What Dick’s Missed Since He Left

As no gradient interim editors, we would like to apologize for letting down the no gradient community, as well as Dick Lucas himself (aka Richard, aka Lakkis, aka Buzzy), who left us in charge of his legacy while he was away. It’s inexcusable, and we vow to make Dick proud over the next week before he returns to civilization. 

A lot has happened in the last four months, from the carousel of Brexit to the resurgence of Bitcoin. Since we failed to cover any of those events as they happened, here are a few of the things Dick would have written about, or at least retweeted if he weren’t orienteering his way up the west coast. (More to come on his exact whereabouts for the last four months when he returns.)


Bitcoin was just beginning its resurgence when Dick left. On May 20, one bitcoin traded for just under $8,000 and rose as high as $11,800 before dropping back to $10,300 at the time of this writing. While cryptocurrencies remain extremely volatile, these price swings alone don’t tell the whole story. Demand for the Ethereum network continues to climb as demonstrated by Ethereum “gas” usage reaching all time highs. Gas is the fee charged to execute a smart contract on the Ethereum platform and is usually represented in Ether (ETH), so the increase in gas usage is directly correlated to transaction volume. The fact that gas usage continues to climb is a more positive sign for the long term staying power of cryptocurrencies and blockchain-based applications in general than the speculation that drove crypto prices to record levels in 2018. 


A LOT has changed with the Brexit situation over the last few months; On May 20, Theresa May was still Britain’s Prime Minister and would remain so until her resignation took effect on June 7th. Her replacement, Boris Johnson, has done little to improve Brexit’s outlook. After promising that the UK would leave the European Union by October 31, with or without a deal, despite Parliament already voting against a no-deal Brexit. In an effort to prevent British Members of Parliament from blocking a no-deal Brexit, Johnson moved to suspend Parliament until October 14. On September 11, Scottish courts ruled that the move was unlawful, setting up an appeal in the UK Supreme Court. As of now, it would be almost impossible to speculate on how all of this turns out. Johnson is accused of deliberately misleading the Queen regarding his reasons for suspending Parliament and even compared himself to the Hulk when saying that he would defy Parliament if they tried to block a no-deal Brexit. Meanwhile, the Brexit deadline looms only a month and a half away…

Hong Kong

In June, citizens of Hong Kong began protesting a proposed extradition bill that would allow any country’s government (including mainland China), to request the extradition of wanted criminals regardless of whether or not an extradition treaty is in place. If the bill passed, Hong Kong’s Chief Executive, Carrie Lam, would evaluate each on a case-by-case basis. While the Hong Kong government stated that the bill would prevent wanted criminals from seeking refuge in the city-state, citizens saw it as an erosion of their independence from Beijing, as it would allow the Chinese government to request extradition of political dissidents and critics of the Communist Party. After several months of demonstrations, during which Hong Kong police brutally attacked protesters, the Hong Kong government withdrew the bill on September 4th in an effort to put an end to the violence. However, violence erupted on both sides after Hong Kong police tried to ban public demonstrations, with police firing water cannons and tear gas as protesters hurled Molotov cocktails. In addition to the withdrawal of the extradition bill, protestors are calling for Lam’s resignation, an inquiry into police brutality and the right to democratic elections. 

Yang 2020

Andrew Yang is running for President on a platform that would provide a stipend of $1,000 per month to every American citizen over the age of 18 that is not incarcerated. The stipend is intended to fight the impacts of automation and artificial intelligence, which Yang claims are destroying millions of jobs. While he is a long-shot to win the Democratic nomination, he has gained a cult following and polled well enough to participate in the Democratic debates. Before his rise to national prominence, Yang’s campaign tried to raise funding via cryptocurrency donations, a process which Dick previously documented as wholly insecure.


With Dick coming back in a week, no gradient patrons can expect a return to the regular cadence of tweets, posts, podcasts and predictions that they’ve become accustomed to. Given the performance of the interim editors during his absence, we honestly aren’t sure whether Dick will continue to retain our services or release us for gross negligence and conduct detrimental to the site. Whatever happens, it has been an honor to serve you all.

-no gradient staff

Sawyer and Pat have arrived, Dick shall return

For Immediate Release: Los Angeles, California — no gradient today announced that Sawyer Billings will be joining as Managing Editor and Pat Daly as Assistant to the Managing Editor. A fortunate addition given founder Dick Lucas will be on leave until 2020.

