The Common, the Wizard and the Blockchain by Zach Cope

‘A tragedy, that’s what it is John,’ Bill moaned into his pint.

‘You upset about the Common again?’ John replied. ‘Can’t you just get used to it? So it floods for half the year, and our sheep don’t grow so fat, and the kids keep getting trench foot, but at least it’s ours again – we’re free!’

Bill sighed, ‘I suppose so, but I hoped freedom would be better than this. Obviously it’s better than when the council existed. I mean they were ok at first, with that caretaker Phil they paid for with our money. Most people didn’t mind paying, and grouchy Fred soon paid up when they called in their tax collector to rough him up a little.

 

© Peter Craine

© Peter Craine

The problem was that once Phil retired, the new caretaker wouldn’t work as hard, so they replaced him with two caretakers. And when that skinny one went off sick we ended up paying for three caretakers, and the yearly drainage repairs still took months to be done.’

‘I’m glad we threw them all in the well,’ mused John, ‘they had been telling us what to do for too long,’

‘Of course the next lot weren’t much better,’ John continued. ‘That company we hired seemed ok at first, with their flashy brochures and those presentations at the donkey racing track. ‘Let us use the common for 10 years and we’ll do the work and charge you to use the common,’ seemed a good idea at the time. They did a great job in the first few years, and we were all happy to pay them the fee to use the common. It was sad they were bought out and they had to send round that guy with the abacus.’

‘Yep he was a real magic bean counter,’ Bill replied. ‘I think the tipping point was when he decided they would focus the use of the common on hut owners only, increasing the charge so that the hovel owners couldn’t use the common. I wasn’t surprised when they threw him and his abacus in the well.

To be honest I’d be happy to pay more than my fair share to keep the common drained as it’s worth it to me. I just wish others would contribute a little.’

‘I remember that meeting we had to find out what people would pay,’ John said, ‘Only a few of us turned up. I later found out that lots of people didn’t want to reveal how much they would pay, particularly if it was less than others might pay, and they didn’t want to give up their groats until they were sure the maintenance project was going ahead. I don’t know what the answer is.’

A deep voice boomed from a corner of the Rose and Crown, ‘I have the answer.’

The two friends turned to the man they knew as the Wizard, who sat in front of several empty beer glasses and seemed to be lit by a small book that emitted a flickering light.

Bill shrugged, ‘We’ve tried everything else, what do you suggest?’

‘Payment first,’ Wizard growled, ‘do you have a Node?’

‘What’s a Node?’

‘A Connection then, do you have a Connection?’

‘What’s a Connection?’

‘Sand then, any Sand?’

‘Wizard I don’t know what a Node, Connection or Sand is!’

Wizard sighed, then his eyes narrowed and he tapped the empty beer glass. Bill nodded and signalled to the barman, whereupon the Wizard’s eyes brightened and he exclaimed:

‘I suggest an application of blockchain technology and escrowed anonymous contracts in order to create an algorithmic blind auction, based on the maximum amount each villager would be prepared to pay to prevent the common from flooding. If the required amount is not met this shortfall is announced and the villagers have the opportunity to increase their contribution until the required amounts are met. Payment is only released once the full amount is met, otherwise the groats are returned. Donators may implement rules, such as their donation only stands if a certain percentage of villagers contribute certain amounts, and these rules can be announced so that individual villagers can make decisions based on this. All rules and bids to donate money are entirely private in origin, reducing the incentives for villagers to throw low donators into the well.’

There was a loud silence for some time. The Wizard, apparently noticing the friends’ confusion, seemed to retreat into a fugue, and a solitary tear rolled down his muddy face. John did the only thing he could think of, and pushed a fresh ale across the table to the Wizard, whose sparkle seemed to reappear.

‘Never mind the detail chaps, just whisper the amount you would be happy to pay towards the maintenance on the Common into my magic book here, and make sure the rest of the villagers do the same.’

And so the magic book was used, and surprisingly to John and Bill, the villagers managed to pay for the maintenance of the common that year, and in subsequent years. Occasionally agreement would take some time but everyone seemed happy with the process. The Wizard never had to pay for drinks in the Rose and Crown, although still muttered about Connections, Nodes and Sand. Even the water tasted better as no one was thrown in the well.

15 years after the Wizard’s magic hat was instituted there was a significant shortfall in the amount raised. The community agreed individually and anonymously to increase their donations. The Commons were maintained, and everyone realised that the biggest donator, once he could do it privately and without compulsion, had been grouchy Fred, who had died earlier that year.

Bitcoin founder Satoshi Nakamoto identified

News from Pimlico is that Satoshi Nakamoto has been identified by writer, libertarian and comedian Dominic Frisby, although suspiciously you must buy his book to find out who it is.

The big news item was that Frisby reckons he has cracked the identity of the founding genius of Bitcoin, a mysterious figure who is currently only known by a Japanese alias. Who is he? Read my Bitcoin book, said Frisby. This will be available some time around late spring or early summer, and I will keep Samizdata posted.

Catching up with Bitcoin

So I read on Samizdata this morning that Bitcoin has encountered it’s first truly serious issue. Control over a substantial fraction of the currency has been lost as popular bureau de change Mt Gox has gone bust. The BBC business editor seems to call this right, or at least nearly:

There is no central authority to step in and give any kind of guidance to Mt Gox customers whether their money is safe or gone. And there’s no compensation safety net.

Bitcoin has been set up on the basis of pure caveat emptor. If its participants take any losses in their stride, and learn the lessons, it can go from strength to strength.

If they are unable to develop any kind of governance system that provides confidence that Bitcoins are where they are supposed to be, then it will disintegrate into fringe territory for loons and wild-eyed monetary anarchists.

I think he is right that this is a big test for Bitcoin and of the committment that the participating companies have to keeping it going, but it is not a choice between centralisation or anarchy.

First it is worth noting some confusion about timing. The BBC date the problems back to 7th February and describe them as technical. The leak that precipitated the crisis (according to this sequence of events) is date stamped 24th February. I will trust that Tumblr datestamp over the BBC fact checkers in this case. Also, I like to beleive I have not been asleep for 19 days, although this is possible.

© ZCopley

© ZCopley

I have not yet read much of the detail, but the timeline is important because it reflects how survivable the crisis is for the core Bitcoin system. Just as the Dollar would not be systemically affected by a bankrupcy of Travellex, Bitcoin is not directly affected by the closure of one exchange. The problem is of credibility.

If users begin to perceive Bitcoin as a risky and difficult option then they are less likely to buy into the concept, just as you are less likely to by a Ford if you think they suffer from rust (I am neither a bitcoin nor a car expert, do Fords rust?). If we were to find ourselves 19 days into a crisis with no-one stepping forward to sort it out, then we would have a serious credibility problem, but if we are just 48 hours in then there is still time.

If the people involved in Bitcoin are just chasing a quick buck, and regard this as a nice job to have while the fun lasts, a job the can leave to go and work in computer games in 5 years time then they will let Mt Gox and $409 million of Bitcoin just melt away. If, however, they have decided that their life mission is to make Bitcoin work then they should be willing to step up and put forward the funds and manpower necessary to mount an orderly bankrupcy process (or investigate the theft, retrieve the coins, repair vulnerabilities etc), by way of mutual contractual agreements – just like a proper political anarchy.

We are about to discover what kind of people are running this system.

 

UPDATE: The FT have credible details. It seems there was a “bug” at Mt Gox ~19 days ago, and the site vanished very recently after a theft. When is a bug not a bug?