... so I think it's time to change that.

This past year has seen many interesting developments in the world with some being good and some being bad. One thing that I didn't do so well at was writing more often. In order for that to happen, I need to just sit down and write out what I am thinking (my problem being, when it comes to writing, I over think it to the point of not doing any writing at all.) So to start off the new year and the new decade, I thought it would be a good idea to come up with some forecasts for the following year ahead as well as review the forecasts I had from last year. So without further ado, let's get started.

• Last year I predicted that the tech backlash or "techlash"  would continue and indeed I was correct. All of the tech CEOs were brought before congress and questioned with some good questions, but mostly bad questions. As it stands right now, the economy is dominated by the giant tech firms and that will continue for the time being. In the past decade, all of their stocks have traded up and made investors happy so nobody has much of an urge to try and stop them. But there are bigger problems brewing with the U.S. presidential election about to pick up steam. The Republicans have remained mostly quiet about techs dominance (mostly quiet, when they aren't complaining about conservative censorship). However, the Democratic presidential hopefuls are skewering tech left and right with some candidates promising to break up the big companies. My forecast is that tech will continue to be skewered in the media and by these presidential hopefuls but not much will change. They are all central to our lives and will remain so for now. (80% probability this will continue)
• Content Creators are the new thing. Why is this? Because everyone is a creator now and can make money selling what they create. I fall into this category based on the work I do for a living and so I find this trend extremely fascinating and enticing. The internet has enabled anybody with a connection to it to sell a piece of themselves. The content that is being created is a piece of that person. I would like to write more about this but as for now, this is a trend that will continue in the new year and beyond. (95% probability this will continue)
• The no-code movement is an interesting idea to me. I see it gaining traction in the DTC (direct-to-consumer) space and that makes sense. Founders want to have a working store up and running immediately so they can begin selling their products right away. The app is the store-front, the internet is the distribution, and the customer is on the other end. So by focusing less on building out infrastructure, no-code enables a founder to build their brand and connect with their audience immediately. Where I start to lose interest is in the idea of no-code itself. It still feels like a bland marketing term. (95% probability that founders will continue to build for their audience in any way necessary but a 60% probability that no-code as a marketing term will stick around)
• Crypto and blockchain are still around but have fallen by the wayside to everyone except for those still directly involved in it. What is interesting about this sector to me is how religious it has become. While the prices are still seeing a bit of a slump and it seems that isn't much interest in it from the mainstream, the industry itself is heads down building. This is a good thing. What has always been needed is less concern of prices and more concern with actually building technology people want to use. There are still some innovative projects being worked on such as Filecoin (IPFS), Blockstack, the DeFi space, and Bitcoin overall. It would be nice to see some new ground made with these projects, but we will see what happens. Both the SEC and the IRS still don't know how to properly work with this new technology and that might be keeping many people out for now. But what has been established over the past few years is the crypto is a viable way to raise resources for a project and business and anyone can do it. That still remains exciting to me so I do hope there are more great things to come for the space. (75% probability the industry will keep pushing forward)
• There is a U.S. presidential election in 2020 and I don't have any idea who will win, nor will I forecast a winner. What I will forecast is that there will be a hellish year ahead where many of the social networks may be weaponized again and people may or may not get their information from memes. God help us all.
• Finally, I want to write more, so I will. This is what I wrote last year: "For me personally I am planning on writing more about the role of media in our culture today. This will include everything from music, entertainment, gaming, VR and the like to how media effects our culture in general and the role technology is playing in culture around us. It's my way of helping us find our way forward." It's time to stick to it.

Onward.

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A common theme among many people who write essays involving business, economics, tech, and media is that there is usually a year end post where the previous year is analyzed. From there, the upcoming year is forecast in a hopefully illuminating light. This is something I attempted to start a couple of years ago but haven't been consistent with at all. So I thought it would be fun to start it back up again since one of my focuses for the next year is to start sharing more of writing in the digital public. This post is going to be pretty simple; the focus will be on what I think what is likely to happen over the next year. I'm hoping to go back over these at the end of the year and see what part of the analysis was close and what was way off. I'm going to make these as simple as possible. So let's get it started.