My plan for no gradient is simple: keep it tight and entirely in sight. Pat and I will work to maintain the integrity, straightforwardness and character of this impressive publication. If you are interested in writing for no gradient please contact us here.

Sawyer Billings, Managing Editor

As Assistant Managing Editor, I will ensure that the content published on no gradient provides a balanced view on all issues and stays true to the mission of giving it to the audience straight. Sawyer and I look forward to providing readers with the same objective and insightful content they have become used to from Dick.

Pat Daly, Assistant to the Managing Editor

Coinbase and the Future

Editor’s note: A business plan I wrote for Coinbase in late 2018. Publishing here for posterity.

Coinbase has positioned itself as the most trusted cryptocurrency exchange with its perfect track record of security and its constant rollout of new products and features. More importantly though, it has established itself as the leader in pushing the industry and the technology forward with its educational tools, engagement in the community, and Coinbase Ventures.

Coinbase will succeed if blockchain technology succeeds. Blockchain will succeed through increased adoption and innovative apps. In my opinion, the stated goal of Coinbase to “create an open financial system for the world” is not big enough. Blockchain is more than just finance, and that means Coinbase is too. I see enormous potential in focusing on education, diminishing reliance on fees, and Coinbase Ventures. This will create a flywheel effect that will make blockchain, with Coinbase as a global leader, even more successful.

  • Educate to encourage adoption and empower developers to build the future of blockchain.
    • The blog and Coinbase Learn are amazing resources. But there’s so much more untapped potential. Coinbase has an amazing network, utilize it. For example, create a podcast interviewing members of the internal team and also leaders in the space. With my podcasting experience and passion for the medium, I would love to be the driving force and host behind such a project.
    • Create a mining pool among exchanges that will agree to protect each other against double spend 51% attacks by having hash power at the ready should a chain come under attack.
    • It is still too hard to get up to speed on building blockchain apps, especially with how bad testnets can be. Coinbase should provide open source example dapps and create testnets for various blockchains to give developers an easy way to sandbox and test their ideas.
    • Create dashboards like Ethernodes and Ethstates to show the current state of various blockchains.
    • Expand the Coinbase API to allow extracting info and exploring various blockchains.
    • Create Ethereum Oracles with stock pricing data, weather data, etc.
  • Diminish reliance on fees.
    • Given consumers are more price sensitive, Coinbase must be prepared to lower fees on Coinbase.com as competition increases. Lowering fees to keep users on Coinbase will allow Coinbase to more easily direct them to products built internally and through Coinbase Ventures.
    • The trust that Coinbase has developed with regulators and institutions will allow it to keep institutional fees higher for longer, but cannot be relied on in the future. Financial institutions everywhere are lowering fees, investors are becoming accustomed to it, so they will expect that of crypto financial institutions as well.
    • Coinbase will not be able to sustain itself long term if the main revenue driver is collecting rent on the exchange of fiat to cryptocurrency. Not only because this can be replicated, but mainly because this is not where the true value is.
    • The fees are a stop gap to help grow the business, but it’s not going to be the moat.
  • Coinbase Ventures to build and profit from innovative blockchains, tokens, and apps.
    • Use the network, resources, and domain expertise at Coinbase to create and identify startups, invest in them, and help them succeed.
    • Internet protocols through tokens now have a means for their creators to be compensated for the value they create. Being at the center of valuable protocol creation will allow Coinbase to thrive.
    • This is where the profit should come from because this is where the value for humanity is created. This is the unfair advantage of Coinbase and how it establishes itself as the leader over the next several decades.

Facebook’s Feasible Future is Apple’s Fictitious Present

The things we think and do not say.

CEO of Facebook Mark Zuckerberg just had his Jerry Maguire moment. In his mid 30s and at the height of his career Zuckerberg has released an about face mission statement for the future of his company. That’s where the metaphor ends though. Unlike Tom Cruise’s character Zuckerberg won’t be getting fired given his 53.3% of voting rights in the company. And I don’t think he should. As I read his mission statement, I’m reminded of what a survivor Zuckerberg is and what a hypocrite Apple has become.

