Innovation & Entrepreneurship

Bitcoin: Imagine a net without intermediaries

by Jerry Brito on April 16, 2011 · 43 comments

Yesterday the FBI effectively [shut down](http://thehill.com/blogs/hillicon-valley/technology/156429-fbi-shuts-down-online-poker-sites) three of the largest gambling sites online and indicted their executives. From a tech policy perspective, these events highlight how central intermediary control is to the regulation of the internet.

Department of Justice lawyers were able to take down the sites using the same tools we’ve [seen DHS use](http://techland.time.com/2011/02/17/operation-protect-our-children-accidentally-shutters-84000-sites/) against alleged pirate and child porn sites: they seize the domain names. Because the sites are hosted overseas (where online gambling is legal), the feds can’t physically shut down the servers, so they do the next best thing. They get a seizure warrant for the domain names that point to the servers and [force the domain name registrars](http://pokerati.com/2011/04/15/poker-panic-11-update-on-domain-name-seizures/) to point them instead to a government IP address, such as [50.17.223.71](http://50.17.223.71). The most popular TLDs, including .com, .net, .org, and .info, have registrars that are American companies within U.S. jurisdiction.

Another intermediary point of control for the federal government are payment processors. The indictments revealed yesterday relate to violations of the [Unlawful Internet Gambling Enforcement Act](http://www.firstamendment.com/site-articles/UIEGA/), which makes it illegal for banks and processors like Visa, MasterCard and PayPal to let consenting adults use their money to gamble online. According to the DOJ, in order to let them bet, the poker sites “arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls.” ([PDF](http://www.wired.com/images_blogs/threatlevel/2011/04/scheinbergetalindictmentpr.pdf))

Now, imagine if there were no intermediaries.

[In my TIME.com Techland column today, I write about Bitcoin](http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/), a completely decentralized and anonymous virtual currency that I think will be revolutionary.

>Because Bitcoin is an open-source project, and because the database exists only in the distributed peer-to-peer network created by its users, there is no Bitcoin company to raid, subpoena or shut down. Even if the Bitcoin.org site were taken offline and the Sourceforge project removed, the currency would be unaffected. Like BitTorrent, taking down any of the individual computers that make up the peer-to-peer system would have little effect on the rest of the network. And because the currency is truly anonymous, there are no identities to trace.

And if a P2P currency can make it so that there is no fiscal intermediary to regulate, how about a distributed DNS system so that there are no registrars to coerce? This is something Peter Sunde of Pirate Bay fame [has been working on](http://www.wired.co.uk/news/archive/2010-12/02/peter-sunde-p2p-dns). These ideas may sound radical and far-fetched, but if we truly want to see an online regime of “[denationalized liberalism](http://techliberation.com/2010/11/28/mueller%E2%80%99s-networks-and-states-classical-liberalism-for-the-information-age/),” as Milton Mueller puts it, then getting rid of the intermediaries in the net’s infrastructure might be the best path forward.

Again, check out [my piece in TIME](http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/) for a thorough explanation of Bitcoin and its implications. I plan to be writing about it a lot more and devote some of my research time to it.

43 comments

Again, It’s Really Hard to Bottle Up Digital Generativity / Openness

by Adam Thierer on April 8, 2011 · 17 comments

There’s a nice piece of reporting from Ian Shapira in today’s Washington Post entitled, “Once the Hobby of Tech Geeks, iPhone Jailbreaking Now a Lucrative Industry.” In the article, Shapira documents the rise of independent, unauthorized Apple apps (especially tethering apps) and points out that what was once a small black market has now turned into a booming, maturing business sector in its own right. In fact, Sharpia notes, there are already “market leaders” in the field:

At the top of the jailbreaking hierarchy sits Jay Freeman, 29, the founder and operator of Cydia, the biggest unofficial iPhone app store, which offers about 700 paid designs and other modifications out of about 30,000 others that are free. Based out of an office near Santa Barbara, Calif., Freeman said Cydia, launched in 2008, now earns about $250,000 after taxes in profit annually. He just hired his first full-time employee from Delicious, the Yahoo-owned bookmarking site, to improve Cydia’s design. “The whole point is to fight against the corporate overlord,” Freeman said. “This is grass-roots movement, and that’s what makes Cydia so interesting. Apple is this ivory tower, a controlled experience, and the thing that really bought people into jailbreaking is that it makes the experience theirs.”

