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Dave's Mostly Tinkering, Occasionally Reporting

Yet Another Bitcoin Intro. This is The Bigger Picture.

December 20, 2014 · 7 min read

I think this technology is often misunderstood.

It’s either thought to be money for geeks to play around on the Internet, for criminals to sell drugs or launder money, for anarchists to weaken governments, and so on. The media has definitely played a role in this misinformation. All you hear about Bitcoin in the news is the sensational headlines, often focusing on trivial aspects of this technology.

For this reason, when introducing Bitcoin, I like starting from a blank slate, and approaching it with an open Mind. Bitcoin is, no doubt, a complex technology, the impact of which no one fully grasps yet. We are only starting to think of and create new ways to use Bitcoin and integrate it with our existing financial infrastructure. But one thing is certain in my mind, and that of prominent economists and technologists, it’s potential impact can be huge.

Bitcoin Blank Slate

Right, I get it, Bitcoin is Digital Money?

You may have noticed that I don’t talk about Bitcoin as money or a new digital currency, rather, I call it a technology. Because, fundamentally, Bitcoin is a technical innovation. It just so happens that one of the applications of this technology is money (or, at least, has similar properties to money). But it can be used for many other purposes, as I’ll highlight in this short piece.

So, what is this technology? Bitcoin, at a basic level, is the first system which truly allows peer-to-peer value transfer over the internet without the need for third parties. Although this doesn’t sound very fancy. It’s a huge breakthrough when you look at the current system. Today, the only true way of doing peer-to-peer value transfer is in person: one person handing cash, a car key, or whatever else to another person. Once you’re at a distance, this doesn’t work anymore, and instead, will require an intermediary to facilitate the transfer (this intermediary adds his own constraints, in the form of cost, delay, exclusivity, etc.)

This innovation is possible because Bitcoin solved, for the first time, a very well known problem called the Byzantine General’s Problem. By applying a combination of clever economics and powerful cryptography, Bitcoin answers the question of: how to establish trust between otherwise unrelated, and sometimes malicious, parties over an untrusted network like the Internet? Practically, Bitcoin gives us a way for one person to transfer a unique piece of digital property to another person, such that the transfer is guaranteed to be safe and secure, without the need to trust each other, to trust a third party, or to trust that the network is secure. And that’s bold.

In other words, Bitcoin makes possible the concept of digital scarcity. Say, you have a picture of your family on your computer. If you send that picture to a friend, you haven’t transferred it, you have simply created a copy and sent that copy. In other words, you have duplicated that picture. And this duplication can be done infinitely. Bitcoin, on the other hand, enables something digital to be unique, non-duplicable, scarce, and hence valuable.

And How is Bitcoin Useful?

Bitcoin Transactions Number of Bitcoin Transactions (source: Blockchain.info)

Thanks to Bitcoin, any two individuals, anywhere in the world, can now transfer value to each other directly. One such form of value is money. If I send you bitcoins that are worth $100, you now instantly have $100 in your digital wallet. But there are other forms of value that can be transferred on the Bitcoin network, and this is where we’ve only really scratched the surface. For example, you could have your car or house lease, your will, stocks and bonds, and basically a digital representation of any physical good represented on the Bitcoin network. This would then allow anyone to transfer the ownership of their assets to anyone else they choose without the existing overhead. Think of the complexity required in buying stock or transferring ownership of your house; with the Bitcoin network, it could really be as simple as sending an email.

Let’s get back to money. Today, this is Bitcoin’s most popular application. Millions of people already own bitcoins: some as an investment, others to do their daily purchases, still others to complete cross-border transfers, and so on. Practically, today you can buy your computer at Dell, book a hotel on Expedia, or donate to Wikipedia — all with Bitcoin. It works.

You can even think of Bitcoin as email for payments. That’s because it’s fast: it just takes a couples seconds to confirm transactions. It’s cheap: since you’re only transferring data across the internet, it almost costs nothing to complete a transaction. And it’s borderless: anyone who has access to a phone or internet connection has access to Bitcoin and all services built on top of it.

And to make things even more concrete, here are some current stats: Today, there are between 5 and 10 million bitcoin wallets in use in around 100 or so different countries, and more than a 100,000 businesses  that already accept bitcoin, either online or in person. And around $50 and $100 million of value is being processed on the network every day.

Bitcoin Enables Permissionless Innovation

Bitcoin or stealing your cash?
I won’t deny that there is still a long way to go, Bitcoin still has many problems — like its high volatility, which often gets brought up. But many of these problems are already being addressed. It’s useful to remember that Bitcoin is an open technology; it’s neither owned by a person or organization, nor does it require permission to use, extend, or innovate on. And this is worth repeating, because people often miss this point. Bitcoin is not a company, nor does it have any headquarters. It’s simply an open and transparent technology that anyone can use. Or decide not to use.