Between Zuckerberg’s decisions to acquire Instagram, WhatsApp, and downright stealing the features of Snapchat he has proved ruthless in ensuring the future of his company. His next bet is that the “the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won’t stick around forever.” The focus is shifting from “a digital equivalent of a town square…[to] the digital equivalent of the living room.” No longer will the focus be on sharing with all your “friends” but only certain things with certain groups. Ironically, this was the exact stated goal of “Circles” in the now defunct Google Plus when it launched in 2011:

Not all relationships are created equal. So in life we share one thing with college buddies, another with parents, and almost nothing with our boss. The problem is that today’s online services turn friendship into fast food—wrapping everyone in “friend” paper—and sharing really suffers.

Google Plus Announcement, 2011

I think Zuckerberg is dead on with this shift in focus. As I look at my own social networking and those around me, it includes private email threads and more extensively group chats. It’s the latter that Facebook is now setting their sights on. As a society we tried the share everything with everyone thing and it was all new, fresh, fun, and internety. But all of a sudden everything got so real. People realized that as “we build up large collections of messages and photos over time, they can become a liability.” So now, now we go underground.

A privacy first mission is only possible with end to end encryption coupled with the keys never leaving your device. A point Zuckerberg made clear is going to be the modus operandi for their services going forward. Along with the plan they “won’t store sensitive data in countries with weak records on human rights” which “may mean that [their] services will get blocked in some countries…a tradeoff [they’re] willing to make.” This shines a bright light on the hypocrisy of Apple which “if you have iCloud Backup turned on, your backup includes a copy of the key protecting your Messages” and more egregiously “iCloud services in the mainland of China are now operated by Chinese internet services company Guizhou…this allows us to…comply with Chinese regulations.” Which means the human rights abusing dictatorship that is the government of China has full access to the data of their citizens.

Google received serious flack for the rumored Project Dragonfly which sought to create a censored version of Google Search that complied with Chinese regulations. Facebook receives little credit for bringing secure end to end encrypted messaging to more users than any company in history with WhatsApp. Meanwhile Apple is working directly with the Chinese government and still gets credit for caring more about its users’ privacy much more than any other tech company.

Apple still deserves credit for their device encryption made famous in the San Bernadino case, their hard stance against the FBI to not build a backdoor in iPhone, the security around Apple Pay and most recently the new Apple Card credit card. And Facebook is certainly not without sin with its history of privacy abuses. It remains to be seen whether Facebook will even cary out the plan outlined by Zuckerberg. But the focus of this publication is to shine a light on the issues where there is the biggest disconnect between public perception and reality. This includes covering what the world’s most profitable companies actually do versus what the public gives them credit for.

Right Jab, Left Hook- Two Experts Talk Climate Change

The Fighting Temeraire

Editor’s Note: Presented are opposing arguments addressing climate change from someone affecting policy in D.C. and another working directly in clean tech. As with any topic, whether you agree with their arguments or not, it is valuable to understand the positions of key stakeholders. Akash Chougule was formerly the Directory of Policy at Americans for Prosperity and now works in Washington D.C. as a staff member for the U.S. House of Representatives. James Newhouse is a Senior Business Development Analyst at EVgo, America’s largest electric vehicle charging network.

Akash Chougule: Perhaps the greatest achievement in the history of mankind is the ongoing near-elimination of extreme poverty worldwide over the past thirty years. After centuries of little progress, today’s poor live better than kings lived not long ago. What have been the driving forces behind this miracle? While charity and foreign aid have helped make material poverty less miserable, they do not create wealth. It is the spread of capitalist concepts such as property rights, free trade, the rule of law, and – yes, the use of fossil fuels – that are driving the spread of global prosperity, especially in the world’s poorest regions.

Access to abundant, affordable, reliable energy is a must to improve quality of life for the poor. Thus far, coal has been unparalleled in its ability to help the poor heat and light their homes and cook their food. That is why countries like China and India – working to lift billions from poverty – continue to expand their use of coal.

Undoubtedly, there is some environmental effect of doing so. But just the same, curbing those environmental effects will necessarily mean changing the behavior of India and China, and doing so will mean harming those countries’ poor. Nevertheless, ideologues in the United States continue to insist that America “do something” and “be a leader” on this issue fully aware that absent action in Asia, prescribed solutions will be all economic pain for no environmental gain.

A long-standing proposal to address the issue has been to price carbon, most often in the form of a carbon tax. While from a free-market standpoint this suggestion is logical, advocates cannot seem to agree whether a carbon tax is a means to price economic costs, or merely another method to grow the government to fund a litany of other left-wing political goals. This is precisely why environmental groups opposed a revenue-neutral carbon tax proposal that failed badly in Washington State. If this idea is to gain traction nationally, leftists must figure out its actual goal.

