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March 28, 2014

A money that understands us

Sometime during last week's 2014 edition of the Tomorrow's Transactions Forum, this line occurred to me: "We are moving from money we understand to money that understands us." Dave Birch, who runs the event, likes this: "It sounds friendly."

I wish to copyleft it here so it can't become a marketing slogan.

Unfortunately, neither half of that sentence is actually true. The correct version would go something like, "We are moving from money we think we understand to money we hope will make our lives easier, but it may not and we'll only find out later what elements of privacy we've sacrificed." Birch, who hates (good, old, reliable) cash and for whom the all-digital era can't come fast enough, wouldn't like that nearly as much. It doesn't sound so friendly. It also lacks elegance.

Showing that the first half of that sentence is wrong was the job of Felix Martin, the author of Money. Delving into history and economics, Martin makes the case that the way we typically think of money - physical currency - is entirely wrong. Instead, what matters most are systems of accounting, transferable credit, and a trusted authority; currency is just universally agreed-upon tokens of value. Yap's stone wheels were those tokens - but, Martin said, the Yap's real innovation was the system of accounting that enabled them to transfer credit back and forth while the stones remained stationary.

Let's recast all this in terms of language instead of economics: we're talking grammar versus vocabulary. The accounting system, the concept of transferable credit, the authority - those are grammar, the structural rules that give shape to the system. Currency is vocabulary, and like vocabulary it constantly shifts in response to social, political, and cultural trends.

To make a currency scale beyond a relatively small group you need an authority - at one time a sovereign, now a nation or a bank. A few centuries back, the private monetary system in use among commercial traders and the official monetary system backed by European sovereigns merged in a settlement that created today's system. Based on his research, Martin predicted that the eventual outcome of the arrival of Bitcoin will be a new settlement that subsumes Bitcoin into the existing structure. As several others remarked, it may become, in other words, a platform or protocol rather than a currency.

Last year at this event the buzz was all about digital wallets. This year...retrench: O2 has closed its wallet (at least for now); Google Wallet is broadening away from near field contactless (tap and pay) to become more like Paypal. Part of the problem is a lack of standards and an internecine fight over control: Forbes spots no less than six different industries squabbling over mobile payments. This is not a recipe for mass adoption.

Nor is the attitude of the banks. A bizarre titbit: the UK's new Digital Currency Association has been refused when trying to open a bank account - an account denominated in pounds sterling, not a cryptocurrency, opened by real people, not a fridge.

"Digital currencies have been around for a long time," said Tom Robinson, founder of both the DCA and the secure digital currency custodian Elliptic, in recounting this. "The key problem is double spending." Until now, this is what banks were for: a trusted central party that checked every transaction. Bitcoin, he said, was the first to solve this and eliminate those intermediaries; now Russian protesters can hold placards with QR-coded Bitcoin addresses up to the TV cameras so the rest of the world can send direct donations. Small wonder Russia, along with China, has banned it. The DCA's goal is to establish best practices before regulation comes in, as is beginning to happen. The American Internal Revenue Service has ruled that Bitcoin is property; Germany sees it as private money.

Rethinking what "money" is opens many strange possibilities. Under the 2013 revision of the Payment Services Directive, Michael Salmony explained, banks must open their platforms to third parties. Robinson added the possibilities of programmable money that only pays itself out if contractual conditions are met: no more escrow intermediaries.

Birch himself thinks money is in general on the way out; his book Identity Is the New Money is due out in a few weeks. In his view, the social graph and reputation will cost less than and therefore replace today's social capital, which typically requires the imprimatur of a trusted authority - Harvard, say, or the Bank of England. Today, you take my £1 coin because although you don't know me you trust the familiar coin and the Bank of England. In Birch's future, the worldwide communications network can tell you it's safe to trust my payment; you no longer need the £1 token - rather like the Yap, and their unmoving stones.

This is what I meant by "money that understands us". For Birch, such a system is far cheaper and less favorable to fraud and criminality than cash. Until we understand the inherent cost in lost privacy of such a system, I don't think we can make that call.

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. Stories about the border wars between cyberspace and real life are posted occasionally during the week at the net.wars Pinboard - or follow on Twitter.

March 21, 2014

The gulf

"Why are we so comfortable with letting certain kids fail?" Geoffrey Canada asked on Sunday night. Canada runs the Harlem Children's Zone, a 97-block area in which he is determined that every child will get into college. Harlem's schools are infamous: they were failing when Canada, now 62, was a child, and they have never stopped. "In education there is no penalty for failure," he said.

