# Coin of My Realm: Meaning

I’ve been thinking on this tweet a bit lately. How do we determine what is the coin of our realm? What is important to us?

I wanted to expand on this tweet. Isn’t really “what others offer” is a question of what we value in ourselves, and in other people? Lets leave aside the fact that this is a transactional model of relationships. Instead, let’s focus on the value. If we really want to understand what we value, I think the real question comes down to time.

How do you spend your time? With whom do you spend it? Because, when it comes right down to it, the only thing each of us has of any value is who we are as people and how we spend our time. Everything else just expands our agency within that framework.

I have been spending a lot of my time lately doing writing, providing support via Discord & Telegram and doing some minor programming for a cryptocurrency called Ergo. I’ve learned a lot about:

• How cryptocurrencies work
• The psychology of people in the cryptocurrency space, which is indicative of people more generally
• Learning to use new software tools

The last is an interesting development, I’ve never collaboratively worked on a project using git. I have use it to provide back-ups and versioning for my own work, such as configuration files, bash scripts and so forth. But, it’s a different experience to work collaboratively with someone else with it. The collaboration has value, independently of the code being created or the ideas behind it. This is something that is missed in the above tweet.

Things change so fast in the cryptocurrency space, and it is filled with people trying to make quick money. Or, “life changing money,” which normally means they can stop working and do whatever they dream of doing, perhaps driving cross country in a Lamborghini. Wen lambo? This is a question often asked, jokingly, but it is also serious.

Given the environment, integrity is very important because there is such a lack of it. Most people are hoping to strike it rich, which means there is a large pool of people that can be scammed.

Beyond the get rich environment, it is also interesting thing to note how little agency people have in the space. At the level of the cryptocurrency itself, there are wild price swings, and much of the variance is market manipulation. Imagine all the problems of the stock market, without most of the regulatory restrictions.

But, it is also clear that the restrictions that are in place are there to benefit certain people, just as much as they are to protect people involved. So, there’s a distrust of larger governance, particularly governance by a state.

In its place, in cryptocurrencies, you have governance by unelected bodies, software developers, investors and other interested parties. It’s never governance by people using the cryptocurrency, in any form whether it is democratic, the choosing of representatives, and so forth.

Best case, it’s a meritocracy. Often, these meritocracies have a benevolent dictator, and while they may wish for more user input, do not know how to move from where they are at to a system where people using the tool are deciding how it should be used and what capabilities to develop.

Without any kind of real governance and input into the decision-making processes necessary to be a functioning entity, discussion tends to devolve into who has the biggest microphone and who can shout down opposing points of view. You might say this is the defining feature of our times, when people have little agency over the things they care about.

One solution to this problem is to care about different things. If you limit what you care about to the things that you have agency over, then you don’t have to argue about it with other people. You can simply do the thing.

Of course, anything sufficiently large is going to require organization beyond mere individuals. But, moving our scope out that wide quickly limits our agency. Most of us scope our concerns so they are beyond any real action on our part. It’s why we develop what the Unabomber describes as surrogate activities, or things we do that serve as a substitute for real agency over things that matter. It’s why people decide to run marathons, climb corporate ladders, or whatever. We set goals such as these when life is unfulfilling.

Where can we find meaning? Where can we find agency? I think the answer to this question in our age is the same answer Voltaire gave in Candide: Il faut cultiver notre jardin, or tend your own garden. Narrow your concerns to a few people. People that show themselves to be unworthy of concern? Remove them from your garden. Spend your time and energy on projects you control and involve yourself in the lives of people you know around you.

Those people don’t need to be “insightful”. Gardens need shade as well as fruit, and every tree and plant can bring something different to the ecosystem. But, we need to thoughtfully engage with the question: what is the garden for? Is it to grow the biggest, best vegetables? Or, maybe there’s something bigger to be found there, such as meaning and agency.

# PoE: Proof of Effort

I really liked this idea of Proof of Effort, a riff off Proof of Work and Proof of Stake consensus mechanism in cryptocurrencies. Strikes me as a variation of RTFM. People are more inclined to help once you have shown you have tried to solve your own problems.