• The security and privacy issues that are a result of the hacking into older companies will probably get worse. We are still in this middle ground between 20th century old industrial thinking and 21st century new information and data thinking and the companies that haven't moved from the former to the latter will suffer the greatest. Why is this? Because these older companies have never had to deal with problems of this scale before and malicious actors will do their best to exploit it to their benefit. What we will see from this is more and more people may start wanting to migrate their data to a place where they control it themselves which brings me to my next bullet point.
  
  
• The crypto space has gone through an intense reckoning over the past year and it may be in for some more this year. I'm not going to forecast the price of any cryptoassets because I really don't know what will happen. What I do think will happen is that more and more of the "projects" and "protocols" that were created in the last couple of years are going to disappear completely. And that is probably a great thing to have happen in the space. The are some legitimate projects that are being built in the space (Blockstack and Mimblewimble come to mind as well as a few others) but there are many more that add very little value. I still think it's early days for crypto and open networks but the kinks are still being worked out. So what I do think will happen is that projects and companies that have built a useful product or service will keep pushing forward and adding value to the space while most others will fizzle out. One big idea that I think will be incredibly useful that can only really be implemented on open networks will be giving consumers the option to control their own data. The majority of the security and privacy issues come down to users not owning their own data. Which brings me to the next bullet point.
  
  
• The techlash is going to continue relentlessly and the aim of that ire will be directed not only at Facebook, but many other tech companies as well. This will be for similar yet very different reasons. Take Facebook for example: The leadership team has had to go from one crisis to the next dealing with Russian interference in U.S. elections, security gripes, and the Cambridge Analytica fiasco. But Facebook isn't the only company dealing with a growing techlash. Googles size, clout, and control over what pops up in its search results (not to mention the algorithmic problems with Youtube), has been making many people uncomfortable and Amazon may start causing even more ire after its incredibly strange search American Idol-esque search for a second head quarters. 
  
  
• AI and automation will be the much bigger story for the economy at large. More and more products will probably have some sort of AI/machine learning algorithms built into them. This will be great for the companies that control and sell those products and services but bad for the jobs that automation will make redundant. The pop culture idea of automation is that there is a robot uprising and suddenly we are at war with the terminator. Sounds very dramatic and al very unlikely. What is more apt to happen is that a piece of AI software will automate some aspect of a business that needed 30 people in a department. Now, that department may only need 2 people and let the rest go. A sort of silent job loss. That is something that I think we will start seeing more of in the future.
  
  
• There are a few other subjects that will probably take center stage and that I would like to dive a bit deeper into understanding are: AI and censorship on the social networks (global communications platforms) and the repercussions of this happening. The subversive hidden networks that are quickly becoming the voice of our culture (an example of these networks can found through hashtags). And of course, the role of technology companies in our society today and how their size, money, and power are effecting everything from politics on the national stage to housing and pricing on the local level.

For me personally I am planning on writing more about the role of media in our culture today. This will include everything from music, entertainment, gaming, VR and the like to how media effects our culture in general and the role technology is playing in culture around us. It's my way of helping us find our way forward.

This is a continuation of The Chain Files, a series of essays about blockchain related technologies. For starters, these essays will be focusing on the technical details of Bitcoin and then move into other cryptocurrencies and assets.

Blocks & Header Chains

Header chain forks

There are complications that can arise between miners and that is when two miners each create a new and valid header at the same time that both refer to the same header parent. This collision is known as a chain fork and since each header can only refer to one previous header, every Bitcoin miner now needs to choose which of the competing previous headers to use in the next header. When moving onto the next block, the chain that demonstrates the most Proof-of-Work becomes the main chain. It is at this point that the miner who had created the header that loses has wasted their Proof-of-Work and missed out on the bitcoin mining reward.

Short chain forks happen quite a bit in Bitcoin and are usually nothing to worry about. We can take note that much work goes into keeping them from happening to keep the maximum amount of Proof-of-Work added to the headers chain.