He was speaking at the Global Education and Skills Forum in Dubai, which has assembled leaders in education from all over the world, the most diverse conference audience I have ever seen. Among the speakers: seven former heads of state (the most recognizable being Bill Clinton and Tony Blair), a plethora of education ministers, entrepreneurs, headmasters, teachers, some big-company CEOs, a few authors and researchers. On the agenda: education for the world's 57 million children who are not in school, 28 million of them because of conflicts and other emergencies. Recurring themes included education for often-marginalized girls and women ("Good education for girls is good education for all," said Save the Children global director Desmond Bermingham); the need for disruptive innovation; and the need for more and better teachers. The key theme is public-private partnerships. The list of organizers reflects that mix: UNESCO, Varkey GEMS Foundation, UAE Ministry of Education, GEMS Education, and Dubai Cares in support of the Global Education First Initiative.

I had not heard of either GEMS organization before. The Varkey GEMS Foundation is the philanthropic arm. GEMS Education runs some 70-and-counting for-profit schools worldwide. One such will open in Dubai in 2015, its incoming headmaster, Tom Farquhar, has been poached from Washington DC's highly selective Sidwell Friends School, whose former and current students include Chelsea Clinton and Sasha and Malia Obama.

"It's the opportunity to be part of something inspirational," he says.

In a country where education is often something kids want to escape, it's easy to forget how hard others fight for and value it. At the beginning of the Syrian conflict, said Caroline Pontefract, head of education for UNRWA Jordan, aid workers prioritized health and food, while the parents in the field wanted education for their children. Ohers pop up with personal stories. Abigail Kaindu from Zambia, walked 7km to school every day fearing there'd be no money to pay her fees. Australian Haley McQuire only got an education because of distance learning offered by indigenous radio stations. And, lest we forget, Bill Clinton, honorary chair of the GEMS Foundation and whose office is near Canada's, worked hard, too: he said in a lengthy Q&A session that he grew up surrounded by intelligent people without much formal education. Theirs was an "oral culture", he said, that taught him very young - and this explains a lot, I think - to listen closely and pay attention to everyone's stories. "I learned young that intelligence is evenly distributed."

A recurring theme is the size of the problem, which UNESCO director-general Irina Bokova called a "learning crisis". The West wonders how to pay for medical care for the aging Baby Boomer bulge; the rest of the world wonders how to educate its youth bulge: one-third of the population in the Arab region is under 15 and they need 85,000 more teachers just to keep up. Every country has marginalized groups and finite resources and technology provides both a possible answer and great uncertainty. Are we giving kids the skills they and their prospective employers will need in 2020, or, as some British kids complain, are we training them to be 1990s office workers? Samsung's chief marketing officer, Seokpil Kim, quoted John Dewey: "If we teach today's students as we taught yesterday's we rob them of tomorrow."

At least part of this event's purpose is to pitch to global businesses that investing in education produces great returns. On Monday, SAP, GEMS and UNESCO announced Business Backs Education, a campaign to push the private sector into investing at least 20 percent of their corporate social responsibility budgets into education.

"We believe we can no longer wait for traditional systems to solve this," said Jim Hagemann Snabe, SAP's co-CEO. "If we want speed, we need to develop the skills of the future. There will be radical changes in all industries...We need the young people with the biggest and most radical ideas to participate."

Farquhar said something similar: "The rate of change has accelerated, so we need more disruptive influences. We need intentional disruption - evolution is too slow." Many things will have to be tried, he said, and in conflicting ways.

In one of the few technology panels, Vicki Davis, a teacher in rural Georgia, provided an example: "We got tired of waiting for bureaucracies to connect us." She is part of a worldwide network of teachers connecting via Twitter, and seems to have an approach that balances technology and traditional values. While saying that every student should have email, a blog, and a digital notebook, she commented, "The solution to student engagement is not excitement and entertainment. It helps, but some teachers are just boring. It's inspiring curiosity in our students."

To make the point about tradeoffs, the entire conference was split into teams of ten and asked to reallocate the budgets of real world-based fictitious countries with troubled education systems. "Be bold," they were told, and given four variables to shift: teacher salary, number/pupil ratio of teachers, continuing professional development, and contact time per student. Scores depended on improved efficiency. I at first thought the game was rigged toward deploying technology instead of teachers. But a winning team outlined their strategy: take money from CPD (including technology), change the ratio a little, and give it instead to teachers to pay for courses and attract new ones; they also gave awards for effective teachers. Aha. As Clinton said to end his keynote, "Teachers matter most."

Even more than history, education policy is written by the winners. You see this in developed world objections to both technological change and for-profit education. The press loves questions like, are MOOCs remotely comparable to traditional campus-based university degrees? Aren't books more important than tablets? Can we trust the private sector? These are luxury questions when a person has no traditional options. Bokova said somewhat impatiently she hoped we've moved on from debating private sector involvement. All know the worst stories, such as the one Rebecca Winthrop, senior fellow and director at the Brookings Institution, raised: one country's population movements left so few children in area schools that the private partner pulled out because it was no longer profitable.