# What a Bear Market Looks Like

But for those of us who were investing in tech and tech startups back in 1999-2002, that time will forever be etched in our minds. It was a brutal period during which our belief in the Internet and its potential was sorely tested. Many friends and colleagues left the sector and never returned.

So while crypto asset prices are down 80-95% in USD terms over the last year, they could and probably will go lower. Amazon was down 80% a year into the post-bubble bear market and it got cut in half again before it made a bottom almost two years after it peaked.

What we have yet to see in crypto land is when they kick you when you are down. And that is certainly coming. Regulators came after the Internet sector in a big way post the bubble and that seems likely to happen in the crypto sector too.

And most everyone in big companies wrote the Internet sector off, cancelling their Internet efforts as a fool’s errand. That seems likely to happen in crypto too.

-Fred Wilson, “What Bear Markets Look Like.” AVC.com. November 25, 2018.

Note the date(s). h/t to Jason Yanowitz.

# How I Hacked a Hardware Crypto Wallet and Recovered $2 Million # Energy Production, Cryptocurrencies & Hidden Agendas How many times have you read something like this, “Bitcoin uses as much electricity as Malaysia or Sweden or Denmark or Chile….”. What a bore. Have you ever wondered, however, why the comparison is to countries? Why don’t they ever tell you what would seem to be a more natural comparison which is how much “Bitcoin” spends on electricity? The reason is that electricity is incredibly cheap so Bitcoin electricity expenditures priced in dollars don’t look very large. Bitcoin uses something like 100 terawatt hours (TWH) of electricity annually (depending on the price of Bitcoin) but a TWH costs less than$100 million (10 cents per KWH times 1000000000). Thus, Bitcoin spends say $10 billion on electricity annually. (In fact, it’s less than this since bitcoin miners can be located in places where electricity prices are especially cheap.)$10 billion in spending isn’t a lot. It’s less than the world spends on toothpaste ($30b), much less than the US spends on cigarettes ($80b), and considerably less than the US Federal government spends in one day (\$18.65 billion).”

Alex Tabarrok. “Bitcoin and Electricity.” Marginal Revolution. November 29, 2021

One argument, one that you see everywhere in popular media, is that cryptocurrencies use a lot of electricity, and it’s not a productive use of resources. Rarely, you’ll see apple-to-apple comparisons, such as this response to trying to make a comparison to the electricity use of the VISA network, which is a strange comparison considering all the payment terminals, ATMs, bank mainframes, and many other things are treated as externalities.

“While no one can argue that Bitcoin (and other altcoins) mining consumes a lot of electricity (in absolute numbers) given that you need to run a network of few hundreds or thousands of very powerful computers all the time, the right way to look at this problem is not about the total consumption but to compare how efficient is Bitcoin relative to the alternative traditional centralized systems that we are predominantly using today and that one day crypto might replace.

However, the only comparison that seems to always pop up everywhere is against VISA transaction costs which was included in the article that trigger the above tweet and in other articles as well. As expected, VISA looks way more efficient which adds to the rhetoric that Bitcoin is a very inefficient system and it is just a Ponzi scheme that is polluting the world. In my view, this comparison is flawed and it is not comparing apples to apples. Besides the fact that Bitcoin is not simply a piece of a payment network like VISA but a full currency system, VISA itself requires the banking system for its payment system to work so you need to actually include some of those costs there to make a meaningful comparison. So let’s look first at how VISA works…

…”According to the article that trigger this discussion, Bitcoin annual Twh consumption is 28.67 , so currently more than 3 times more efficient than a very conservative calculation of the cost of the global banking system. Of course you will argue that the banking systems does more than handling a currency which is true but the difference is large enough that I do not think is that relevant. Even if only 30% of banks electricity consumption was the comparable part to Bitcoin, that will still make Bitcoin more efficient.”

-Carlos Domingo, “The Bitcoin vs Visa Electricity Consumption Fallacy.Hackernoon. November 29, 2021

And, the simple fact is that it is very difficult to price in externalities to determine the real price of any energy production.

