Friday, December 9, 2016

Crypto cops

Bitcoin Mag: Chainalysis signed an agreement with Europol on Friday that paves the way for the European law enforcement agency to use the New York-based company’s blockchain analytics tools to investigate criminals who use Bitcoin. 
The deal between Europol and Chainalysis comes just days after news broke about a high-profile ransomware attack against Hollywood Presbyterian Medical Center. The attacker froze the hospital’s computer systems for 10 days and demanded 40 bitcoins, about $17,000, to restore service. The brazen attack and the hospital’s decision to pay the ransom has renewed the debate about the criminal uses of Bitcoin. 
Chainalysis’ blockchain analytics technology enables law enforcement agencies to track such ransom payments through the Bitcoin blockchain, and eventually to identify the culprits. 
LawBitRage: Since their inception, Bitcoin exchanges have operated under a fog of legal uncertainty. Last week, just one day after the New York-based exchange itBit announced obtaining a banking law charter giving it the ability to operate in all 50 states, a California official called that into questionAlmost every state has its own licensing requirements for traditional money transmitters that include payment processors and money transfer firms like Western Union. The safe but costly route for Bitcoin exchanges would be to obtain a license in each state that requires it for digital currency firms. But it's unclear which do.Texas, for example, stated that transmitting digital currencies like bitcoin doesn't require a license in its state. Other states, like New York and California, are still in the midst of passing digital currency-specific licensing requirements, making it a question of what Bitcoin exchanges should do until those licensing laws are finalized. The prominent and reputable Bitcoin exchange Coinbase, for example, was operating in New York and California without a license in either state—and probably didn't need one. 

Trading pit does not clear accounts, it is really a database manager.  It can exchange virtual coins by bet compression.  The money transmitter laws refer to bank clearing houses, but the entire secure card network is strictly symmetrical peer to peer. Individual secure cards in fact have the ability to exchange coins, acting as an exchange.  It has the same spreadsheet function as used by the trading pit, just variations of a windowing Huffman encoder.

In cases where the owner of a pit generates income from incidental ads makes him a non-participant in the capital requirement, he cannot be regulated until ads are regulated. If the issue is provisional cash (read bit error) then I guess government can grab that line of code and look at it, or demand it be verified. But that is what all the traders want anyway.

UK Gov wants to regulate the trading pit

Britain's finance watchdog is proposing tougher rules on disclosure and transparency for peer-to-peer lending platforms, after a 6-month review into the growing industry.
The Financial Conduct Authority (FCA) on Friday released the initial findings of its review into crowdfunding — a term it uses to cover both crowdfunded equity schemes like Crowdcube and peer-to-peer loan providers such as Funding Circle.
The inquiry, launched in July, found that:
  • It's difficult to compare platforms to each other;
  • Risks are hard to assess;
  • Financial promotions do not always meet requirements to be "clear, fair and not misleading;"
  • Increasingly complex structures are introducing new risks and conflicts of interest;
Provision funds, which platforms like RateSetter offer to cover a certain amount of investor losses, "introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors;"Wind-down plans, put in place to take care of loans in case firms go bust, are not adequate;Some platforms client money handling standards are not up to scratch.
OK, no problem here.  One cannot get a more transparent system than the trading pit, theoretically impossible, everyone still has to run the graph.  Risks are easy to asses,read the pit boss code, watch the bit error accumulation, an run snooper bots to spot inconsistencies.. The structure is not complex, it is a few hundred line of python code that implement a iterator on a nested block probability graph. Everything is adequately disclosed, in fact, take the code and run it through an off line evaluation.

So, the answer i, trading pit is how it i done in the future.  The major complaint will not be fairness, it will be a bunch of socialist welfare bums from Silicon Valley who want to rig the graph.

When I appeal to a higher diety

Texts between Mark Zuckerberg and Marc Andreessen say the Facebook founder may want to go into government

Thursday, December 8, 2016

Texans stop worldwide catastrophe

Zero Hedge has the details:
The Dallas Police and Fire Pension System's Board of Trustees suspended lump-sum withdrawals from the pension fund Thursday, staving off a possible restraining order and stopping $154 million in withdrawal requests. The system was set to pay out the weekly requests Friday. Pension officials said allowing the withdrawals would leave them without the liquid reserves required to sustain $2.1 billion fund.
Now, consider, the entire globe has been carried by Texas and China, most of the recovery.  A little Germany and UK, but Japan is dead in the water.  So, suddenly, Texas turns up 20 billion short when the goodie queue is forming, not a good sign.