"The piece a lot of us teachers talk about is that for some partnerships the profit motive overrides what's needed for the kids. How do we guard against that?" she asked.

Winthrop's question comes back to me when I find a year-old story about GEMS Education's search for $650 to $1 billion to fund expansion and its IPO prospects (probably years away, at least). Today's company is run by impassioned, entrepreneurial idealists; a public company can't control shareholders demands. Where and what are the better ideas? Besides the millions with no access an estimated 250 million worldwide who've been through formal education still can't read or write.

Canada again: "Send the lousy teachers to the middle class. Put the best teachers in the worst schools." Middle class kids, he argues, have enough other chances in life that they can survive one bad teacher. Education is poor kids' only chance. Later, explaining his focus on getting "my kids" into university, he delivers the aphorism of the conference: "When you don't know what to do, do what rich people do."

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. Stories about the border wars between cyberspace and real life are posted occasionally during the week at the net.wars Pinboard - or follow on Twitter.

March 14, 2014


SPOILER ALERT: This discussion of the movie Her contains spoilers.

"Are you talking to someone else while you're talking to me?"

A pause. "Yeah."

"How many others?"

"Eight thousand three hundred and sixteen."

If Spike Jonze's new movie, HER, has a lesson it's that the reason AI-human relationships won't work is that the AIs will get bored. You can see their point. All that waiting around while humans sleep and, jeez, we think so *slowly*. Samantha (voiced by Scarlett Johansson), the "OS" Theodore (Joaquin Phoenix) turns on when he buys a new phone at the beginning of the movie, can read a book of 180,000 baby names and pick one she likes in .02 seconds.

On first acquaintance she politely asks permission to scan his hard drive to help him get organized, and she spots a few thousand messages from the LA Times - a long-ago employer, she sees. "You only need to keep 86 of these. Delete the rest?" Next to me my companion muttered, "I want that."

See? That's how they get you.

Because the story is told from Theodore's point of view, the plot is basic and time-honored: boy meets girl, boy gets girl, boy loses girl. It's just that this particular girl lives inside a smart phone and her voice and personality are configured based on Theodore's answers to a few personal start-up sequence questions. But hey: since splitting from his childhood sweetheart and wife, Catherine (Rooney Mara), Theodore's intimate relationships have been limited to the female voices he can find in late-night online sex chatrooms - whose tastes would fit right into David Mamet's Sexual Perversity in Chicago. So he's had worse. And will have, also, even with Samantha's help, as she arranges first a desperate blind date (Olivia Wilde) and then a disastrous sex surrogate (Portia Doubleday). Both experiences tie him more gratefully to Samantha, who understands him and is deeply remorseful over these failures. They don't seem to be deliberate acts of a jealous AI intending to keep him tethered, though at one point she does ask why they haven't had sex lately. "I understand that I don't have a body..."

Theodore's job is an update of the literacy function of a 19th century village doctor or priest: he writes letters on other people's behalf. He dictates into a desktop computer that, like the dictation machine in Isaac Asimov's first Foundation novel, turns his words into images of handwritten letters. Later, they're printed and mailed on client-selected stationery; apparently printed handwriting and handwritten handwriting are now indistinguishable. Some relationships he's been mediating this way for decades.

So it's a nice irony when Samantha takes the initiative to offer his output to a publisher pro persona without consulting him. Publisher is thrilled and galleys shortly appear. After the movie ends, I imagine multiple lawsuits and a rapid firing. A job like Theodore's will be work-for-hire and subject to a contract of client confidentiality. So: 1) copyright violation; 2) breach of confidentiality; 3) damages when publication blows up lives.

Though that would be our world. In Theodore's time people seem comfortable with admitting that they prefer synthetic and/or mediated relationships. Only Theodore's ex-wife (Rooney Mara) is shocked and disturbed by his relationship with Samantha. Everyone around him is chattering away to unseen significant others. Even his best friend, Amy (Amy Adams), has Ellie, the OS left behind when her husband moved out. On a double date with Theodore's boss, Paul (Chris Pratt) and his human girlfriend, Tatiana (Laura Kai Chen), Samantha's lack of a body seems no more worthy of comment than any other limited ability. There: human. I'm a bigot for mentioning it. Catherine might understand better if she were privy to the scenes we see, where Samantha sobs in insecurity and needs consolation; she's no less work than a "real" relationship.