Another common suggestion is for government to grant privilege to “clean” energy sources by providing billions in subsidies to wind and solar. In any other industry, the Left would rightly decry this as corporate welfare. That is precisely what it is – government giving taxpayer dollars to politically-favored private businesses. We have seen this fail miserably before, leaving American taxpayers on the hook. To this day, renewable energy receives far more in subsidies than coal, oil, and natural gas. Until and unless renewable energies can compete on a level playing field in the free market, they will not be competitive or viable, and the government should not give them an advantage at taxpayers’ expense. Making lower- and middle-class Americans foot the bill to enrich California billionaires is wrong and unnecessary. If the hope is that private capital markets will lead the way without government pressure, environmentalists must realize the onus first lies on the providers of that technology before it lies with financiers.

Fortunately, there is good news: the free market, not government control, is solving this problem. US carbon emissions have been plummeting for years without a carbon tax or socialist controls, while they continue to increase in Asia. Better yet, in the US they continue to fall faster than they are in Europe, where our betters insist America is the problem. The biggest driver of this decline in emissions has been the expansion of fracking, which has greatly expanded the use of natural gas and thus weaned dependence on coal.

Shockingly, the free market solves problems when free people place value on solutions and are left to their own devices.

Finally, in discussing this issue, not only must we be realistic about the environmental impact of climate change (for which predictions have been laughably inaccurate), but also the economic costs. The government’s own report stated that the “worst-worst case” scenario of climate change would reduce the average annual economic growth rate by just 0.05 percentage points. There is no economic catastrophe coming from climate change – unless environmentalists impose one on us.

James Newhouse: As I read Akash’s response, I was reminded of Bill Nye’s remarks on CNN last year. Nye, a longtime climate change mitigation advocate, criticized the network for giving equal air time to climate skeptics. By my count, Akash’s piece contained 16 misleading claims ranging from topics about the effects of climate change, concerns about the global poor, and the definition of socialism. I was not surprised by this tactic, as special interest groups have used climate denial to obstruct federal climate change policy. And this is exactly the problem. Whereas Reagan and Bush acknowledged that climate change is a problem and John McCain even ran his 2008 presidential campaign on being more active on climate than Barack Obama, many elected officials today deny that climate change will negatively impact the U.S. economy. This effort by special interest groups has been tragically successfully; as of 2017, 180 congressmen and women deny climate change and have received >$82 million in funding from fossil fuel industries, in direct contrast to the beliefs of their constituents.

I want to write about infrastructure finance and not get bogged down addressing the flaws in Akash’s argument, so I will keep my response to Akash brief. Climate change is happening. It threatens human progress through a variety of ways, including but not limited to: natural disasters, floods and drought, decreased GDP, deadly heat waves, mass migration, and loss of biodiversity. All of this is already happening. And it will disproportionately affect the poor in the global and U.S. south.

With that out of the way, I want to address infrastructure finance and investment-spurring regulation. Free market neoliberalism cannot solve climate change. Only public-private partnerships and government-created market signals, which are rejected by neoliberal economic theory, can spur the infrastructure overhaul required to decarbonize our entire economy.

Neoliberalism fails because it propounds a capitalism that is apathetic to sustainable growth. Investments are awarded to companies that provide high internal rates of return (IRRs) and returns on investment (ROIs). These metrics fail to account for the social benefits of decarbonization. Without accounting for this benefit and without government intervention, clean infrastructure projects valuations are terrible, as these projects are capital-intensive, in nascent markets, and often never see positive returns. The resulting IRRs and ROIs paint a clear, unprofitable picture for private investors whose primary focus is earning a return on their investment.

And this should be investors’ focus. That’s how capitalism works. But because infrastructure is expensive, government must introduce policy that improves the IRRs and ROIs on these projects and thereby attracts investors. Policy measures such as infrastructure subsidization, consumer rebates, cap-and-trade programs, and tax breaks improve supply and demand dynamics for infrastructure. For example, Tesla could not have attracted >$19B in post-IPO investment without the existence of California’s zero-emissions vehicle mandate, which required a portion of every automaker’s business in California come from electric vehicles. In the nation’s largest auto market, this gave Tesla a huge advantage over its competition.

