Friday, January 23, 2015

BILL GATES ON BITCOIN: BITCOIN ALONE IS NOT GOOD ENOUGH















bill gates bitcoinBill Gates has done a great deal of work throughout the developing world in the field of vaccinations, disease eradication, and funding clean water projects. He has a long history of many years of investment and research into poverty in the Third World, and how things can be improved. Now, he has published his 3rd-annual Gates Annual Letter, which is a sort of State-of-the-Third-World address on these endeavors. It seems coincidental that it is released at the same time as the President of the United States’ State of the Union Address.

What the Third World Needs According to Bill Gates

Inside, he posits three issues that are most dire in the plight of impoverished countries worldwide. One, the idea of getting Africa to feed itself, which would help eradicate famine that has killed millions of people annually. Two, the need to drop infant mortality rates and other diseases through better vaccination and medicine. And the third is the ability of these cultures to integrate new growth technologies like mobile or digital banking, in order to build a sustained economy and a middle class of their own.
In the promotion for his Annual Letter, Bill and Melinda Gates spoke to Backchannel about his views and what he sees going forward as far as helpful innovations. He was asked specifically about Bitcoin, and this is what he had to say:
Are you excited about the potential of Bitcoin in systems like these as a way to keep fees low and have the system work robustly in the global sense?
“There’s a lot that Bitcoin or variants can do to make moving money between countries easier and getting fees down pretty dramatically. But Bitcoin won’t be the dominant system. When you talk about a domestic economy, [you must have] the idea of attributed transactions, where if you sent it to the wrong person you could actually get the transaction reversed. [And a traditional system] doesn’t have this huge fluctuation where the value of your account is going up and down by a factor of two. We need things that draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.”
An interesting take on Bitcoin, as this does highlight what many would consider a flaw in the protocol. Or is it a million-BTC opportunity? Could a person, inventor, engineer, company innovate a way to reverse a Bitcoin transaction gone bad, and make the irreversible BTC transfer reversible? Bitcoin is an incredible system, but it is not perfect, and such issues may indeed be holding it back from it’s true potential as a global currency. It’s better than the primitive and highly corruptible fiat currency system, but one of us can improve it? Where some see flaws, others see opportunity for growth. Or maybe the “core developers” can adjust the technology for this capability down the road.
This is not the first time Gates has spoken about Bitcoin in detail. We reported last year on the interview done by Eric Schatzker of Bloomberg News
The need to move money from place to place – the cost to do so: the overhead, as you put it – makes me think, believe it or not, of Bitcoin. Because, some people have said: “Hey, you know? Bitcoin is the answer to those problems!”
“Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and of course for large transactions currency can get pretty inconvenient. The customers we’re talking about aren’t trying to be anonymous. You know they’re willing to be known, so the Bitcoin technology is key, and you could add to it. Or you could build a similar technology where there’s enough attribution that people feel comfortable this is nothing to do with terrorism or any money laundering.”
Image from Shutterstock.
Is the irreversibility of BTC transactions holding Bitcoin back?  Should this be fixed, and by whom? Share above and comment below.
Updated: January 23, 2015 at 5:47 pm CET.
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Shape the Future: Q&A: Gavin Andresen, chief scientist, Bitcoin Foundation




Shape the Future: Q&A: Gavin Andresen, chief scientist, Bitcoin Foundation

 





What will make digital currency viable in the mainstream? Fortune ponders the possibilities with the Bitcoin Foundation’s chief scientist.