Blocks of transactions

Ultimately Bitcoin is a transactional system, although the are no transactions in the block headers. Miners instead collect groups of transactions that are called the block of transactions and then hash them using a specific formula. That hash of the transactions is called a merkle root. The merkle root is included as 32 of the 80 bytes in the block header and together, the block of transactions and their corresponding header are what make up a block. In the previous post, it was pointed out that hashing some input will produce a specific output. So when miners hash the same block of transactions, it will always produce the same hash as the output and proves that the miner chose those particular transactions. And since the block header is protected by Proof-of-Work, it just isn't possible to change and of the transactions that appeared in that block.

As mentioned in the previous paragrah, the hash of the transactions is called a merkle root which is the root hash of what is known as as merkle tree, which is a hash based tree data structure that is a generalization of a hash list. Within the tree structure, each leaf node is a hash of the block of data and each non-leaf node is a hash of it's children. They are primarily used in distributed and peer-to-peer data systems for verification which works out perfectly for the Bitcoin blockchain.

The Bitcoin blockchain is an interesting piece of technology that demands further study and research. From a technical perspective, by combining the power of such data structures and algorithms as the hash function, Proof-of-Work, and the merkle root, we now have a better way to define attribution to digital space. Each transaction is just that, digital space that is located on a block in the ledger. From a more philosophical perspective, we can think of each transaction that takes place as it's own unique digital moment; further proof that an event*** happened at a specific time and there is proof that it took place. Bitcoin itself is more focused on financial transactions which has been a major contributor to its overall security. This is one of the top reasons to study and understand its technical merits.There are other projects focused less on the financial and more on the digital moment. It will be interesting to see how newer projects in the space will build on the technical considerations from Bitcoin and create their own projects that are more focused on the philosophical sense.

*** In this case, we can think of an event in the abstract and it could refer to most anything. A less abstract and more definite way would be to think of an event as something tangible like a digital photo, recorded music, or a piece of art that is assigned to a transaction and can be found in the ledger, easily giving attribution to the owner via their wallet address. 

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I haven't written anything in a long while and have been thinking about this subject lately and figured I would do a little research and get my thoughts down on digital paper. You can read more about it from this old post here.

Bitcoin has been around for almost a decade now and since its arrival, has had an incredible impact within the technology and business communities. When the white paper was released in 2009, the world had just suffered through the 2008 financial collapse and was still dealing with the after effects. Most essays these days focus solely on the supposed business and economic changes that the Bitcoin blockchain will introduce to the world; those changes have not fully materialized yet although there are many companies, governments, and individuals around the world doing their best to make that happen. However, in it's entire run, the security of Bitcoin has not been compromised. There have been hacks, but those are mainly due to third party vendors such as exchanges making mistakes. The mathematics and technology underpinning Bitcoin itself still runs securely. That made me more curious about it and ultimately led me to the conclusion to learn about it. I'm hoping that this essay will explain some, but not all, of the basic technical underpinning of Bitcoin. So let's get started.

Hash Functions

One of the data types that is used most frequently in Bitcoin is the cryptographic hash or hash function. A hash function takes an input of some arbitrary amount of data (it can be any amount) and turns it into a fixed-length string or byte array. No matter how large the input data is, the output data will always be the same length. However, every time you hash different data, even if the same function is being used, a completely new hash is created.  Sometimes you will see the cryptographic hash referred to simply as "hashes" since there are non-cryptographic hashes that don't have the same security properties. 

The following examples below show how hashing can be used to verify documents with text, photos, or other forms of multimedia. I am using text only for an easy to understand example.

## Run the following commands in a linux terminal
1) echo "this is our secret message. 'the rain in spain falls mainly in seattle'" | sha256sum
   ab9c98ed0d99f6cf8b7f2a8d2e96a1526aae7bf084fcca87edd41029e3adce9e  -

2) echo "this is our secret message. 'the rain in spain falls mainly in seattle'" > hash.txt

3) cat hash.txt | sha256sum
   ab9c98ed0d99f6cf8b7f2a8d2e96a1526aae7bf084fcca87edd41029e3adce9e  -

Running the echo command along with the given text and the sha256 algorithm, we see the output is a string of 64 characters that looks absolutely random. However, both end up being the same string of 64 characters. This is an extremely important part of hashing as it can be used for verification. In this case we have used it for a simple line of text; but it can be used to verify other forms of documentation and identification now. There are a fair amount of companies that are in the first stages of building an identification layer using blockchains and hashing is an important characteristic of how they will function.

