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The more I read about “cryptocurrencies” the more they feel like frauds in the making.
My latest reminder is this detailed report by Fortune’s Team Ledger about an investment by the venture-capital firm Andreessen Horowitz in something called a “stablecoin.” I studied this article carefully, and for the life of me I can’t figure out what this stuff is about. I’m fairly confident I’m just a fuddy-duddy and will be proved wrong.
Be that as it may, here’s the key bit about the “Maker Coin,” or “MKR,” in question that’s got me scratching my head:
The whole point of MakerDAO is to create a system that stabilizes the price of another cryptocurrency it mints: Dai, a digital token presently pegged to the value of a U.S. dollar. The system maintains this price peg by requiring Dai-seekers to put up Ether as collateral. In other words, people send Ether into an escrow-like financial contract coded on the Ethereum blockchain and, in return, they receive some Dai. MKR coin holders, in turn, get to set this “collateralization ratio” (as well as pull some other financial levers).
This arrangement screams out “Ponzi scheme” to my benighted brain. That or the infamous “round-tripping” deals done by slimy AOL executives back in the day.
The other interesting aspect of this investment is that Andreessen Horowitz is veering away from venture-capital investing and into cutting-edge securities speculation. According to Robert Hackett’s excellent profile of Kathryn Haun, the firm’s new partner, Andreessen Horowitz’s charter for its “crypto” fund allows for such investments.
It’s a new day and a new ballgame.
Follow the bouncing ball. What in the world are we to make of Bloomberg’s explosive scoop of Chinese spies slipping surveillance chips into server motherboards made in the country and used by Apple and Amazon, among others? We included a brief link to the story yesterday, but later in the day Amazon issued a detailed, categorical denial, along with increasingly detailed denials from Apple. These are highly unusual statements from the companies and the timing of the entirely-anonymously-sourced story is certainly suspect, coming on the same day Vice President Pence made public claims of Chinese attacks on the 2018 election. (Pence also urged Google to drop its rumored China-specific search engine known as Dragonfly.) Stay tuned for further developments.
640K ought to be enough for anybody. Fueled by booming sales of memory chips, Samsung says it expects to report record operating profit of $15.4 billion for the third quarter, up 20% from last year. Revenue is expected to rise just 5% to $58 billion, as smartphone sales seems to have stalled out.
Comparative chatter. Need a ride? Google has added a consumer-friendly trick to its voice-controlled digital assistant. Name your destination but don’t specify which ride hailing service you prefer and the assistant will list wait times and prices for Uber, Lyft, Ola, and other services. Speaking of ride-hailing, both Uber and Lyft say they’ll be giving free rides to the polls for Election Day on November 6.
Walking it back. In a 15-page memo to employees, Snap CEO Evan Spiegel said his company is aiming for profitability next year and apologized for the much-criticized redesign of the Snapchat app. “The biggest mistake we made with our redesign was compromising our core product value of being the fastest way to communicate,” he wrote.
Shhh. The National Theatre in London isn’t waiting for tech giants to create smart glasses, it’s deploying its own. The glasses, created in a partnership with Accenture and Epson, offer viewers realtime captioning of every production, a huge boon for the deaf and hard of hearing.
Blown out of the sky. The Senate approved the Federal Aviation Administration’s reauthorization legislation, including an assortment of new rules for drones. Law enforcement authorities will be permitted to shoot down or otherwise disable drones they deem a “credible threat” under the bill, which has already been approved by the House and is expected to be signed into law by the president shortly.
FOR YOUR WEEKEND READING PLEASURE
A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:
The Appealing Myth of the Frugal Billionaire (Vox)
People love stories about supposedly penny-pinching billionaires like Warren Buffett and Mark Zuckerberg—even if they aren’t entirely true.
Instagram’s Kevin Systrom on the Platform He Built for 1 Billion Users (WSJ Magazine)
After selling Instagram to Facebook, Systrom vaulted the platform past Snapchat and had been gearing up to take on YouTube. WSJ Magazine interviewed the CEO before he announced his resignation.
Russia Made the King of Chess. The U.S. Dethroned Him (FiveThirtyEight)
In the days following the 2016 election, a large group of Russians gathered in New York to watch one of their own wage war in miniature. They were at the World Chess Championship, where a patriotic Russian grandmaster was challenging the Norwegian defending champion in Manhattan’s South Street Seaport. Members of Russia’s business and political elite gathered in the venue’s dimly lit VIP lounge and whispered over martinis as their countryman tried to restore Russia to its former chess glory.
The Shape Shifter (New York Times Magazine)
Lady Gaga wants to wear every costume, live out every type of known stardom. A Star Is Born is just her latest reinvention.
FOOD FOR THOUGHT
Louis Rossetto and Jane Metcalfe started Wired magazine in 1993 in part to combat the techno-pessimism of the time. When Conde Nast took over a few years later, the founders left. But Rossetto hasn’t lost his point of view. In a new essay published by Wired, the magazine’s co-founder is calling for techies to “embrace militant optimism,” citing coming revolutions in biology, energy, space, blockchains, and augmented reality. Part of his message is to ignore the politics of our time:
In The Mass Psychology of Fascism, Wilhelm Reich wrote that politics can be the outward manifestation of personal emotional problems. Instead of working on our own issues, some instead work them out on society at large. (Sound familiar?)
We’re living through a moment when this phenomenon is vivid. The unease among elites of the first world, the palpable emotional distress of our friends, the media’s daily two minutes of hate, the social media flash mobs, the tribalism, the way every aspect of our lives has become political.
Good thing breakthroughs in the human condition happen outside of politics. History is the record of political failure. Progress is the march of science and technology. Just think of the past 100 years: mass communication, penicillin, refrigerators, computing, commercial air travel, cheap birth control, PCs, the internet, smartphones, gene sequencing, fracking—altogether producing more human freedom and wealth than wars or laws.
IN CASE YOU MISSED IT
Elon Musk Mocks SEC on Twitter: ‘Shortseller Enrichment Commission’ By Kevin Kelleher
MoviePass Gets a $65 Million Lifeline By Chris Morris
Those Secret Swiss Bank Accounts Are Not So Secret Any More By David Meyer
The AI Wars Have Not Even Begun By Vivek Wadhwa
Does Facebook Have a Cyberattack Plan? If So, We Need to See It By Bugra M. Gezer and Shiva Rajgopal
BEFORE YOU GO
In various versions of the tales of King Arthur, the would-be royal pulls a sword from a stone or receives it from a lady in a lake. So perhaps we should have regal expectations for Saga Vanecek, a Swedish eight-year-old who found an ancient sword in a lake while on vacation this summer. The blade in question turned out to be a 1,500-year-old Viking relic. All hail Queen Saga?