A great analogy is that of the web. The Web is an internet-scale open platform for information exchange: it gives everyone equal access to information, and it enables individuals and businesses to build on top of it, integrate their products or services with it, to improve it and extend it, and so on. Bitcoin is, similarly, an internet-scale open platform for value exchange. It can give everyone equal access to value transfer and more generally financial services. And we’re seeing entrepreneurs and forward-looking businesses already looking at ways to leverage Bitcoin’s benefits.

Continuing down this line of thinking, Adam Ludwin, CEO of Chain.com, wrote something that I think is spot on:

As with many breakthroughs, “Most people think about bitcoin as an alternative to something they already know, as opposed to an enabler of something they never considered.”

And that’s understandable, we’re much more familiar and comfortable with that which interact with on a daily basis. But Bitcoin’s real innovation lies in what NYC-based VC Fred Wilson callsNative Bitcoin Apps“: applications built using Bitcoin that couldn’t have existed prior to Bitcoin. And those are very hard to predict, just as it was hard to predict back in 1993 what the successful native Internet applications would be (try to find someone who predicted Wikipedia, Skype, Blogging, YouTube, Uber, etc). Similar to the Web, Bitcoin is a platform enabling “permissionless innovation”. It has the potential to do to value transfer what the Web did to information exchange.

Power to the People

Bitcoin Power to the people
For one, think of the billions of people around the world that are either unbanked or under-banked; people that are forced to live in a cash-based society. Many traditional companies are already trying to address these issues, but we can take it a step further. Instead of having these individuals be on the fringes of the economic system, they could conceivably get access to the same sophisticated financials tools as someone living in downtown Manhattan in the palm of their hands. And that’s because Bitcoin is an open system, such that anyone with access to a phone or internet connection gets access to all the services built on it. The same way that anyone surfing the web has access to all the world’s knowledge.

Another great application is micropayments. We’ve already seen the huge success of this form of payment on platforms like Apple’s AppStore. Billions of dollars are transacted at an average transaction amount of less than a $1. You can now extend this service to the whole world, rather than just have it limited to specific applications on closed platforms (like apps on the AppStore). Bitcoin also makes it much more cost-effective, because a transaction is essentially a matter of sending bits of data over the Internet, the cost of which is negligible. With Bitcoin, tipping online becomes possible; or, for example, adding value to social interactions (like “liking” on Facebook); or even, using entirely new content monetization models (pay-per-word-read or pay-per-second-of-video-watched) helping us get rid of excessive advertising. There are many more opportunities we still haven’t thought about.

What’s Next?

For these reasons and more, we are seeing hundreds of millions of investment dollars poured into new Bitcoin companies, from some the biggest VC names in the world (Andreessen Horowitz, Index Ventures, Google Ventures, etc.). And some of the largest financial and non-financial organizations are starting to pay close attention to or already invest in Bitcoin: like PayPal partnering with several Bitcoin payments companies, Perkins Coie creating a Bitcoin legal practice, Goldman Sachs running a Bitcoin report, the State of New York developing Bitcoin specific regulation, or even Fidor Bank in Germany launching the first digital currency bank, and many more.

Many of the opportunities I have mentioned, as well as countless more we have only begun exploring, are not going to happen overnight. We’re talking about at least 5-10 years, in my opinion, before we see a deeper integration of Bitcoin into our existing financial infrastructure. But I believe we’re reaching a tipping point of very rapid and continuous innovation in the financial sector (glimmers of which we can already see). And this is the point that will separate early adopters from late comers. It’s an opportunity for every individual and business to explore how they can combine their knowledge and expertise with Bitcoin’s technical innovation in order to provide vastly improved services to the world.

So, what are you going to do?

 

You can learn more about the work we’re doing in the Middle East with Yellow and ShuBitcoin.com.

And Finally, thank you to the thought leaders who have inspired much of this content, including Marc Andreessen, Richard G Brown, Fred EhrsamAdam Ludwin, and more.

The Short Tale of a Kashmiri Salesman

5 things a Kashmiri Pashmina shop owner can teach you about sales

August 3, 2014 · 3 min read

The last time I remember reading formal sales material was when I was 19 during an internship. An internship so boring I couldn’t resist leafing through a dusty sales manual forgotten on someone’s desk. I read it cover to cover. I don’t remember much today, but I’m sure I’ve internalized some of its lessons.

Fast forward 7 years, and as cliché as it sounds, the most powerful sales lesson I’ve learned to date took place at a random garment shop in the Muttrah garment and jewelry souq of Muscat, Oman. There, I met our local salesman–let’s call him Bashir–who claimed to be directly from Kashmir the international capital of cashmere wool garments (some of most expensive wool).