Proof-of-Work

So how do hash functions work within Bitcoin? In order to understand this better we have to travel back to 1997, when cryptographer Adam Back created a technology called HashCash which pioneered something called Proof-of-Work (PoW). HashCash used PoW to limit email spam and denial-of-service attacks and it did so by requiring a selected amount of work to compute with a proof that could be verified efficiently. The algorithm was later slightly tweaked by Hal Finney for his bitcoin precursor project as a way to mine coins. But how does it work within the Bitcoin network? In order to understand this we need to understand the technology that is causing the biggest hype these days, the blockchain.

The Bitcoin blockchain is a ledger that contains the entire record of bitcoin transactions that have taken place since the original genesis block. All of these records are arranged in a sequence of "blocks" in such a way that no user can spend their holdings twice. This record is also public and anyone can verify that these transactions have taken place if they have a specific wallet address or hash. Each block references the hash of the previous block and creates a "chain" to all previous blocks back to the genesis block. These blocks are also computationally impractical to modify because each proceeding block would then have to be regenerated as well, creating completely different hashes. This helped solve the double-spend problem of previous digital currencies and has applications beyond money as well such as identity and intellectual property. 

Hash functions and the Proof-of-Work algorithm make it extremely difficult to alter the blockchain which has brought us to where we are today and helps explain why the idea behind a blockchain has turned into such a buzzworthy business focus. Trying to do so would require that all subsequent blocks are re-mined. Doing this is difficult though since any attempt to monopolize the networks computing power would be expensive due to the machinery need to complete the hash functions.

OP_RETURN

One fascinating use case of a hash function within the Bitcoin protocol is that of the OP_RETURN, a script opcode that is used to mark a transaction output as invalid. Although the protocol caused a bit of an uproar when first announced due to many in the community believing that it was irresponsible since Bitcoins use case was for financial applications and adding this made it a record for arbitrary data, the proposal was eventually accepted. This was the first use case for a digital asset proof-of-ownership and there have been quite a few use cases and apps created since its release, most notably, proofofexistence.

Although the hash function has a been a critical component for cryptography and security software in general, it has started to become a subject more people are learning due to so many newcomers to the cryptocurrency industry. This is a good thing in my opinion for two reasons; first, more people with a better understanding of the security underpinnings of technology will hopefully lead to a demanding of more robust software being built in the future, whether it is based in the cryptocurrency space or not. Second, aspiring developers who are taking what they learn and applying it are also building those security standards into their applications. I know that many people could argue back that this idea is more hopeful than anything, especially with so many hacks taking place among large companies and governments, but only time will tell. We are still in the early stages of attempts by many companies and teams to bring this technology to the mainstream and it is exciting to see many of the results.

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At the moment there is a huge debate raging in the Bitcoin community on whether or not there should be a hard fork into two different currencies along the same lines as what happened to Ethereum in 2016. As can be imagined, the debate is intense with many folks taking extreme sides. My goal for this essay is not to weigh in on that battle as my technical understanding of Bitcoin is limited in this debate compared to many of the developers and other folks who are staking their businesses and focus on it. But there is another idea that is constantly springing up in many of these debates and that is this idea of decentralization and more importantly, building decentralized applications. So why is the concept of building decentralized applications gaining prominence?

First, there are three types of ways that applications can be built: centralized, decentralized, and distributed. The majority of general applications being built are centralized, that is, there is a unique core node that must be used in order to access what the app is offering (be it data, an API, or your account) and the core node instructs all of the connected nodes as to what to do. If we take a step back and analyze this idea we can see that all information being produced will flow through a single center (or node). Every person who uses these services is dependent directly on this central authority maintaining the power to send and receive information. Google, LinkedIn, Facebook, and Amazon are all built on centralized stacks and this design works powerfully for them both technologically and business wise. 