“All energy production has environmental and societal effects. But calculating them — and pricing energy accordingly — is no easy task.”

-Erica Gies, “The real cost of energy.” Nature. November 29, 2017.

And, this is true when assessing energy use as well. It’s difficult to measure the benefits of energy expenditure. What is the value of street lights relative to the energy and infrastructure required to have them on? This is true of practically everything. What is the true cost and benefit of international shipping and transportation? Of the cement poured for a playground? The establishment of a new church or temple? You could continue this line of questioning down any avenue you like, and the answer is it is impossible to make this kind of calculation beyond the costs and perceived benefits.

Enter cryptocurrencies. The problem with the arguments against cryptocurrencies is that they generally take this form.

1. If an activity provides no benefit and uses resources, it is a wasteful activity.
2. People should not do wasteful activities.
3. Mining Bitcoin provides no benefit and uses resources.
C. People should not mine Bitcoin.

This is the extreme argument. The less extreme argument makes some kind of comparison between the benefit relative to use of resources. But, as we know from the above it is difficult to take into consideration the externalities involved. On the face of it, the argument that mining cryptocurrencies have no benefit is belied by the fact that every day billions of dollars worth of transactions are conducted using cryptocurrencies. None of that has any value? How do we evaluate the benefit relative to resource use or other ways this energy might be used? But, we really cannot make that kind of comparison. What is the relative value of Bitcoin mining versus the amount of power used in casinos on an annual basis? Online gaming? How does one make those kinds of comparisons? Is it even right to make them?

The reality is people don’t even try to make that sophisticated of an argument. Instead, it is something simplistic like: Bitcoin uses as much electricity as a country, the implication is that people would otherwise use this electricity, or the electricity they do use would be less expensive.

We also don’t make these kinds of calculations for other activities. The reason there’s the difference hinges on a value judgment that the activity, same as the implicit argument above mentioning casinos implies they have no value. But, even casinos have plausible arguments supporting their value.

The interesting thing, for me, in looking at these arguments closely is ho political arguments. The reason that the environmental argument is used is because it can plug into concerns that people have about climate change, and short circuit a reasonable assessment of the claims being made.

Same is true of claims that cryptocurrencies are used only for crime. Criminals may be an innovator in the space, but it isn’t only good for crime, just as it is not true that VHS and internet streaming is only good for porn. Porn pioneered the technology, but it didn’t stop with porn. YouTube isn’t porn.

There’s also a deeper agenda. It’s a simple fact that the more money that makes its way into cryptocurrencies, the less money that will be available to buy stocks, bonds, U.S. Treasury instruments, and so forth. Less money in traditional financial vehicles means lower prices for them.

The Bitcoin “debate”, if we can call it that, really helped me to understand how much of our dialogue is shaped using concepts from our political orthodoxies. A claim like, Bitcoin mining hurts the environment, is an emotional appeal, not a reasoned argument. The anti-Bitcoin argument is above, and it is problematic both because it has benefits and it is difficult to assess the costs and benefits without engaging in motivated reasoning.

Another point worth making here is that it wasn’t until this year that cryptocurrencies emerged that created a marketplace of cryptocurrencies, where they will compete. Network efficiency and cost will be one dimension of this competition, and it will drive both electricity use down and provide for many more benefits. And, where something like Bitcoin’s energy-intensive proof-of-work algorithm is used, it will be because it provides a capability that isn’t available in other approaches that justifies the cost.

When all of that happens, what will be the new reasons people will be against cryptocurrencies? It’ll be the need for regulation, to provide customer guarantees, or something else. But, the one thing that I am certain of is that there will be other reasons, other agendas that these kinds of arguments will be serving to obscure. And, this is how everything is, there’s always another or series of issues hiding behind the one that’s used as justification.

# Why Ergo?

Ergo is different from other blockchains. It is focused on providing a decentralized, open, permissionless, and secure platform for contractual money that is usable by ordinary people to pursue their common good over the long term. It is designed to be resilient in the face of different economic environments and competing interests, allows individuals to choose how much privacy is right for them, and offers economic opportunity to the people using the blockchain.