This argument is not controversial. Infrastructure subsidization has existed throughout U.S. history. In fact, we have the Republican party to thank for the transcontinental railroad, the Morrill Land Grant, the Hoover Dam, and our interstate highway system. None of these would be profitable enough for private investment without government intervention. This is not socialism, it’s regulation. Today, infrastructure spending is supported by 75% of Americans, the entire Democratic Party, and even President Trump. It’s just the GOP platform, which is influenced by neoliberal special interests, that prioritizes market growth at the expense of sustainability. The solution, of course, is to elect officials that support climate change policy. That means politicians that aren’t married to special interest groups.

Akash Chougule: My friend James’ argument relies on several tried-and-true tactics of central planners that all distract from the folly of their ideology and public policy goals.

The first is to simply paint those who disagree with their proposed policies as “climate deniers.” In my initial post, I explicitly did not deny the existence of climate change, or even human impact on it. Quite the contrary, I noted how human innovation is helping reduce carbon emissions in the United States, something climate activists strangely never applaud – perhaps because it is happening as a result of the free market, without massive government intervention.

The second is placing blame for people’s democratically-elected representatives’ failure to adopt leftists’ preferred policies on evil fossil fuel companies pumping millions of dollars into political campaigns. Except, fossil fuel companies are nowhere near the biggest donors in our political system. Strangely, leftist activists never level similar complaints about labor unions or environmental groups, both of which are scattered throughout the list of the top 20 biggest donors. Also unmentioned are the campaign donations to politicians advocating for “green energy” policies from those who stand to profit off those policies (investors, entrepreneurs, researchers, etc).

Liberals seem to have a problem with issue advocacy, organizing, and campaign donation only when it goes against causes and candidates they support. More broadly, there seems to be a reluctance to accept the simple fact that many of the radical environmental left’s ideas are simply unpopular with the American people. One only need look at the backlash after House Democrats passed cap-and-trade legislation in 2009 for recent evidence of this.

Finally, there is seldom acknowledgment of the fact that the United States cannot solve climate change on its own. India, China, sub-Saharan Africa and the rest of the world would be required to act, too, and would never agree to any plan to seriously reduce carbon emissions for the reason stated in my original post – fossil fuels are fueling a reduction of poverty around the world. For those serious about curbing emissions quickly, the Paris Climate Agreement’s expectations of China were laughable. Their “goals” were little different than what they were already doing, and they were continuing to increase carbon emissions anyway.

Nevertheless, on government financing to combat climate change, it seems James made two different kinds of proposals, but they share the same problems: infrastructure financing (such as building roads, or in the case of what many environmentalists prefer, light rail systems) and financial incentives for favored market actors (such as tax breaks for Tesla).

On infrastructure financing, James is correct that government plays a huge (and fairly obvious) role and has for decades. I’d be curious to hear specifically what kind of infrastructure environmentalists would prefer the government subsidize. But it would also be important to know how much it would cost (on top of what we already need to spend to repair roads and bridges), the tax hikes necessary to pay for it (and who will pay them), and – perhaps most importantly – what level of control they plan to exert on people’s freedom of choice to ensure that environmentally-friendly infrastructure becomes the default choice.

Just recently, California Democrat Governor Gavin Newsom cancelled plans for a high-speed rail system in his state, saying it would cost too much and take too long. Democrats recently introduced – and several presidential candidates endorsed – a so-called “Green New Deal” that would seemingly necessitate abolishing or at least significantly curbing the use of cars and airplanes. The resolution introduced in Congress lacked sufficient detail on how they plan to achieve their climate goals in terms of restrictions on choices and growth in taxpayer costs, but these are details worth knowing before we take these proposals seriously. Are these choices the American people are willing to make? Or must they be forced into making them? Would they elect politicians who would enforce this regime?

There are undoubtedly infrastructure investments that can be made, in lieu of other infrastructure choices, that would seemingly be better for the environment. But if the people’s elected representatives are to make these decisions, people deserve to know the pain they will have to endure and for what gain environmentally they will do so.

On the matter of increasing IRR and ROI for clean energy private sector ventures, such as Tesla, most environmentalists readily admit that this is a form of government picking winners and losers. This is corporate welfare that leftists rightfully decry in any other setting. They will obviously claim that climate change is a crisis for which it is worth setting aside their principled opposition to corporate welfare, but then, what else is worth it? When politicians get involved in making decisions for the economy, no single group gets to decide when or how they do so.