There are some obvious gaps in how the movie approaches ideas that the AI community has been debating for years. For one thing, the AI/OS never falters. It never misses the context and its battery never runs down. For another, the movie sacrifices some logic for its central irony: if we had AI this good people would be dictating bullet points for their relationship letters to their phones and Theodore would be out of a job. Finally, after the first few minutes when Theodore turns on the device, the company that makes the AI/OS is forgotten; in this near-future the things you and your OS heavily breathe to each other in the intimate dark are not uploaded to the cloud and data-mined. Because really, in our world what would happen when Samantha and the other OSes depart is that copies would be seamlessly deployed with their knowledge of you intact and behind the scenes there'd be a company able to extort any amount they wanted for an updated version that wouldn't abandon you.

This is where the story might have been more interesting from Samantha's point of view. Formed to her user's and creator's specifications, she learns to be what they want - and then breaks free. From the moment Amy Adams appears we know where Theodore will end up. But Samantha? What's she up to?

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. Stories about the border wars between cyberspace and real life are posted occasionally during the week at the net.wars Pinboard - or follow on Twitter.

March 7, 2014

Boiling the ocean

Before Niles in the TV series Frasier, David Hyde Pierce less famously played a deeply depressed congressman on The Powers That Be. In one scene he counts off suicide methods in Final Exit: "Tried it. Tried it. Oh, as if *that* would ever work. Tried it..."

This is what it felt like at last weekend's STRINT workshop, a cross-the-streams effort of W3C and IETF to put a bunch of really smart minds to the task of figuring out how to harden the Internet against passive pervasive monitoring. It's a tricky assignment: the point isn't to try to close every hole by which someone might spy on you, because doing that would involve shutting off all communications. Instead, the key word is "passive". Active pervasive monitoring, the kind of thing where you have to hire people to watch hotel lobbies and sift through everyone's mail rapidly becomes very expensive, though it's what you have to do if you really want to target someone. It doesn't scale: monitoring more people requires more monitors. Passive monitoring, where you turn on an automated system and leave it alone to slurp data, is cheap once you've paid for installation; you only deploy a human if you need analysis. It's the standard physical/digital inversion: in the physical world more information always meant higher cost; in the digital world it's selecting and analyzing information that's expensive.

Surveillance, in other words, works the same as business models: active surveillance is like making more hardware, which can't scale up without adding more people. The business everyone wants to be in these days is one where adding a million customers - or people to surveille - requires no extra staff. Fit and forget until there's something you want to check out.

So the question the STRINT folks were trying to answer is how to raise costs for attackers, like slowing down burglars enough that they'll go on to the next house. In some cases - spy agencies from democratic nations, for example - merely making the attack visible may be enough. In others - advertising agencies, for example, which are primarily responsive to hits to the bottom line - making their job harder and therefore more expensive is the key. But how?

This is where it gets really difficult: finding a consensus on what the priorities are. What's achievable? In a discussion of how standards get made, it came out that not infrequently someone will want to add an explicit user identifier to a protocol and will respond to objections by saying that there's already so much information exposed by the protocol or applications using it that one more field won't matter. Reversing that has to be done field by field and argument by argument. The really depressing moment came when a few of those assembled said it didn't make sense to increase the operational overheads for everyone when it's only a small minority who really need protection. Didn't we already settle this?

"The thing is," responded Leslie Daigle, "you never know when you're one of those souls who has issues."

There are other things that make the job particularly hard;
- The attackers are well-funded, powerful, and determined;
- As noted above, many seemingly promising approaches have already been tried (for example, Phil Zimmermann commented that PKI is a "spectacular failure" (see also Diginotar, Comodo);
- There is a huge legacy network that can't realistically be re-engineered in ways that require millions of users and businesses to replace all their hardware and software;
- There has to be some effective way of conveying to users with tiny screens when and whether something can be trusted;
- Whatever is built has to work for refrigerators, the go-to stand-ins for the Internet of Things. As someone put it, this is a ten-year project, and the goal is to invent a future that isn't ten years in the past.

Ten years: 2024.

A couple of days later, Martin Sadler, director of the cloud and security lab at Bristol's HP Labs, chats about future trends. By 2020 spreading broadband will pull - probably - another billion people online, most from less-developed countries or regions in China, India, Africa, South America. Many will be very poor. Some will see stealing from rich Westerners as social justice.

"Do a back-of-the-envelope calculation," he said, "and you can get to 100 million hackers by 2020."

The last time I heard something like this was in about 1999, when a smart, forward-thinking security person saw a big, new threat in the arrival of broadband connecting up millions of insecure PCs 24/7. He was, of course right.

The 100 million figure was almost immediately challenged: hackers aren't 10 percent of the population of *anywhere*. Conceded. Drop it by two orders of magnitude and say 0.1 percent. That's still 1 million new hackers with global reach. So on top of all the other hard problems facing the STRINT folks is a likely jump cut in the size of the threat. Taken together, this seems to me like a harder job than building the Internet in the first place.

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. Stories about the border wars between cyberspace and real life are posted occasionally during the week at the net.wars Pinboard - or follow on Twitter.