Ergo has the technical capability to provide a wide variety of services to the decentralized financial cryptocurrency ecosystem and to enjoy comparative advantages, whether that comes from oracle pools, logarithmic mining, profit sharing protocols or other innovations. However, while Ergo offers a lot of technical capability not available on other chains, the real value of Ergo is its focus on providing the tools for the financial success of ordinary people, like you and me.

## Introduction

“The real problem of humanity is the following: we have Paleolithic emotions, medieval institutions and god-like technology.”

–E.O. Wilson

We are witnessing the birth of a new era, one where well-established elements of computer science, such as cryptography and distributed systems, are combining with fields of finance and game theory to bring a new economic and social order. Who will reap the benefits of this new era?

Shifts of this kind tend to create new social classes. For example, the Industrial Revolution and the emergence of capitalism made being royalty and a feudal landlord less important.

With change, there is opportunity. But, frequently, the opportunity is limited.

What is new is that blockchains make it possible to facilitate transactions between businesses of any size, between people in any geographic location and that can work in any economic, social or political environment. Blockchains can unlock synergies and new ways of exchange and interacting.

Blockchains are a new method of accounting. Just as double entry accounting introduced a formal and methodological rigor to bookkeeping that transformed medieval businesses into capitalist enterprises, blockchains have the potential to upgrade our medieval institutions into something that serves the common interest more than elite interests by providing mechanisms for financial exchange, decision-making, arbitration, and so forth that were not possible before.

## The Challenge

People don’t like change. Medieval institutions who serve entrenched corporate, state and other interests will want to limit the opportunities of blockchains to enrich themselves. Even with the best of intentions, it is a challenge to broaden access to opportunity. Everyone wants to help the hungry, but few people want to give up their lunch in order to do it.

So, the question is how do you grow the pie? Do you grow the pie by focusing on large economic actors, such as governments or businesses in the Fortune 500, who then, presumably, pass along portions of the pie in the form of more goods and services at less expensive prices? Or, do you grow the pie by focusing on the needs of ordinary people and creating new opportunities with this technology that didn’t exist before?

And while it is necessary for a blockchain to have multiple constituencies with different interests, such as miners, liquidity providers, developers, entrepreneurs, users and so forth, some groups are in opposition. If you are focused on cross-border payments for large businesses, it’s not the same as being focused on cross-border remittances of people without access to traditional financial services. The software for these two use cases will be very different. While it is possible the same blockchain can serve both groups, it’s going to serve one of them better.

When using, or investing, in a blockchain, one of the key questions is: Whose interests does the blockchain serve? Who is threatened by it? And how can it be attacked?

## The Power of Ergo’s Proof of Work

Ergo’s proof of work provides a powerful example of seriously considering the problems that come from various attacks, whether they be 51% attacks via centralized pools or regulatory attacks on infrastructure, such as China’s displacement of blockchain miners.

Ergo addresses this issue by implementing an algorithm designed to be mined on commodity hardware by users of the blockchain. Right now, there are smart contract pools that allow people with a single GPU graphics card to mine Ergo and verify the blockchain in return for some cryptocurrency. And with Moore’s Law, this commodity hardware becomes more accessible over time, as graphic cards with the same capability become less expensive.

It provides more opportunity, for more people and results in a more secure blockchain. What’s not to like?

## Capabilities & Environments

Almost every blockchain claims to value decentralization. But, if you need people with specialized hardware to maintain your consensus, then you are beholden to people with that specialized hardware, or to the governments that can ban them.

People talk about the number of transactions per second, the market capitalization, the price, the size and productivity of the applications on the chain. But, there is much that is not discussed.

For example, people rarely think about longer term issues, such as the fact that blockchains have lifecycles. Blockchains will have to operate during times when a significant portion of the local, regional and global environment is experiencing a pandemic, a war, or some other factor that threaten their ability to function. How prepared are they to meet that challenge?