 So these good soldiers have their thumb in the dike.   One more round the tree and DaBlowsio plus Rahm will be sneaking in line. Watch this guy, Eric Garcetti, from LA.  How are they going to do it, they must be plotting something.

The Coinbase case

Swampers issued a John Doe warrant telling coinbase to prodiuce individual identity information, including account number, for traders.

The Law:
Now, the Swampers can likely go to JP Morgan and ask for the list of   a certain group of Libor traders, and their names.  Courts would grant that, based on evidence of collusion at JPM.  The court would not allow the Swampers to peruse all the emials at, the John Doe is too broad.

Coinbase is in the middle.  They only have member account information incidental to their business, they really trade digits and manage databases. Breaking down accounts to individual transactions is incidental money technology. These two list, of themselves, cannot be evidence of anything without additional information.

Uh Oh, the pension queue is growing

Senate Democrats are digging in their heels over health benefits for miners in a government funding bill, raising the risk of a shutdown at midnight on Friday."We're going to win this fight, we cannot predict the path, but we're going to win this fight because we're right," Sen. Charles Schumer (D-N.Y.) said.Schumer, as well as Democrat Sens. Joe Manchin (W.Va), Bob Casey (Pa.), Heidi Heitkamp (N.D.), Sherrod Brown (Ohio) and Mark Warner (Va.), held a press conference with coal miners as they sought to ramp up the pressure on Republicans to strike a deal. Democrats are holding up the continuing resolution (CR) to fund the government as they push to include a one-year extension of healthcare for thousands of miners and their families. The spending measure now includes a four-month extension. Absent a deal, the earliest the Senate could take an initial vote on the CR would be Saturday morning, meaning Congress would blow past the deadline to fund the government. 
Second time up, they got a four month insurance, now they up the bid.  But it is not un-noticed by our Chicago brethren that the trickle begins to stream, if they could just get a little, before Texas notices.

So, no one tell Texas, they will want to be first in line, their bill is 22 billion, and Illinois will be second third fourth, and adding hmm..., carry the one,.. that comes to oh, 150 billion, We are going to need Trump's deficit bazooka.

Beating the 16th, a legal strategy

The Feds, nor the states, can insert income collecting codes into the secure smart cards because the card network is a money technology and does not account for surpluses held for individuals.

Income accounting is a contractual imposition outside of  money technology, and the right to coin money supersedes.  The money technology has no sense of time or space in its construction, that is the definition of money.  So, I take back my plan to pull a Sotyomyor, don't need it. I can get a majority of the Supremes on this, except for that one negative vote I always get. I get to meet Justice White and the Supremacists, edcept I herer White is now silent on most issues, sort of like Scalia..

Egad, the income tax law!!

I forgot, it is in the US Constitution, and it allows mandatory withholding. Omigod, the Swampers may have got me on this.

If you claim to be a US Citizen, they you agree the government can put a snippet of code in your secure card.  You atre going to be n one too happy, for good reason.

This requires some careful thought, we may have to pull a Sotomayor.  Seriously, this is too much issue to place before the Swamp, it is something they will screw up. It is money, money as it will be done, likely forever, and it has become a constitutional issue, a bummer.

Using the smart card to check into the trading pit

Step one is a symmetrical cardID verification between the pit boss and the trader request parameters, from you and your card. If the verification passes, the two parties are considered honest and the python interpreter is secure, so the selected trader bot is activated. The bot has exactly the money in whatever units that came with the request, no need verify betting limits, the pit boss is happy. Once end to end verified, and he intermediate secure; just assume every part is honest and verified.

Then the bots execute the pit code:

select stock in the_pit(where_my_algorithm_looks,<argTuple>)

and your algorithm is what your select, maybe a standard trading bot.  Then the bot can do bid/ask up to the limit, as often as it is willing to wait inline.

Trading pit is done, but it has issued a shit load of contract fulfillments to ethereum, and that is where the bottlenecks and security will arise. Outside of the pit, there is going to be a registration between the card holder and the ethereum contracts enforcer, gobs of blockchaining.

Stock certificates need registering to a real human, truck loads of pipes need to be sent properly. These contract enforcers got great code, but they do a lot more. They go to court, they synchronize time and space, they carry the known, but significant, human error.  But they can do this knowing the artificial bottlenecks are gone.

Back to the simplest model
The pit is a spreadsheet function that fits all the fulfillments into the delivery process. It is the stock boy with quantization power. But it really is just a spreadsheet function, say given two arbitrary sequences, co-compress them, find their mutual entropy.