In another sign this black market is now going mainstream, advertisers are apparently flocking to it:

In what might be the ultimate sign that the jailbreak industry is losing its anti-establishment character, Toyota recently offered a free program on Cydia’s store, promoting the company’s Scion sedan. Once installed, the car is displayed on the background of the iPhone home screen, and the iPhone icons are re-fashioned to look like the emblem on the front grill.

Interestingly, however, some people now complain that Cydia is getting too big for its britches and has come to be “as domineering as Apple is in the non-jailbreak world.” What delicious irony! Yet, I do not for one minute believe that Cydia has any sort of “lock” on the “unlocking” marketplace. This is an insanely dynamic sector that is subject to near-constant fits of disruptive technological change. Continue reading →

17 comments

The Precautionary Principle in Information Technology Debates

by Adam Thierer on April 4, 2011 · 12 comments

I’m currently plugging away at a big working paper with the running title, “Argumentum in Cyber-Terrorem: A Framework for Evaluating Fear Appeals in Internet Policy Debates.” It’s an attempt to bring together a number of issues I’ve discussed here in my past work on “techno-panics” and devise a framework to evaluate and address such panics using tools from various disciplines. I begin with some basic principles of critical argumentation and outline various types of “fear appeals” that usually represent logical fallacies, including: argumentum in terrorem, argumentum ad metum, and argumentum ad baculum. But I’ll post more about that portion of the paper some other day. For now, I wanted to post a section of that paper entitled “The Problem with the Precautionary Principle.” I’m posting what I’ve got done so far in the hopes of getting feedback and suggestions for how to improve it and build it out a bit. Here’s how it begins…

________________

The Problem with the Precautionary Principle

“Isn’t it better to be safe than sorry?” That is the traditional response of those perpetuating techno-panics when their fear appeal arguments are challenged. This response is commonly known as “the precautionary principle.” Although this principle is most often discussed in the field of environment law, it is increasingly on display in Internet policy debates.

The “precautionary principle” basically holds that since every technology and technological advance poses some theoretical danger or risk, public policy should be crafted in such a way that no possible harm will come from a particular innovation before further progress is permitted. In other words, law should mandate “just play it safe” as the default policy toward technological progress. Continue reading →

12 comments

What Progress Looks Like

by Adam Thierer on April 4, 2011 · 5 comments

Kudos to Mashable for collecting these “10 Hilarious Vintage Cellphone Commercials” from the past two decades. Strangely, I don’t remember ever seeing any of these when they originally aired [although some are foreign], but it might have been because I flipped the channel when they came on. Most of really horrendous. My favorite is the Radio Shack ad shown below, not just because of the phone, but because of the Bill Gates-looking kid at the end. And speaking of Radio Shack, check out the ad down below, which I originally posted here a few years ago, for a 1989 Tandy machine, then billed as its “Most Powerful Computer Ever.” Accordingly, you would have had to practically mortgage your house to own it with a price tag of $8500! Whether its phones or computers — which are increasingly one in the same, of course — it’s amazing how much progress we’ve seen in such a short period of time.

5 comments

App Store Wars: Apple, Amazon, Google, Microsoft & Dynamic Platform Competition

by Adam Thierer on March 23, 2011 · 1 comment

Venture capitalist Bill Gurley asked a good question in a Tweet late last night when he was “wondering if Apple’s 30% rake isn’t a foolish act of hubris. Why drive Amazon, Facebook, and others to different platforms?” As most of you know, Gurley is referring to Apple’s announcement in February that it would require a 30% cut of app developers’ revenues if they wanted a place in the Apple App Store.

Indeed, why would Apple be so foolish? Of course, some critics will cry “monopoly!” and claim that Apple’s “act of hubris” was simply a logical move by a platform monopolist to exploit its supposedly dominant position in the mobile OS / app store marketplace. But what then are we to make of Amazon’s big announcement yesterday that it was jumping in the ring with its new app store for Android? And what are we to make of the fact that Google immediately responded to Apple’s 30% announcement by offering publishers a more reasonable 10%-of-the-cut deal? And, as Gurley notes, you can’t forget about Facebook. Who knows what they have up their sleeve next. They’ve denied any interest in marketing their own phone and, at least so far, have not announced any intention to offer a competing app store, but why would they need to? Their platform can integrate apps directly into it! Oh, and don’t forget that there’s a little company called Microsoft out there still trying to stake its claim to a patch of land in the mobile OS landscape. Oh, and have you visited the HP-Palm development center lately? Some very interesting things going on there that we shouldn’t ignore.