In the span of 15 short minutes, Bashir effortlessly swept us away with his smooth and enticing talk. It’s only after leaving his small shop (with scarves in hand, of course), that it hit me. Whether intentional or not, Bashir was one effective salesman. I was so mesmerized, I took a moment to reflect on this experience, and jotted down some thoughts. I knew there was something to learn from this man.

Sales Lessons Straight From Kashmir

Kashmir Sales lessons

Here are the 5 things our Kashmiri Pashmina shop owner did to captivate us.

Where else?

You may have already noticed, but one of the first things Bashir told us was that he was from Kashmir. Instant credibility. The man’s from that city that gave its name to cashmere wool. It was done subtly; but passionately.

“It’s like paradise over there. I miss it.”

And that just drew us in. “Please, tell me more about your home…”

Surprise and sacrifice

That was, in fact, the second thing he told us. The first–after noticing some of the scarves we had in hand, purchased earlier in the day–was inquiring (not so innocently) about their origin and price. He knew, on the spot, we had bought “the cheap stuff”. We didn’t know any better. But soon we would.

“What you have is cheap low quality Chinese scarves”

He walks to the side of the shop, picks out an identically branded scarf, brings it over to us, then takes off the information tag stuck to it. The scarf deforms easily, and irreversibly.

“See, what I mean? These scarves barely withstand any manipulation.”

WHAT? Why did you just destroy one of your scarves to make your point? Regardless, not only do I now feel ripped off by our previous scarf seller, but I am blown away by Bashir’s “sacrifice” to prove his point. Dramatically. Somehow, I now felt like I could trust him. Tell me even more, I’m all ears

There’s so much more to know

Now, we are bitterly acquainted with the cheap material.

It’s the perfect time for Bashir to walk us through all the different grades of scarf material (cotton, silk, wool, etc.). One by one, he takes out scarves from different drawers, shelves, cupboards, etc.. Starting at the lower end, he shows us scarves selling for a single Dinar. Goes up to $10 Dinar, $20, $50, $100, and more. He doesn’t stop.

Not only does he shows us the scarves. He urges us to touch them, feel their material, admire their embroidery, look for the details, and so on. By the time we were hitting the $100+ Dinar scarves, they felt so good to the touch (whether physically, or psychologically) that I just wanted to wrap myself in them.

Bashir was getting into my head.

Be Badass

It may be enough to show your customers your most expensive products to make them understand what they’re missing out on; but Bashir wasn’t satisfied with this. It was time to take out the big guns.

He walks to the side again, bends over behind the counter, struggles a bit, then pulls out a large worn-out suitcase! He throws it over on the table in front of us. And I’m thinking “What kind of crazy stuff is he going to pull out from this?”

This, my friends, are $800 Dinar scarves. Made from Tibetan antelope down hair.

At that point, I’m sure our jaws dropped. Not only was that such a badass move, but we now had $1000+ USD scarves in our hands.

Stories that captivate

And then, came the mesmerizing part.

As he walked us across his shop, he walked us through the story of the many scarves. Pictures from his hometown were displayed modestly everywhere. No fancy photography or frames. Just pictures of people skinning goats, spinning wool, weaving scarves with traditional manual tools, and so on.

We followed intensely, and were fascinated by the effort and dedication required to create such works of art. This, in my opinion, was the most effective way of increasing the perceived value of his products.  Surely, we now were much more willing to pay a premium for pieces that had such a rich and intricate history.

By the end of these emotionally filled 15 minutes. We bought scarves. Walked out and away from the shop. Then realized. Bashir is good, very good.

Bitcoin Is Kicking Off Nicely In Lebanon

Successes Of The First Bitcoin Meetups

June 13, 2014 · 3 min read

This post is long overdue, it’s been sitting in my drafts for more than 2 months. I was hoping to release it with videos of recorded talks, but since video production delay has been (and continues to be) unpredictable, I will just post my thoughts now and talks will follow.

Beirut Bitcoin Meetup, the first!

Beirut bitcoin meetupMarch 20th was the date of the first Bitcoin meetup in Lebanon (organized by yours truly and AltCity). What a success!

Success is of course relative; it’s when expectations meet outcomes. Since my return to the Middle East (and specifically Lebanon), my search for Bitcoin enthusiasts and adopters was not very fruitful. And as such, I was expecting a small crowd with limited knowledge of this technology. Clearly, I was wrong.

We had 100+ people RSVP, around 50/60 show up in person, and another 100 or so tune in and out of the live stream. The event lasted for 2 hours–only because it was cut short to allow a speaker to leave.

We started our event with one of the most concisely effective introductions to Bitcoin:

Surprisingly, most people didn’t get it. So, we then switched to prepared talks. I kicked things off with a Bitcoin 101: what is Bitcoin and why does it matter? The talk was inspired by a recent post I wrote for ArabNet. Dr. Saif Ammous, assistant professor of economics at LAU (Lebanese American University), followed-up with an introduction to how Bitcoin works, with an economic twist to it. And finally Ola Doudin wrapped up the presentations with a discussion of existing and future Bitcoin applications.