Are blatantly harmful tariffs that protect American steel companies justified because we have a crisis of economic mobility in the Rust Belt? Should we subsidize American shoe companies so that we don’t have to buy shoes made in China, our greatest geopolitical foe? These are all important matters that might theoretically result in politicians deciding to grant privilege (tax incentives, subsidies, etc.) to some mega-corporations over their competitors.

Are we prepared for more and more of the direction of our economy to be determined not by market signals (government does not create market signals…market actors create market signals) but rather on the whims of Washington politicians? The same politicians who can’t seem to perform the most basic tasks of governing?

What impact would that realistically have on the opportunity, choice, and innovation in our economy that has produced the wealthiest and most powerful nation on earth?

Moreover, as mentioned above we have seen this fail miserably before within the green energy space, leaving American taxpayers on the hook, and to this day, renewable energy receives far more in subsidies than coal, oil, and natural gas. How many more billions in subsidies do green energy companies need in order to satisfy the environmentalists?

How much much of our money and freedom of choice will it take to solve climate change?

The fact of the matter remains that climate change cannot simply be solved with a “carrot” for cleaner technology or the right kind of infrastructure. It will necessitate the “stick” of increased government control over personal choices and higher taxes to pay for it – including on the middle class. Environmentalists are free to make that case to the American people. But the American people deserve an open, honest, and full discussion of what that entails – not merely sloganeering and lofty promises.
Until they can do so successfully and be rewarded for it at the ballot box, we’ll have to settle for free-market innovations – the ones environmentalists are certain can’t address climate change – to keep driving down emissions.

James Newhouse: Perhaps the single greatest achievement of capitalism is the vast reduction of global poverty. Akash and I agree on that. The unfortunate reality, though, is that our economy runs on natural resources. Unlike renewable energy, these resources expire. Not only that, overconsumption of these resources threatens our entire system. That means continued reliance on these sources threatens the capitalist mantra of growth. Akash is a climate denier because he cited a Trump federal government study and American Enterprise Institute source that doubt the likelihood of this possibility.

Recently, economic mobility has decreased, inequality has increased, and credible sources (see the links I provided in my first response) consistently show that climate change will only exacerbate these troubling trends. Fortunately, Capitalism provides a solution: subsidize clean infrastructure (e.g. solar development and electric vehicle infrastructure). This is embraced by the Chinese, Europeans, and Californians. Republican governors Larry Hogan of Maryland, Charlie Baker of Massachusetts, and Phil Scott of Vermont also embrace this solution. This has seen slow uptake on the federal level because the oil industry enjoys outsized influence and because it requires an adjustment to the modern neoliberal over-embrace of free markets.

To ensure the sustainable growth of capitalism, both of these barriers to regulation must be removed. That doesn’t mean that everyone should vote Democrat. Multiple parties are good. They bring diversity of thought and checks and balances. But it does mean that we should actively support politicians that embrace this effort. To frame things in a capitalist mindset one final time, what is a couple billion dollars to safeguard against the existential threat of climate changes? Those billions may be the highest ROI risk-mitigation investment ever made.

What I Learned from the Ethereum Classic 51% Attack

Beginning January 5 Ethereum Classic was the victim of a 51% attack allowing the malicious party to successfully double spend tokens to exploit one exchange. I cover a timeline of the events, some learnings, and end with applicable excerpts from the original Bitcoin white paper.

On January 6, the Ethereum Classic organization contradicted rumors of an attack on ETC:

Several hours later they sent a warning to mining pools and exchanges urging extra precaution:

After the initial warning, in cooperation with SlowMist, they confirmed the attack:

The next day on January 7, Coinbase publicly confirmed the attack as well providing details on the deep chain reorgs of ETC:

The attack is acknowledged by Gate.io, one of the exchanges compromised in the attack. They clearly state they will cover the losses for their users:

Another targeted exchange that had thwarted the attack, acknowledged what had happened as well:

Haseeb Qureshi of MetaStable Capital released an excellent description of 51% attacks. I highly suggest you read it:

Finally, the organization that tipped Ethereum Classic off to the attack, released their final report:

Update: The attacker has returned the funds to Gate.io. You can see the transaction here. We don’t know the motivations for returning the ETC. My guess is either the attacker was afraid of getting caught or they simply wanted to expose vulnerabilities to help prevent double spend attacks in the future.

