually separate the means of payment from the medium of exchange by creating a new synthetic asset, because those two things actually should not be the exact same asset.”
Of course it still remains to be seen in which countries regulators will allow this to happen. How persuasive is the promise of one hundred percent reserves? I don’t mean to speak for Libra/Calibra here, but I believe they are suggesting (or implying?) that the proof of stake system for making and validating transfers could in essence enforce relevant regulations against money laundering, illegal transfers, and the like.
It is a quite separate (but possible) claim to believe that libras could serve as an effective medium of exchange at a retail level, and perhaps I will cover that in a separate post. That would mean that both the medium of exchange and means of payment should be new and different assets, a much stronger claim.
Skype and Zoom aren’t quite as good as meeting in the physical world. But why? Pioneer and Emergent Ventures are looking to fund research on exactly how and why video conferencing interactions are different. Apply at https://pioneer.app and mention this tweet…Given the rise of remote work, the economic impact of this research could be Nobel-worthy.