The most exciting part of for attendees was a “get your hands dirty with Bitcoin” experiment advertised at and before the event. We walked every attendee through the wallet creation process and “secretly” funded their wallets with 2 milliBTC (0.002 bitcoins). They now all had their own Bitcoin wallet with their first bitcoins. The second part of the experiment consisted of donating live to one of three organizations we had chosen ahead of time: AltCity to thank them for hosting us, the Bitcoin Foundation for their support of Bitcoin, and WikiLeaks, because “they’re cool”. The whole process was interactive, and involved attendees working together.

The second half of the event was a Q&A session. This is when my expectations were blown away. We were bombarded with an hour of intelligent and non-generic questions, so much so that we had to cut the session short to let our speakers head back home. Attendees were engaged, interested, and savvy.

Beirut Bitcoin Meetup, the second!

Beirut bitcoin meetup
The second meetup was held at the beautiful coworking space coworking+961  on April 8. This one was completely casual: no presentations or prepared content. The purpose was to get a lively discussion going.

We had 20/25 people show up, which is not bad, and partly explained by last minute advertising and by the fact that it was barely 3 weeks after the first. I had intended to do an exercise with the crowd to get people warmed-up. But just a few minutes into the event, the questions started pouring in. So I let go of my “agenda” and we kept the conversation going for an hour.

This time, because the event was simply a casual discussion, I could more clearly identify the different types of audience. I can place them across two spectrums (or spectra, if I want to sound fancy): from skeptics to supporters, and from closed-minded to open-minded individuals.

There is really only one type of person that turns me off: closed-minded individuals (whether skeptics or supporters). Those people that are stuck in their ways, hearing but not listening, antagonizing not engaging, simply unwelcoming to ideas that challenge their beliefs. This is a general opinion of mine that applies in all settings (not just Bitcoin). I bring it up here because I see it manifest itself more often than usual in a Bitcoin-related setting, due to the many novelties that Bitcoin introduces.

That aside, I very much enjoyed the conversation. I find it especially great when attendees answer each other’s questions and concerns.

Beirut Bitcoin Meetup, the future?

It seems like there’s potential for Bitcoin in Lebanon, after all. It’s undeniable that the ecosystem is still tiny today. But the level of engagement displayed by the few today could be an indication of the general attitude Lebanon will have towards Bitcoin. After all, we do like to think of ourselves as early adopters and trendsetters in the region. All I’m hoping for is that the Central Bank and other authorities don’t stifle entrepreneurial initiatives (such as our Yellow) and consumer adoption with an overly negative position. Time will tell.

I’ve already started working on the third Bitcoin meetup, taking place on July 7th. This one will be about the Future! Register here to stay up to date. And shoot me a note if you have a cool venue to recommend.

As for the recorded talks, I will share them here as soon as they are available (including the experiment and the Q&A session).

The Rise of New Markets: Bitcoin In The Middle East

April 9, 2014 · 3 min read

This post was written for ArabNet, and first appeared on their website.

In an earlier post, I introduced Bitcoin through storytelling, and briefly highlighted its benefits over conventional money and payment services. This time, let’s look at a few revolutionary applications of Bitcoin in The Middle East and the world. Read through until the end to hear about an exciting update.

The Rise of New Markets

Bitcoin is a technology that has the potential to redesign our global financial landscape from the ground-up, to better serve an increasingly digital and globally connected world. Here are only a few ways in which Bitcoin’s attributes can lead to major improvements.

Unlocking Billions

Bitcoin in the Middle East
According to the world bank, there is more than $500 billion that circles the globe through remittances (e.g., sending money back home to support your family). The average cost of these payments is more than 8%, and significantly worse in less developed countries–the countries that need it the most. That’s $40 billion that’s lost to fees in order to move the money around. And the Middle East is no stranger to these flows of money. The MENA region accounts for as much as 15% of that share.

A shift towards using Bitcoin for international money transfer could potentially unlock billions of dollars for the people who need it the most. This is achieved thanks to Bitcoin’s extremely low cost of money transfer.

Banking the Unbanked

Bitcoin in the Middle East
There are 2.5 billion people around the world today that are either unbanked or under-banked. That’s almost 50% of the planet’s adult population that is left out by our current financial system, and forced to live in a cash-based society. These individuals cannot benefit from all the financial products that contribute to their prosperity, and in return cannot contribute to growing their economy.

The Middle East, unfortunately, ranks among the lowest in terms of financial inclusion (access to basic financial services). The regional average barely stands at around 20% of the adult population (with accounts at a formal financial institution).