Then there are distributed and decentralized applications. A distributed system means that computation is spread across a network of multiple nodes which helps speed up computing and latency of data access. A company like Google builds distributed software to help speed up their services. A decentralized application means that there is no central node that instructs the other nodes on what to do. Bitcoin is the ultimate decentralized application because if one node fails, it will not have an effect on any of the other nodes and the network will continue to operate. For the purposes of this essay, I am going to skip going through anymore detail on distributed systems. 

So why should we care about decentralized systems/applications especially since centralized systems already work so well for these companies already? For one, there is a rather large possibility that these applications will be used for their superior incentive structure, resiliency, transparency, and distributed nature. Using a blockchain (peer-to-peer distributed ledger) to a form a trustless system, value can be created using cryptographic tokens, which can then be used to access the application. As I stated in the previous paragraph, the premier decentralized app at the moment is Bitcoin (and this could very well change down the road) which simplifies the traditional financial system. In order to access the network, one must own some bitcoin, which can then be used to store value, or easily transfer it from one wallet address to another. For example, cross-border payments are made easily since the value isn't being transferred through several financial middleman.

Another way that decentralized applications are being built is as protocols that use another blockchain, such as Ethereum, and issue their own tokens to function. One interesting example is the Golem Project; it lets users access another users computer using their tokens as the exchange of value. For example, if I set up some spare computers and put them on the Golem network, anyone with Golem tokens can use my computers in exchange for those tokens. We suddenly have a way to put our spare CPU's to work. This has been an idea I have thought about considerably using bitcoin as the exchange of value instead. Either way would work well and put spare computers to work.

But let's not get ahead of ourselves quite yet. Centralized services still absolutely dominate the vast amount of users and will continue to do so over the coming years. It may not even be until innovation begins to slow down or companies begin having other problems that will eat up their time (this could be anything from internal problems to governments/states coming down hard on them). If this does happen, then decentralized systems built on blockchains could start becoming more well known as easier and stable computing platforms. In fact, I am thoroughly convinced that these systems will be incredibly important for businesses, customers, and citizens. But it will be a long road before we get there successfully and my goal is help pave it along the way.

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The Basics

HTTP

Earlier this week I had the opportunity to be invited to a private event here in Seattle regarding Blockchain technology. The even itself took place on he 48th floor in the old Washington Mutual Tower. The fog disrupted what might have been a beautiful view. The event itself went by rather quickly but it did a great job of explaining how the Blockchain technology can be leveraged in more ways than just creating the killer app "Bitcoin". Some interesting points that were brought up were:

• Using the Blockchain as a ledger to keep track of IP, land titles, and other assets
• Goldman Sachs has filed a patent for crypto-security settlement on a blockchain.
• Microsoft has declared that the Blockchain is one of the "key must win workloads" for their Azure cloud platform and business. They are also collaborating with major U.S. banks using the technology. 
• Some governments are already beginning to invest in their own local, or private, blockchains.

What was most surprising to me was the actual plans and partners Microsoft has for their Blockchain-as-a-service (BaaS) tech they have on their Azure cloud platform. Some of those partners include:

• Bitpay
• Multichain
• OpenChain
• Coinprism
• Augur
• Slock.it
• Ripple

Putting tech like this in the hands of developers easily will be a huge factor in spreading it far and wide. The event was exciting to me as I was able to speak to a number of people about an area in tech that I have been involved with for a few years now and it also showed how many people are interested in learning more. I hope to be a part of those bringing this technology to the masses over the upcoming years. 

"It's no use going back to yesterday, because I was a different person then."

- Lewis CarrolI

As is standard practice in the New Year, many people enjoy writing about what they think will happen in the coming year ahead. It’s not something I’ve ever done before and so instead of just quickly throwing together a quick list and publishing it, I thought it would be better to look at a few important developments taking place in the world and see where they may be heading. So here are my thoughts on the four spaces that could have an impact on the global economy.