It is not hard to imagine that various blockchain ecosystems becomes important to our daily lives, such as when there is a digital national currency, and a failure could lead to catastrophic outcomes, such as famine. How many people in the cryptocurrency space have given that possibility consideration? Your lambo is useless in an environment where you don’t have enough food to eat.

At this time, most blockchains are building their infrastructure. They aim to increase their market share and capability of their dApps. But, if you don’t have your eye on the potential problems that will manifest over time, you’ll make design decisions that will be difficult to fix later, e.g., Ethereum’s move toward Proof of Stake in an effort to resolve their problems with fees. And every design decision has positives and negatives.

## Ergo’s Positives & Negatives

• Financial capital: A fair launch means you don’t have a lot of money sitting around to fund development. There are ways this problem can be solved, such as establishing funds that people that are interested in certain kinds of development or a particular dApp could contribute to that would help make them a reality. This also has the advantage that it establishes that there is interest and perhaps even a market for the software being developed.
• Human capital: There are many excellent developers already working on Ergo. With financial constraints, it isn’t possible to bring on as many developers as some other blockchains, but this fact also leaves more room for organic growth. If adoption were only about market share, then Ergo is at a disadvantage. However, there are many niches that Ergo’s technology can fill. Some niches may not have many options and developers will be enticed to the platform because it can solve problems other blockchains cannot.
• Infrastructure: You need wallets, dApps, APIs and so forth. The software that faces the user of the chain needs a lot of work. However, the underlying chain technology is great, or has great potential, and the dApps and consumer facing technology will only improve from this point.
• Open source: It’s important to recognize that open source does have drawbacks. Many open source projects are a labor of love that don’t have good incentives, which can negatively impact projects by making it difficult to keep developers, create schisms that undermine the project or lead to other problems . But, there is also real value in not having to reinvent the wheel when building an application. It’s easier to leverage an existing code base, modify, and iterate than it is to write code from scratch. However, open source requires evolution, which takes time and implies some tolerance for error.
• Synergy: The ecosystem is young. But, there is evidence of clustering of services, such as the development of a profit sharing contract that can be used by any dApp, the building of cross-chain functionality, the launch of a variety of stablecoins, etc. These kind of interactions implies both competition and an attempt to accommodate a variety of use cases.

## Conclusion

Who is using the blockchain? Without many dApps, it is primarily people investing in the chain and transferring Ergo to and from exchanges and wallets. So, Ergo is a promise. It’s an idea that blockchains can be a vehicle for the economic good of ordinary people. But, there needs to be a lot of development before Ergo can fully deliver on that promise. Investing in that promise before it is fulfilled will both help make it reality, and it has the potential, if the promise is fulfilled, to benefit those willing to make that investment.

Acknowledgements: Many of the ideas in this essay came from Joe Armeanio’s response to a reddit post outlining Tascha’s A Checklist for Layer 1 Blockchain Investment.

# Mining the Ergo Cryptocurrency in the ergo.getblok.io Pool

Mining Ergo as part of the ergo.getblok.io mining pool is easy, particularly on Windows. If you already have a Ergo wallet, it can be set-up on a computer with a GPU video card compatible with mining Ergo in less than 5 minutes.

For Ergo, you need a card with a minimum of 4GB of RAM, ideally more. Create a Ergo wallet using Yoroi, if you don’t have one already. Download mining software compatible with your card, i.e., T-Rex (Nvidia) or RedTeamMiner (AMD). Extract the mining software file in your Download directory. Open a text editor, and type in (or copy & paste) the following, assuming in this example you are on Windows:

setx GPU_FORCE_64BIT_PTR 0
setx GPU_MAX_HEAP_SIZE 100
setx GPU_USE_SYNC_OBJECTS 1
setx GPU_MAX_ALLOC_PERCENT 100
setx GPU_SINGLE_ALLOC_PERCENT 100

C:\Users\your_username\path\to\mining\file\t-rex.exe -a autolykos2 -o stratum+ssl://ergo.getblok.io:4056 -u <YourErgoAddress>.<AnyNameYouWantToIdentifyTheComputer>