Mobile penetration, in contrast, is quite high across the world (90%) and especially so in the Middle East (110%; including people with multiple mobile subscriptions). The inclusiveness of the Bitcoin protocol has the potential to bring all of these individuals, regardless of their financial situation, into the digital economy!

Bitcoin is a global and open network, that only requires access to a phone or an Internet connection. This means that, as more mobile-based Bitcoin services are built and made available, millions of unbanked individuals may soon have access to easy and affordable financial services.

Getting Rid Of The Ads

Bitcoin in the Middle East
Bitcoin also introduces a new category of payments that was previously impossible: micro-payments; payments of less than 1 Dollar, Dinar, Dirham, Lira, etc.. Because of the high transaction costs, these micro-payments were only possible in cash (but still remained impractical). Bitcoin makes this possible and even attractive, since the transaction cost is negligible. This has the potential to reshape many industries and even create new ones.

Let’s look at the world of online content monetization (e.g., articles, news, videos). It has been dominated by advertising. Any time you access content on the Internet you are forced to watch an ad placement (or pay a subscription fee). Imagine if, instead, you could pay pennies for each nugget of information you consumed, or even tip the person that has produced it. Bitcoin allows you to pay cents or even less for each article, video, news source, etc. and only when you want it. This is the pay-per-x model (pay-per-article, pay-per-video, etc.).

But, We Still Have Work To Do

Bitcoin is still in its early stages of development. There is no doubt that all of the above is great. But for it to become a reality soon, we (Bitcoin entrepreneurs and advocates) still have work to do before Bitcoin’s full potential is reached.

For example, there aren’t nearly enough products and services built to make Bitcoin as useful as described above (e.g., remittance product); it still isn’t easily accessible in most regions because of limited infrastructure (e.g., local exchanges); it remains a complex technology that needs UX (user experience) improvements before it can reach mass adoption, etc.

However, none of these are insurmountable problems. And many ambitious entrepreneurs are already working on these issues in different corners of the world. I believe it’s a matter of when–not if–all of this happens.

What’s Next For Bitcoin In The Middle East?

This is only a small selection of the innovative ways in which Bitcoin can reshape industries. And for these reasons and many more, the Middle East is gearing up to join the Bitcoin economy. There have been many events popping up across the region, in Lebanon, Jordan, Dubai, and more.

Bitcoin In The Middle East
The most exciting event so far–one you won’t want to miss–is #CoinTalksDubai on April 21st! This event will be bringing regional and international Bitcoin experts to introduce Bitcoin and talk about the latest developments. So if you’re curious, want to learn more, or want to engage with digital currency enthusiasts, entrepreneurs, and investors, I’ll see you there. (Full disclosure: I am helping organize this event.)

And to stay up to date on all things Bitcoin in the Middle East, be sure to check out ShuBitcoin.com.

 

Sources:
Financial Inclusion Data, World Bank
Migration, Remittances, and Diaspora, World Bank
Mobility Report, Ericsson, 2013

Bitcoin or How To Avoid A Series Of Unfortunate Events

March 20, 2014 · 6 min read

This post was written for ArabNet, and first appeared on their website.

A Tale Of Money and Misfortune

Let me start off by sharing a story with you.

I just arrived in Dubai, on a business trip from Beirut. I’m excited to be here as it’s my first time back in 10 years, and I’ve heard many great things about its transformation.

As I hop into a cab out of the airport, I realize I forgot to exchange cash for local Dirhams. I only have a single 50Dhs bill on me. I ask the driver about accepting credit cards, but no luck. At my destination, I reluctantly give the driver my only bill, and get a 20Dhs in change.

As I walk away, my mouth starts feeling dry. I always get dehydrated on flights, it’s time to get a drink. I stop in front of a small hole-in-the-wall shop to get water. I hand over my 20Dhs. The owner looks at it, folds it, scratches it, places it in front of sunlight, makes a weird noise, then hands it back to me.

“It’s fake.”

“What do you mean it’s fake? I only just got this. From the cab. It can’t be.”

“It’s fake.”

Damn. Well, I hand over my credit card, the owner takes it reluctantly, and charges me 1.5Dhs. We’ve now unintentionally annoyed each other.

Just as I walk away, I get a call from my sister. I’m excited for her, she took some time off from work to travel and relax. But, she sounds very panicked.

“What? you lost your purse on the train? … All your cash and your credit cards were lost? … Sure, I can wire you some money. I’ll head to the bank right away. Talk to you soon.”

Change of plans, I need to find a bank ASAP. I start running while keeping an eye out for a bank. As soon as I spot one, I head for it, run towards the entrance, and BAM. Slam face first into the glass door.

It’s 7pm, of course banks are closed. I should have realized. Fine, no time to dwell on this, I’ll just head over to a Western Union. I’m really not looking forward to getting charged those crazy high fees…

After getting that out of the way, I text my sister the transfer details. Now, I’m really looking forward to relaxing over a good movie at the hotel. My phone rings, I just got a text. “My sister replied quickly!” I think to myself. I take out my phone, and read the text.