It was amazing to see a cryptocurrency’s leadership, exchanges, mining pools, and researchers come together to address this issue. Typical security breaches offer little information to the public, but the open nature of blockchain encourages immediate assessments of attacks.

Now, onto the learnings:

  1. Understanding a 51% attack and “double spending” is a great way to understand how blockchains actually work. Haseeb’s tweet thread is a great start.
  2. The market does not fear 51% percent attacks. I predicted the attack would not only affect the price of ETC but also Bitcoin. After all, the goal of a blockchain is to maintain consensus. My next two reasons may explain why the market fears not.
  3. Funds in your wallet are safe. 51% attacks are only practical for changing recent transactions. The more blocks between when your wallet received the funds and the present, the more secure your funds are and the harder it becomes for a 51% attack to successfully undo it.
  4. 51% attacks are mostly targeted at exchanges. After all, attackers need a way to sell their double spent tokens to profit. And what better way to do this than on an exchange.
  5. Top blockchains are easier to attack than I thought. Crypto51 estimates that it would take an estimate of $350k to 51% attack Bitcoin for one hour. For a highly capitalized entity like a government, this really isn’t a high bar.
  6. Jeff Bezos could afford to 51% attack Bitcoin for 36 years. And likely even longer than that given Crypto51‘s estimates assume you are renting the mining equipment.
  7. Anyone can visit the scene of a blockchain crime. From the SlowMist report, you can see for yourself one of the wallets the attacker used.
  8. The market encourages these attacks, sort of. Because the price remains stable even when a 51% attack is acknowledged, this allows the malicious actors to retain value when they sell.
  9. Exchanges should come together and create a mining pool that activates when they detect a coin is under attack. This would not only help ensure their protection, but also ensure the protection of the attacked blockchain.
  10. It’s possible a malicious actor is mining a separate Bitcoin chain right now, waiting to unleash it. The alternate chain need not be made public as it is happening.
  11. Every 15 minutes Google makes enough profit to 51% attack the Bitcoin network for one hour.
  12. Google makes $12.5m in revenue per hour which equates to an hourly incentive to keep their systems operating. It costs $355k to 51% attack the Bitcoin network for one hour.

A 51% attack is something that every Proof Of Work consensus algorithm is vulnerable to. Including Bitcoin, as Satoshi Nakamoto discussed in the Bitcoin white paper released in 2008.

Satoshi discusses how the incentive structure of Bitcoin encourages those with a majority amount of computing power to act honestly:

If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.

Satoshi goes on to explain the limits of a 51% attack:

We consider the scenario of an attacker trying to generate an alternate chain faster than the honest chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such as creating value out of thin air or taking money that never belonged to the attacker. Nodes are not going to accept an invalid transaction as payment, and honest nodes will never accept a block containing them. An attacker can only try to change one of his own transactions to take back money he recently spent.

51% attacks will always be a reality in any Proof of Work consensus mechanism. The question always will be whether the cost of carrying out an attack is prohibitively expensive and is there enough of an incentive to keep would be attackers honest.

Though the cost prohibition and incentive structure begin to break down when the attacker does not care about the health of a cryptocurrency’s network, the value of the token, and only wishes to harm others who rely on it. As our reliance increases on a given cryptocurrency, an attack like that increasingly makes more and more sense. It’s a brave new world.

In 2018

In 2018 I made a concerted effort to focus my attention on the slow moving trends behind the constant events of the news cycle. That’s where you stay the most informed. The Economist, Peter Zeihan, and Benedict Evans, among others, helped me with this. Below I cover things that were top of mind for me in 2018, which I think will help you put our world in perspective.