For clarity, <YourErgoAddress>.<AnyNameYouWantToIdentifyTheComputer> should look something like:

C:\Users\cafebedouin\Downloads\t-rex-0.24.7-win\t-rex.exe -a autolykos2 -o stratum+ssl://ergo.getblok.io:4056 -u 9g1p6UU8XoAeU4yGPLpbTHYiG8aBHwfCFzQqJZrfzuLnmF3zb7P.covertmixeraddress

You can find your address by going to the Receive tab in Yoroi, you can then go to the getblok.io website and put in the information this page asks for and it will provide the information above for you. Save the file as ERGO_mining.bat. To start mining, simply click on the file.

Note: If you have a virus protection program like McAfee, you’ll need to restore the t-rex.exe file after extraction and exclude it from Real-Time Scanning in order to run it.

If you want the mining software to start when you reboot your computer, then, save ERGO_mining.bat in C:\Users\Username\AppData\Roaming\Microsoft\Windows\Start Menu\Programs\Startup. If you have trouble finding the Startup folder, you can always save ERGO_mining.bat somewhere, type the Windows key + R to get the shell prompt, then type:

shell:startup 

This will bring up the Startup folder, and you can drag and drop the Ergo_mining.bat file into it.

## Linux

This is harder for me to comment on since I am using a AMD card on my Linux machine, which can be a bit of a PITA to configure correctly. These instructions will get you in the ballpark with an AMD card, but be prepared to do some troubleshooting.

Let’s assume that you somehow managed to get your graphics card working on Linux. Then, the process is very similar to Windows above. Open a text editor and type the following:

#!/bin/bash

export GPU_MAX_ALLOC_PERCENT=100
export GPU_SINGLE_ALLOC_PERCENT=100
export GPU_MAX_HEAP_SIZE=100
export GPU_USE_SYNC_OBJECTS=1

/home/cafebedouin/Downloads/teamredminer-v0.8.6.3-linux/teamredminer -a autolykos2 -o stratum+ssl://ergo.getblok.io:4056 -u  9g1p6UU8XoAeU4yGPLpbTHYiG8aBHwfCFzQqJZrfzuLnmF3zb7P.covertmixeraddress

Then, save the file as ergo_miner.sh. At the command prompt: chmod 744 ergo_miner.sh and then just run it as usual, by typing: ./ergo_miner.sh at the prompt. If you want it to automatically run whenever you restart your machine, this image from linuxconfig.org tells you everything you need to do to set it as a systemd service.

# Conceal Network

“Conceal Network is a secure peer-to-peer privacy framework empowering individuals and organizations to anonymously communicate and interact financially in a decentralized and censorship resistant environment.”

https://conceal.network/

# A Crash Course on Crypto Economics in 1 Hour by Natasha Che

A newer one with a focus on stablecoins and fiat.

The whole series is worth a read if you have any interest in cryptocurrencies. Tascha also has a newsletter.

# How NFTs Create Value

“[Non-fungible Tokens (NFTs)] enable new markets by allowing people to create and build upon new forms of ownership. These projects succeed by leveraging a core dynamic of crypto: A token’s worth comes from users’ shared agreement — and this means that the community one builds around NFTs quite literally creates those NFTs’ underlying value. And the more these communities increase engagement and become part of people’s personal identities, the more that value is reinforced.

Newer applications will take greater advantage of online-offline connections, and introduce increasingly complex token designs. But even today, it’s less surprising than you might think that people are making money selling pictures on the internet.”

Steve Kaczynski and Scott Duke Kominers, “How NFTs Create Value.” Harvard Business Review. November 10, 2021

I was of the mindset that NFTs are a scam. But, then again, people think the same thing about cryptocurrencies, which I think is a new computing paradigm. This overview and explainer convinced me that perhaps there is more going on in this space than I realized. If you want to go deeper down this hole, you could do worse than Rolling Stone’s coverage of the Bored Ape Yacht Club.