“A transaction on your card ending 6964 is accepted for USD 6,216.75 at THAIMAZON.CO in THAILAND” (I subscribe for credit card payment notifications by SMS)

I guess I’ll be spending the evening with VISA customer support to get my card cancelled and reimbursed…

Bitcoin Makes Tales Boring

Did you notice what happened? I don’t mean how poorly my day went, but how inefficient our whole financial infrastructure is.

Today, I can hold a live video call with anyone around the world for free, but I can’t send them my money without getting stuck waiting in line and getting charged hefty fees for the privilege. And it doesn’t end with money transfers, from the credit card fees that shop owners pay to the constant stream of identity theft stories, people everywhere are struggling to bring cash online.

Let’s rewind this nonsense, and replay this scenario the way it should happen in our technologically advanced civilization.

Out of DXB, I hop into a cab that drops me off at my destination. I take out my phone, scan his Bitcoin account QR-code (similar to a barcode) displayed on the dashboard, and transfer the amount owed with a click of a button.

I then walk over to the shop to order a bottle of water. I transfer 1.5Dhs (the QR-code is printed in front of the cashier). The owner instantly receives a text on his old Nokia phone confirming the transaction.

As I walk away, I get that unfortunate call from my sister. But wait, she sounds all nice; too nice. Oh right, you can’t physically lose your digital wallet, you can always store a backup. So what does she want?

“Dave, I didn’t budget enough money for my trip, could you please send me some?”

I sit on the side of street, and open up my laptop. (I don’t like to store large sums of money on my phone wallet.) I access my larger account, then transfer 10,000Dhs as easily as I had done with 1.5Dhs. One click and done.

“I just got it, thank you so much!”

So What Is This Bitcoin You Are Talking About?

That’s it. Now that makes for a much more boring story, but at least my cortisol levels haven’t gone through the roof.

In fact, the simplicity of the second story belies the powerful innovation happening behind the scenes. I’m talking about Bitcoin. A technology that enables a decentralized digital currency, a fast and secure payment network, and a disruptive payment protocol. That’s a mouthful, so let me break it down.

Bitcoin is a decentralized digital currency. You can think of it like cash, but designed, from the ground up, for an increasingly digital and globalized world. A world where paper money and its associated products (e.g., credit cards) are becoming very inefficient. My story already highlights (only) a few of these problems: identity theft, the need for money conversion, and counterfeiting.

Bitcoin is a fast and free payment network. It is similar to the email network, but for sending money instead of messages. On the Bitcoin network, you can move any amount of money, anywhere in the world, instantaneously and close to free. Just like email, you put in the recipient’s address, the content (or in Bitcoin’s case, the amount) and click send. done.

Bitcoin is a disruptive payment protocol. This is one of the more advanced aspects of Bitcoin: programmable money. Since Bitcoin is built with code—at a very basic level, it is a computer program—anyone can actually add new features. Just like apps on the Appstore, if someone can think of a new feature they can build it on top of the Bitcoin protocol.

And This is Why Bitcoin Matters

Whether or not the above appeals to you, in the end, what truly matters is Why. Why should anyone consider Bitcoin? Why should individuals start using Bitcoin? Why should merchants accept Bitcoin? etc.

Few of us understand how TCP/IP and HTML work, how a jet engine works, or even how the credit card network works; but that doesn’t stop us from surfing the web, boarding a plane, or using our credit cards . Similarly, we don’t need to understand how Bitcoin works to appreciate its benefits and applications, and ultimately adopt it. It’s the why that matters.

Here’s why Bitcoin matters—briefly.

It’s open. Anyone who has access to a phone or an internet connection has access to Bitcoin, as well as all the services built on it—like apps on your iPhone.

That’s a big deal for the un-banked or under-banked, who account for the majority of the world population. They are left behind by our financial sector, and forced to live in a cash-only society. But since most of them have mobile phones, this may no longer be a problem.

That’s also a big deal for anyone that wants to get a business started but can’t afford the complexity and cost of doing so (e.g., opening a merchant bank account, acquiring credit card equipment, absorbing high transaction fees, etc.)

It’s fast, and (nearly) free. Whether you’re sending $1 to a person in front of you, or $1,000,000 to someone halfway across the planet, the transfer is near instantaneous and the cost is negligible. You’re sending bits of data, after all.

It’s secure. You simply can’t counterfeit military-grade encryption, the technology behind Bitcoin.

It’s decentralized or peer-to-peer. Bitcoin does not depend on any central authority to operate, rather it is supported by everyone on the network—as is the case with the Internet.