2014 wasn’t a banner year for Bitcoin speculators—its price was down nearly 60%—but it has left the community of developers who support the digital currency more optimistic than ever. New applications, exchanges, products, and uses for the Bitcoin technology are emerging every week.
Unlike large companies such as Apple  AAPL -0.20%  or Tesla  TSLA 0.01% , Bitcoin developers operate as an open community—no organizational structure necessary. If there is a single leader guiding the vision, it’s Satoshi Nakamoto, the pseudonymous inventor of the Bitcoin protocolwho remains mysterious and mostly silent since a 2011 e-mail that said he’s “moved on” and left Bitcoin “in good hands with Gavin and everyone.”
“Gavin” is Gavin Andresen, the chief scientist of the Bitcoin Foundation. Modeled on the Linux Foundation, Andresen’s organization fosters the success of the Bitcoin technology and supports its community of developers. Fortunecaught up with Andresen to ask him about how Bitcoin went from idea to reality and where it’s heading from here.
How did cryptocurrencies emerge, and where do big ideas like Bitcoin come from?
In the ’90s, there was a group of people called the cypherpunks who were pushing to get encryption technology declassified. It used to be you couldn’t create encryption products and ship them overseas because they were classified as a munition and the U.S. government didn’t want you shipping munitions overseas. The notion of software being a munition seemed ridiculous to these people, so they began to change the way that technology was seen and used. It’s thanks to them that we have good encryption that lets things like e-commerce work on the Web.
There was also a lot of talk back then about digital cash and whether there was a way to pay for things that doesn’t require you to trust a government or central authority. They never quite figured that part out. So all the ideas were there, but until Satoshi Nakamoto had this brilliant idea of how to solve the trust problem,it never really took off.
Companies were created and failed, basically because they were single points of failure. In the case of U.S. dollars, we really trust the U.S. government not to screw up our money. But the U.S. government is the single point of failure. I keep a Zimbabwe 100 trillion dollar note in my wallet just to drive home the point to people that this is what can happen if you put your trust in a single entity and it screws up your money.
How much of the early interest in Bitcoin was driven by a desire for a decentralized currency versus people who were just curious about how the technology worked?
It depends on the person. I think there were some people who were interested in digital cash as an interesting problem to tackle. There were academics and researchers. And there were computer hackers who did things just because they could be done—the same reason why people climb Mount Everest: because it’s there. It’s an interesting challenge. There were certainly a lot of people inside the cypherpunks who were interested in privacy—who were trying to keep financial transactions private.
I think that still drives a lot of the Bitcoin world. There are a lot of people not happy with the idea of their entire financial lives being subject to either governments, or even worse, some random hacker suddenly knowing every purchase that you ever made. Sooner or later, one of the credit card companies is probably going to suffer a major breach, and we will probably see everyone’s transactions for some period of time showing up on the Web somewhere. I think that motivates a lot of people to try find a solution where you’re not giving up your privacy to some central organization that you’re forced to trust.
What was it about cryptography that solved a lot of these problems?
The piece of cryptography that Bitcoin uses is something called public key encryption. It’s a piece of technology that makes the secure Internet work well. The idea is that you can keep a secret and then prove that you have a secret piece of information without revealing that piece of secret information, which is really a neat mathematical trick. It turns out that you can use this trick to very securely transfer digital tokens from person to person.
So I can create a digital signature that says I am sending some Bitcoins to another person and transmit that transaction on the Bitcoin network, and everyone can it. You can think of it as a kind of a wax seal that they used to use for sealing envelopes. If you saw that the wax on the envelope had the king’s impression, you could be sure it came from the king because he was the only person who had that stamp.
These transactions on the Bitcoin network work the same way. You sign the transaction using what is called the private key. And through this crypto-math magic anybody can verify that only the person who owns that private key could have authorized that transaction. That’s what keeps the whole Bitcoin transaction network secure. It’s this weird combination of mathematics and also the consent of the governed.
If Bitcoin is designed to work without a central government, what does governance mean in the Bitcoin ecosystem?
When the rubber meets the road, it means: What is the code that is actually running? What is the software that people download and run? Because that’s really what determines what Bitcoin is. So the governance process is convincing the people who write the code—which used to be a small, core group of developers—that this is the way that we all should do things. Then everybody writes their code so that it all talks to each other. And this is essentially the same way the technical parts of the Internet get implemented.
Is there an analogy between what’s happening in Bitcoin today and the early years of the Internet, when the browser made it more user-friendly and people jumped in?
Definitely. I just ordered a hardware wallet for myself from a company called Ledger. It’s a USB device I can plug into my computer and it will store my Bitcoins. One of the big risks of having Bitcoins is having a computer hacked and the Bitcoins stolen. Ledger is an example of an innovation that’s happening that could make it much easier and safer to use Bitcoins. There are other companies working on different form factors and different security models.
All of this is happening as we speak, and it’s exciting. It is like the early Internet where even using e-mail was hard. You worked for university that had an IT department that set up an e-mail account or in time you had a service like AOL. Now we have Gmail and it’s really easy for everyone to use e-mail. Bitcoin is definitely at the beginning of that evolution.
Finance is intensely regulated, and often regulated differently in different countries. How are regulators thinking about Bitcoin?
In the last year, the regulation picture has gotten a lot clearer in the U.S. and most of Europe. And that’s fantastic. I think that’s why you’re seeing companies like Microsoft and Dell accepting Bitcoins. If people pay you in Bitcoins for products and services, it’s clearer now what taxes you owe, how you treat Bitcoins, and so on. In other parts of the world it’s still fuzzy. If I was living in a country where the regulators hadn’t said one way or another how these newfangled cryptocurrencies should be treated, I’d be more worried.
What are some of the bigger challenges that need to be tackled before Bitcoin can begin to reach its potential?
There’s a non-technical chicken-and-egg problem that I’m worried about right now. How do people get Bitcoins in the first place? How do people earn Bitcoins so that they have them to spend? If you have to jump through some hoops—if you have to go to some exchange or buy Bitcoins with a credit card—that makes it a lot less attractive. You really want some natural way for people to get Bitcoins, as part of their paycheck or some other activity so they can turn around and spend them. It’s much better if the Bitcoin economy is a self-contained thing.
For more stories from our Shape the Future package, click here.





