Monthly Archives: September 2017

Economics

How I Broke Bitcoin

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Before I tell you about my experience with Bitcoin, I’d like to share a secret. My father is at a casino right now.

Dad isn’t a big-time gambler, but he enjoys himself. And like all occasional gamblers, or lottery players, he has a certain faith that he is perhaps slightly luckier or smarter than most other gamblers – most of whom leave the casino poorer than they enter. I have no such ideas about myself.

Gambling, for me, is about as enjoyable as folding $20 bills into paper airplanes and setting them on fire. This might be an apt metaphor for my brief dalliance with Bitcoin as well.

Why do Bitcoin?

My interest in the cryptocurrency evolved out of an interest and a concern with ransomware pirates who have had a few high-profile scores. They use bitcoin as a means of payment because bitcoin can flow in and out of wallets without necessarily revealing who received the payment, which is really handy for pirates.

My business or personal data could easily fall victim to an attack like this and I had no way of knowing whether I could even come up with a payment in the allotted time before my files disappeared. Even if I could do so, I didn’t have any experience buying or selling it and really wasn’t sure how it worked from the consumer’s point of view.

How?

I am not going into all the details here, but there are a few things to learn when trying to acquire a little bit of Bitcoin. All you really need is a wallet and a human who is willing to sell you Bitcoin for dollars. I don’t know anyone willing to do that, so I had to create an account on an exchange. I used Coinbase.

Side note, setting up an account on Coinbase is about the least anonymous thing a guy can do.

I purchased about $100 worth of bitcoin through various mechanisms on Coinbase. The privilege involves a minimum 1.5% transaction fee. If you use a credit card, it is closer to 5%. If I want to leave it in my Coinbase account, then I’m done. However, transferring bitcoin from the exchange to my own wallet revealed a bit of a surprise. What the miners charge to move bitcoin around depends on the demand on the network. At the time I started the process of transferring to my wallet, the fee was $4.80!

This wasn’t Coinbase’s fault. They don’t mark up the fees here, but this was a sudden realization to me that Bitcoin, at least at the moment, is completely unusable for microtransactions, like buying a cup of coffee or paying a friend back for a movie ticket.

The Slide

From the moment I purchased my small amount of Bitcoin, the price began to drop. I started hearing news about it. First, China is making Bitcoin exchanges illegal. This isn’t a big surprise, but it did seem to have an apparent effect on the price of Bitcoin. Then came Jamie Dimon’s statement that Bitcoin was fraud and that he would fire any trader speculating in it for stupidity.

Now, I think whether or not he believes it to be a fraud is not really the point for me. It is potentially useful to the extent that it may be required to use it to pay a hacker to get my files back at some point. Furthermore, if it is in fact sound technology, (that is, it can’t be hacked and transactions are faithfully executed) I’d say that it isn’t a fraud per se.

But, I have some serious misgivings about Bitcoin. It seems to be founded on some arbitrary units of computer problem solving power that can’t be held, looked at, tasted, smelled or heard. There is a finite amount of Bitcoin that there will ever be (21 million coins) which is, I suppose, an interesting factoid. Each coin can be divided into one hundred millionth of a Bitcoin called a Satoshi.

A little back of the napkin math reveals the total number of satoshi’s there will ever be which is 2,100,000,000,000,000. This equals about 300,000 satoshis for each of the 7 billion people on the planet. That’s it. My $100 investment represents about 2 million satoshis more or less depending on the conversion rate.

At any rate, I am not sure what the future of Bitcoin will be, but the fact that there are already several other competing cryptocurrencies and even Bitcoin itself has fractured itself into Bitcoin and Bitcoin Cash makes me wonder if it is sustainable.

Bad human

Living With the Scars of Eagle Creek

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Photo of the Eagle Creek Fire taken from the Washington side of the Bonneville Dam area on Monday, Sept. 4, 2017. (Photo by Tristan Fortsch)

As the Columbia River Gorge burns, we mourn the loss of thousands of acres of some of the most beautiful forest areas I have seen.

I live about 50 miles downwind. For the past three days, the sky has become increasingly hazy. The air smells like a sour campfire that I can’t escape. Ashes float down and leave a layer of gritty, gray soot on every outdoor surface.

The Eagle Creek Trail was a hike that I last enjoyed with a friend about 5 years ago. My dog was about a year old at the time and she came along for the adventure. Beautiful and ancient, it was a wonderful hike and I am grateful that I saw it in its prime.

To the best of our knowledge, there is a 15 year-old kid in custody for lighting firecrackers in these woods. The stupidity of doing such a thing is hard to excuse. We had experienced several days of near triple-digit temperatures and scant rain in months. By September 2nd, the forest was incredibly vulnerable. Nobody old enough to babysit a toddler should be capable of such poor judgment. Then again, age 15 is probably about the right age for such monumental idiocy.

As the flames still rage unabated, my thoughts have turned to this individual’s mental health. I wonder how they will personally deal with the scope of this tragedy over time and come to grips with their guilt about the destruction they have caused. It is likely that a 15 year old kid has no perspective they can use to evaluate their actions and the consequences yet. Sure, they may eventually be incarcerated for a time, but my concern is more long-term.

When I reflect on my life, I have some regrets. I assume most people do. Often, it is the things I have said to people that I wish I could take back. I have had moments of insensitivity that I wish I could redeem and occasionally some mistakes that were life-threatening to myself or others. I’d undo them if I could, but we all make mistakes, and we try to move on.

Here we have a person who will grow up knowing that they burned down a 20,000 acre old growth cathedral of pines, deciduous trees, native ferns, moss and wildflowers. The area was home to countless thousands of animals many of which have been incinerated alive. It will likely be the defining moment in a life that has barely started. This act of carelessness will weigh heavily, having left behind a scar that will take generations to heal, and will never truly be the same.

It is hard to imagine facing a future of knowing this truth. People are good at compartmentalizing and I would imagine that this will be an important survival technique. But there will be nights for the rest of this person’s life filled with nightmares about being so incredibly careless one day in early September, 2017.