This matters for simple issues, like being subject to banking working hours (the Bitcoin network never sleeps); as well as more serious ones, like the hyperinflation that has destroyed some currencies in the past (Bitcoin supply cannot be manipulated).

It’s borderless. It lives on the Internet, and can move freely on the Internet. Your bitcoins are not confined within physical borders (e.g., a country) or digital borders (e.g., the Paypal network).

It’s private. When you make a payment, you never share any compromising information. Contrast that with credit cards: every time you use it, you are essentially revealing all your supposedly secret information (i.e., name, number, expiry date, CCV), and hoping that the person on the other side of the transaction doesn’t steal it.

And much more…

Doesn’t this make more sense? I’d like to think this is how we would design a currency and payment system if we had to start from scratch today.

Well we are—somewhat—starting from scratch. It’s only recently that we’ve been able to accomplish the above and more, thanks to Bitcoin. However, Bitcoin is still an early experiment, adopted by a few (million) across the world. But it’s growing very fast, and proving to be a very robust system.

Give it a try!

If you want to stay up to date, check out ShuBitcoin.com, an upcoming resource for all things Bitcoin in the Middle East. And If you liked this article, you can tip me—with Bitcoin of course:

Our Brains (Mostly) Suck At Decision-Making

February 6, 2014 · 3 min read

My earlier post on the paradox of choice sparked interesting conversations with several people. I got inspired by these conversations to write this follow-up post.

Breaking Down Decision-Making

When we struggle to make a decision (i.e., selecting between different options) we are struggling to find the superior choice among alternatives.  In other words, we are choosing between similarly good options with no clear winner (“good” in different ways, but “good” nonetheless). Were one option clearly superior, there would be no struggle.

Then, if options are “similarly good”, why is it so difficult to take a step in any direction? Why is decision-making paralyzing? What is the cause of this inertia?

Well, for one, we are not rational robots. Our minds inevitably factor in many variables rooted in our emotions: we tend to focus on the missed opportunities and undesirable outcomes inherent to decision-making. Said differently, these are the upsides of forgone options and the downsides of the selected option—driven by fear and regret, respectively.

If that felt like a mouthful, let me explain myself.

The Upsides Of Forgone Options, a.k.a Fear Of Missing Out

Decision-MakingLoss aversion—a well studied psychological concept— states that people have a stronger preference for avoiding losses over acquiring gains (some studies even suggest that this preference can be quantified as 2x). Decision making, by definition, involves selecting a single option and letting go of one or multiple others. It involves closing doors, eliminating possibilities. In other words, you are “losing” the future benefits of many options and “gaining” those of a single option.

Hence, our loss aversion tendencies will shift our focus towards these missed opportunities, and away from the benefits of the selected option. It is frustratingly easy to imagine all the benefits we are letting go of when making a decision, and to ask ourselves that dreadful question: “what if?”. The Fear Of Missing Out creeps in. It paralyses us. And for a while, our brain will mistake this lack of action (or decision-making) with a lack of losses. While delaying decision-making may seem comforting in the short-term, it will often lead to a rushed—hence, less effective—decision down the line.

The Fear Of Missing Out thus leads to inertia—an unwillingness to take a step in any direction to avoid letting go of possible future benefits.

The Downside of Selected Options, a.k.a Ancitipation Of Regret

In his book “Thinking Fast And Slow“, psychologist and behavioural economist Daniel Kahneman defines Regret as what you experience when you can most easily imagine yourself doing something other than what you did. It is one of the counterfactual emotions that are triggered by the availability of alternatives to reality. Alternatives we must, by default, consider when making decisions.

Decision-making

Our mind is a powerful imagination tool. It will easily wander into the future playing out multiple scenarios of possible futures, including, in most cases, what can go wrong. The anticipation of regret thus plays an important role in decision-making. Take the example Dan illustrates in his book.

Paul owns shares in company A. During the past year he considered switching to stock in company B, but decided against it. He now learns that he would have been better off by $1,200 if he had switched to the stock of company B.

George owns shares in company B. During the past year he switched to stock in company A. He now learns that he would have been better off by $1,200 if he had kept his stock in company B.

Who feels greater regret? The results of an experiment are clear: 8% of respondents say Paul, 92% say George. However, objectively the two situations are similar: both own stock A and would have been better off by $1,200 had they owned stock B. The difference is in how each individual got to where he is: George got there by taking action, whereas Paul got there by NOT doing so.

The point here is that people tend to have stronger emotional reactions to outcomes produced by an action, rather than those produced by inaction. And since decision-making is akin to taking action, it leads to similar emotional reactions—specifically, regret.

It is the anticipation of regret, brought on by our wandering minds, that leads to inertia—an unwillingness to take a step in any direction to avoid a feeling of regret down the line.

Fear, Regret, and Awareness?