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Thursday, January 22, 2015

Seven Central Banks Take Anti-Deflationary Actions in Past Week

Seven Central Banks Take Anti-Deflationary Actions in Past Week

By Pam Martens and Russ Martens: January 22, 2015
Mario Draghi Speaking at the Press Conference on QE, January 22, 2015
Mario Draghi Speaking at the Press Conference on QE, January 22, 2015
The big story this week has not been news coming out of the widely covered World Economic Forum in Davos or the much anticipated bond-buying program in Europe known as QE. The big story is the sheer number of central banks moving into panic mode in the span of a week.
We may be forced to change the name of our web site to “Central Banks On Parade.” Since last Thursday, seven separate central banks have taken action to guard against deflationary forces now moving like an out of control wildfire around the globe. Central bank moves in Switzerland, Canada, Denmark and Peru came as a surprise to markets and may have had a secondary agenda of drawing some blood from speculators.
The most heavily anticipated announcement came today from Mario Draghi, President of the European Central Bank. At 2:30 p.m. Central European Time today, Draghi announced that the central bank will expand its current program of purchasing asset-backed securities and covered bonds by including the purchase of sovereign debt from its Eurozone members. The program will run from this March until September of 2016 with 60 billion euros in bonds being purchased each month. 
Yesterday, Canada’s central bank, the Bank of Canada, shocked markets by announcing it is lowering its target overnight rate by one-quarter of one percentage point to 3/4 percent. The central bank said the move comes in response to “the recent sharp drop in oil prices.” In a statement released at the time of the announcement, the bank stated:
“Business investment in the energy-producing sector will decline. Canada’s weaker terms of trade will have an adverse impact on incomes and wealth, reducing domestic demand growth. Although there is considerable uncertainty around the outlook, the Bank is projecting real GDP growth will slow to about 1 1/2 per cent and the output gap to widen in the first half of 2015…The Bank expects Canada’s economy to gradually strengthen in the second half of this year, with real GDP growth averaging 2.1 per cent in 2015 and 2.4 per cent in 2016.”
The Danish National Bank cut its deposit rate deeper into negative territory on Monday as speculators pour into the currency (Krone) in the belief that Denmark will have to abandon its peg to the Euro, following the same move by Switzerland last Thursday. Central banks can spend billions of dollars attempting to maintain such pegs. If the costs become too exorbitant as speculators pile in, the peg is at risk of abandonment. Monday’s action cut the deposit rate by 15 basis points to minus 0.2.
The Bank of Japan also announced this week that it will extend by a year two loan programs geared toward encouraging banks to broaden lending. One of the programs was increased by 3 trillion yen for a total of 10 trillion yen while eligibility was widened. The BOJ also announced that it will maintain its program of increasing its monetary base at an annual pace of $674 billion. The moves coincided with an announcement that the BOJ is cutting its core inflation forecast from 1.7 percent to 1 percent.
Centrals banks in Turkey and Peru also cut rates in the past seven days. On Tuesday of this week, Turkey’s Monetary Policy Committee cut its benchmark one-week repo rate to 7.75 percent from 8.25 while last week the Central Reserve Bank of Peru cut its reference rate by 25 basis points to 3.25 percent from 3.50, citing weak economic growth and the impact of lower oil prices.
The central bank move that has cost speculators most dearly was last Thursday’s decision by Switzerland’s central bank, the Swiss National Bank, to remove the 1.2 cap on the Swiss Franc’s peg to the Euro and allow the currency to float freely. The action came with no hint of warning and stunned currency markets. Global banks have admitted to losses of at least $400 million with billions more in losses coming at hedge funds and foreign currency brokers.