• Emerging markets are going to go through quite a bit of pain due to the price of many commodities falling to earth. China seems to be going through a bit of turmoil within its economy which can have a negative ripple effect across the global economy as a whole. The country is beginning to really experience a huge amount of pain brought on from the large debt that has been built up in some of its industries. For example, since the price of steel and iron ore have fallen so much since early 2015, the construction boom has slowed down and claimed many jobs in Europe. In response, fiscal and monetary stimulus will be used as best it can in order to help bring back demand. Doing this could hinder the exchange rate for yuan which is already feeling a large amount of pressure from the outflow of capital. If the yuan is benchmarked against a basket of currencies, its value could decline which could lead to a serious erosion of value in market valuations in much of Asia. What should be watched for is just how much China’s economy and market movements effect the rest of the worlds markets. As China grows bigger, the countries presence will begin to be felt in countries that it has invested in or have invested in it, for better or for worse.
  
  
• Bitcoins presence will also begin to be felt in both currency markets and some products and services in the financial industry. It is the easiest way to store and send monetary value using the internet and the bigger it gets, the more people will learn about it. Many venture capitalists and industry players still talk about finding that killer app that will bring it further into the mainstream, but it still may be slow going on that front. Many banks and financial institutions including Visa and Goldman Sachs are starting to use the underlying technology, called the Blockchain, with the help of many fintech startups that have built a product or service that these companies will find useful. The use of technology by these companies will help push it towards a larger consumer base to use. There should also be more massive market movements expected for two reasons: 1) the community is still divided over the block size and (with a major core developer leaving rather loudly) and 2) its presence has been felt in China with the price popping when there are problems with the market and traders reacting by quickly moving resources in Bitcoin. Big things could make some headway this year provided there are some creative uses of the technology and the community does not remain split.
  
  
• Security and privacy will remain on everybody’s radar as important subjects to understand what is going in. Security, already a huge geopolitical issue, will become a subject that effects more and more people as technology rapidly advances. We walk around with devices that can be tracked at all seconds of the day so it should be fully expected that more security related services and products will make their way to the market. Nobody wants their phone hacked into since it carries such a great amount of details about our lives and there will be many companies that answer that concern. But the other side of that coin is the subject of privacy; a slippery slope due to so many differing opinions of how to define privacy. Right now, most people don’t understand cryptography or the mathematics behind what makes it work; nor do they know to what extent companies and states can track their every move and search query and place all that information into a large context about our lives. On the business side, in the case of retail and advertising, I side with giving the consumer the choice of whether to do or don’t want to be tracked and sold to. If they do, to what level of privacy are they willing to forgo their privacy? And in the case that consumers aren’t given that choice, tools should be made available for anyone to use to give them the privacy they expect. And in the case of security, companies and states should work together to come to a middle ground that gives both what they need. This being the year of a presidential election, it should be expected to hear this subject brought up quite a bit.
  
  
• Lastly, Artificial Intelligence (or machine intelligence) will become a bigger part of our lives; probably even in ways that we aren’t fully expecting to happen. But where it will remain most important to us will be in our working lives. As more and more rote work is able to be automated easily by computers, we will find them working by our side and helping us achieve things we didn’t thing possible to an even greater degree than they already are. The use of machine learning will help with completing sets of tasks and jobs more efficiently. Large tech companies like Google, Facebook, Baidu, Alibaba, Amazon, and Microsoft will help pave the way to a greater use of AI by making their products more intelligent and useful. These same companies will also go a step further (some already have) by open sourcing their code so that more researchers, smaller companies, and independent developers will have access to the same tool sets, thereby producing new products and creating a healthy ecosystem. It can even be thought that these same smaller companies or products will be purchased by the larger players and seamlessly integrated since the underlying technology will be the same. It’s exciting to think about what kinds of new products can be made.

These four developments will have a large impact on the global economy and marketplace whether positive (AI related products, Bitcoin, Privacy) or negative (Commodity prices crashing, Security) and it’s interesting to think about what lays ahead for us. There are a few developments I left out that will definitely have a large impact on the world and those include the price of oil ($28), augmented and virtual reality, and a U.S. Presidential race. Should be an interesting year that lays ahead.