There aren’t any quick fixes for these psychological pitfalls. Our gut reaction will often be to delay decision-making. The best I have done so far is arm myself with awareness.  An awareness and an understanding of these cognitive mistakes that helps uncover undesirable behaviours (like stalling) as they arise, and helps control emotional impulses (a.k.a. Fear and Regret). 

The mind remains a funny thing.

Event Recap: Amman Tech Tuesdays, Bitcoin Edition

February 6, 2014 · 1 min read

On February 4th, I gave an introductory talk on Bitcoin applications at an event held jointly by Amman Tech Tuesdays–Amman’s leading monthly event for techies–and the Amman Bitcoin Meetup Group.

I was impressed with the turnout–around 300 people. 50% of the room had already heard about the crypto-currency, and there were even a few that had bought/mined Bitcoins. Also in attendance, were a small number of individuals from the Jordanian Central Bank (2-5?)–They, however, explicitly mentioned attending as civilians.

Other than an incident that occurred towards the end (more on this below), I believe the event was well received. Attendees seemed pleased with the content, some even extremely enthusiastic and eager for follow-ups. The four speakers, Ola Doudin, Mohammed Saled, Zaid Amireh, and yours truly covered an introduction to Bitcoin, an overview of the technology, a discussion of wallets and security, and a review of existing applications, respectively.

On stage, after the Q&A, I offered to sell Bitcoins for cash to anyone that was interested. Unfortunately, and to my disappointment, no one took the offer. I was hoping the excitement around the topic would push some to “put their money where their mouth is” and get some Bitcoins.

As for the incident, some of the topics covered unfortunately led to a heated debate with individuals from the Jordanian Central Bank. A few of our speakers included political and ideological comments in their talk–A move I don’t agree with. I strongly believe these events should be an avenue to discuss the technology behind crypto-currencies, its benefits, and its practical applications (and, of course, shortcomings). Instead, a good part of the Q&A turned into the equivalent of a political debate and a clash of opinions rather than facts.

Here are the video and slides from my talk on Bitcoin applications, covering six existing practical uses. (Skip to 16:05 for my part, it lasts just under 8 minutes.)

(This talk was inspired by multiple sources, including Andreas M. Antonopoulos, Marc Andreessen, Gavin Andresen, and more. I don’t claim any original content)

2013 In Snippets

January 11, 2014 · 1 min read

The best moment in 2013 was switching to working for myself. Although, I have yet to make a sustainable income.

The biggest letdown in 2013 was 47 Ronin. Keanu, I still have hope.

The best non-fiction book I read in 2013 was “The Antidote” by Oliver Burkeman. It discusses what I believe to be several essential philosophies in a very approachable way. (stoicism, buddhism, etc.)

The best fiction book I read in 2013 was “Ender’s Game” by Orson Scott Card. I just love the a-ha moment.

The biggest tech trend in 2013 was the rise of Bitcoin and distributed applications (or decentralized technologies). More on this soon.

Another big tech trend in 2013 was the Internet of Things and the numerous companies innovating in this space ( NestSmartThingsMotherLockitron, etc.)

The best personal change in 2013 was getting rid of 90% of my belongings and limiting everything I own to fit into a carry-on and a backpack. Now, every time I travel, I literally take ALL my belongings with me.

The best new follows in 2013 were Scott Adams, the creator of Dilbert, for his provocative and refreshing short blog posts, and Ze Frank for his humour, absurdity, and creative projects.

My favorite podcast of 2013 was Radiolab. A combination of fascinating content, captivating narration, and great production and editing.

The most exciting moment in 2013 was giving my first public talks at both the Quantified Self Global Conference and the Silicon Valley meetup.

Your turn.

Thanks to David Lee for the format used above, borrowed from his post “My 2013 Listicle”.

My QSSV Meetup Talk on Lifelogging

December 8, 2013 · 0 min read

This is the second talk I give on the topic of my lifelog (you can find the earlier version here). This time it was at the QS Silicon Valley meetup held at the Evernote offices.

It’s a slightly updated version with some new material. The talk is approximately 8 minutes long followed by 8 minutes of Q&A. In the first half, I explain my Lifelog experiment and the setup. In the second half, I talk about some of the insights gained.

The slides are embedded below, and make it easier to follow.

Let me know what you think, and how I could improve!


Check out the Life Log page for the latest updates and posts on this experiment.

My Quantified Self Conference Talk on Lifelogging

December 8, 2013 · 0 min read

This is the talk I gave at the 2013 Quantified Self Global Conference on October 10th.

It’s 7.5 minutes long followed by a short Q&A period. There was a small tech glitch midway that led to a couple slides disappearing. I’ve embedded the slides below which make it easier to follow.

I’ve since given an updated version of this talk here.


This talk was originally posted on the Quantified Self main website.

Let me know what you think, and how I could improve!


Check out the Life Log page for the latest updates and posts on this experiment.