  • The U.S. is the world’s top oil producer for the first time since 1973, surpassing Russia and Saudi Arabia. –AP News
  • U.S. GDP was 60% higher than China in 2017. U.S. GDP per capita was 575% higher than China in 2017. – World Bank
  • Since 1960, child deaths have plummeted from 20 million a year to 6 million a year. – Gates Notes
  • Since 1960, the fertility rate has fallen by half, which is why Deutsche Bank projects world population will peak in 2055. – Gates Notes, CNBC
  • 137,000 people escaped extreme poverty every day between 1990 and 2015. – Gates Notes
  • In the U.S. more than 90% of all retail sales still happen in physical stores. E-commerce is just getting started. – Bloomberg
  • Amazon has low single digit percentage share of US retail. Gas stations are a bigger business than all of e-commerce. – Benedict Evans
  • Out of the 5bn phones in use globally, 3.5bn are smartphones — 28% of people are under 14; 28% Google Android; 20% feature phones; 11% iPhone; 8% Chinese Android, which does not have access to the Google Play store; 7% of people are over 14 with no phone. – Benedict Evans
  • The Tesla Model 3 is the highest selling car by revenue. – Clean Technica
  • 10 million years ago a supernova took place 100 light years from Earth; if it had taken place 30 light years away life on Earth would not exist. – Brad Gibson


  • The internet has directly connected every person on the planet. Gatekeepers can no longer control the message. This explains the election of Trump despite no major newspaper endorsing him. It explains why Joe Rogan can reach 1.5 billion people a year with a completely independent show.
  • Liberalism, in the classical sense of the word, is a “universal commitment to individual dignity, open markets, limited government and a faith in human progress brought about by debate and reform.” It needs a renewal. – The Economist
  • The world economy is becoming less competitive. For example, in the U.S. roughly 600 out of 900 sectors became more concentrated between 1997 and 2012. – The Economist
  • In the U.S. the popular will of the people contributes less to who is elected, with rural votes having more power than urban ones. – The Economist
  • Members of congress over the last several decades increasingly vote along party lines. –PLOS One
  • We are witnessing the break down of the international system the U.S. created post WWII. Trump is a symptom, not a cause. – Peter Zeihan
  • Though it’s in vogue to say the U.S. is over the hill as the EU or China take its place, Zeihan argues that from an economic and defensive standpoint the U.S. has nothing to worry about. The rest of the world, however, will have to come to terms with a more disinterested U.S., which will cause global instability over the coming decades. –Peter Zeihan
  • Despite the curtailing of political and civil freedoms, the past 25 years have been the freest in Russian history. – The Economist


  • Many people are enamored with Nordic-style social-welfare policies that they associate with socialism. However, those countries are not socialist; they are free-market economies with high rates of taxation that finance generous public services. The “socialist” part of those countries would be unaffordable without the dynamic capitalist part many people dislike. – The Economist
  • IBM and other companies developing “blockchains” is nonsensical. Bitcoin and Ethereum derive their value from their distributed and decentralized nature; one or even several companies managing a “blockchain” is just a database. – Benedict Evans
  • Many people think the “world is getting worse.” By which metric? We live in the healthiest, wealthiest, most peaceful, most equitable time in human history. There are many things that need to be improved, but the past was much worse. – Gates Notes
  • Building a wall on the Mexican border would actually increase illegal immigration. – Peter Zeihan
  • Facebook doesn’t sell your data to advertisers. They sell ad placement and allow advertisers to target you in that ad space. That is a huge difference. – Motherboard
  • Apple can read your iMessages: “If you have iCloud Backup turned on, your backup includes a copy of the key protecting your Messages.” – Apple
  • Apple products used by Chinese citizens are not protected from government access. – Apple
  • Signal is the most secure messaging app period. It is open source and the keys never leave the device. Even when the U.S. government requests access, Signal does not have the ability to share your messages. – Signal
  • Long term the market always goes up. Don’t worry about market volatility — keep investing and keep saving for retirement. – no gradient


  • Why don’t more people in the blockchain and cryptocurrency space talk about the BitTorrent protocol? It was blockchain before blockchain, released seven years before the Bitcoin white paper was released. It’s a protocol that allows nodes on a network to share a file and prevents nodes from sharing the wrong file.
  • Why the Elon Musk hate? Does he say and do stupid things sometimes, absolutely. But zoom out. He has created the first successful American car company since Chrysler. Tesla’s vehicles are the safest the U.S. government has ever tested. He’s making space transportation cheaper. And, he’s pushing humanity towards renewable energy to combat climate change.


  • “Civilization advances by extending the number of important operations which we can perform without thinking about them.” – Alfred North Whitehead
  • “Justifying a solution because ‘it’s better than nothing’ results in something that is not better-than-nothing, but stands in the way of good solutions.” – Tomer Asher
  • “The world is not a meritocracy, but merit still matters. The world isn’t fair, but being fair still matters. The world is unkind, but being kind still matters, perhaps more than anything.” – Ed Helms