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Inequality and climate change: 2015’s challenges





A view of the Turano slum in Rio de Janeiro
Climate Change
Economic Growth and Social Inclusion
Environment and Resource Security

Inequality and climate change: 2015’s challenges

By Winnie Byanyima


This year, global leadership will be tested like never before.
Significant progress has been made in the past decade. Global poverty rates are falling. Child and maternal mortality rates are down, many more children are in school, and the total number of people going hungry in the world is falling – albeit far too slowly.
Yet extreme economic inequality is out of control and getting worse. From Ghana to Germany, South Africa to Spain, the gap between rich and poor is rapidly increasing. At the World Economic Forum last year, Oxfam released a statistic that made headlines: 85 rich individuals held more wealth than the poorest half of the world’s population – 3.5 billion people. Now, a year later, that figure has become more extreme – 80 billionaires have the same amount of wealth as the bottom half of the planet.
Across rich and poor countries alike, this inequality is fuelling conflict, corroding democracies and damaging growth itself. Not long ago those who worried about inequality were accused of partaking in the politics of envy. In the past year this concern officially became mainstream as voices from the Pope to Christine Lagardeto President Obama cautioned of its impacts. The mounting consensus: left unchecked, economic inequality will set back the fight against poverty and threaten global stability.
At the same time, the impacts of climate change are exacerbating this growing divide. As temperatures rise, extreme weather events are becoming more frequent and severe, crops and livelihoods are being devastated, and the efforts of people on low incomes to feed their families are being undone. Those who are least to blame are suffering the most.
Rising inequality and climate change: these are the defining challenges for 2015. This is the year when we will have to set a course for action for a sustainable and just world.
Winnie Byanyima 2
An action plan
What action can we take? These profound global challenges require bold responses.
In October last year, Oxfam launched a global campaign to tackle inequality, Even It Up, in which we pledged to campaign for years to come on a seven-point plan to close the gap between the rich and poor, focusing on measures ranging from public financing for free health and education, to decent work and wages and political participation for all.
This year, our collective energy must focus first on international tax reform. To make headway on tackling inequality, a more ambitious, far-reaching and inclusive process is needed to fix the broken international tax system, to prevent corporations from dodging the taxes they owe and to give governments the resources they need to tackle poverty and inequality. Yesterday’s international tax system is not fit for purpose – let alone fair – today. The year 2015 must be when world leaders rewrite fragmented global tax rules that reward those who avoid their civic obligation, and leave the poorest to foot the bill.
For this reason, Oxfam is calling for a world tax summit in 2015, which would allow a discussion between all countries, rich and poor, to set the basis for a permanent body to set, implement and arbitrate fairer international tax rules.
On climate change, 2015 could be a pivotal year if our leaders rise to the challenge. Last year we saw the latest scientific assessments confirm more clearly than ever the scale of the danger we face from a warming world. And we saw the response of citizens: in September in New York, l joined a hundreds of thousands on a march to demand real action on climate. We were joined by many thousands more in other cities worldwide.
This year, governments have a chance to secure an agreement at the UN that could be a turning point in the fight to cut and ultimately end greenhouse gas emissions, and secure the support vulnerable communities need to adapt to climate change.
In recent months private companies have made some encouraging climate pledges and commitments to clean energy. But ultimately, governments must lead and act on the issues that most affect citizens and our planet. Only with political leadership can we get the global action that a growing number of people around the world are demanding.
In Davos, I look forward to a robust and frank discussion about these issues, which challenge vulnerable communities and powerful businesses alike.
Author: Winnie Byanyima is Executive Director of Oxfam International and a Co-Chair at this year’s Annual Meeting of the World Economic Forum in Davos.
Winnie Byanyima is attending our Annual Meeting 2015 in Davos, and is a panel member in the sessions, The BBC World Debate: A Richer World, but for Whom? on 23/1 at 9am CET and The Global Agenda 2015 on 24/1 at 4.45pm CET.  
Image: A view of the Turano slum in Rio de Janeiro March 11, 2014. REUTERS/Sergio Moraes
Posted by Winnie Byanyima - 
All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.

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