What these developments illustrate is a point that I have constantly reiterated here: Continue reading →

1 comment

Virginia Postrel Takes on the Zittrain Thesis

by Adam Thierer on March 14, 2011 · 0 comments

On numerous occasions here and elsewhere I have cited the enormous influence that Virginia Postrel’s 1998 book, The Future and Its Enemies, has had on me. Her “dynamist” versus “stasis” paradigm helps us frame and better understand almost all debates about technological progress. I cannot recommend that book highly enough.

In her latest Wall Street Journal column, Postrel considers what makes the iPad such a “magical” device and in doing so, she takes on the logical set forth in Jonathan Zittrain 2009 book, The Future of the Internet and How to Stop It, although she doesn’t cite the book by name in her column. You will recall that in that book and his subsequent essays, Prof. Zittrain made Steve Jobs and his iPhone out to be the great enemy of digital innovation — at least as Zittrain defined it. How did Zittrain reach this astonishing conclusion and manage to turn Jobs into a pariah and his devices into the supposed enemy of innovation? It came down to “generativity,” Zittrain said, by which he meant technologies or networks that invite or allow tinkering and all sorts of creative uses. Zittrain worships general-purpose personal computers and the traditional “best efforts” Internet. By contrast, he decried “sterile, tethered” digital “appliances” like the iPhone, which he claimed limited generativity and innovation, mostly because of their generally closed architecture.

In her column, Postrel agrees that the iPad is every bit as closed as Zittrain feared iPhone successor devices would be. She notes: “customers haven’t the foggiest idea how the machine works. The iPad is completely opaque. It is a sealed box. You can’t see the circuitry or read the software code. You can’t even change the battery.” But Postrel continues on to explain why the hand-wringing about perfect openness is generally overblown and, indeed, more than a bit elitist: Continue reading →

0 comments

A Vision of (Regulatory) Things to Come for Twitter?

by Adam Thierer on March 13, 2011 · 2 comments

Twitter could be in for a world of potential pain. Regulatory pain, that is. The company’s announcement on Friday that it would soon be cracking down on the uses of its API by third parties is raising eyebrows in cyberspace and, if recent regulatory history is any indicator, this high-tech innovator could soon face some heat from regulatory advocates and public policy makers. If this thing goes down as I describe it below, it will be one hell of a fight that once again features warring conceptions of “Internet freedom” butting heads over the question of whether Twitter should be forced to share its API with rivals via some sort of “open access” regulatory regime or “API neutrality,” in particular. I’ll explore that possibility in this essay. First, a bit of background.

Understanding Forced Access Regulation

In the field of communications law, the dominant public policy fight of the past 15 years has been the battle over “open access” and “neutrality” regulation. Generally speaking, open access regulations demand that a company share its property (networks, systems, devices, or code) with rivals on terms established by law. Neutrality regulation is a variant of open access regulation, which also requires that systems be used in ways specified by law, but usually without the physical sharing requirements. Both forms of regulation derive from traditional common carriage principles / regulatory regimes. Critics of such regulation, which would most definitely include me, decry the inefficiencies associated with such “forced access” regimes, as we prefer to label them. Forced access regulation also raises certain constitutional issues related to First and Fifth Amendment rights of speech and property. Continue reading →

2 comments

Free the Toll-Free Numbers

by Steven Titch on March 2, 2011 · 0 comments

Toll-free number allocation remains one of the last vestiges of telecom’s monopoly era. Unlike Internet domain names, there is no organized way of requesting, registering, reserving, purchasing 800, 888, 877, 866, or the newly available 855 numbers, the five prefixes that currently designate toll-free service. If you’re lucky or creative enough, you can visit any number of sites (just Google “855 toll free code”) and the number you request might be available. If not, you’re SOL.

That’s because the toll-free number regulation regime is cumbersome, opaque and bureaucratic. And while the FCC technically prohibits the warehousing, hoarding, transfer and sale of toll-free numbers, enforcement is difficult and inconsistent.

The North American Numbering Council, a federal advisory committee that was created to advise the FCC on numbering issues will be meeting in Washington March 9. On the agenda will be discussion on whether to go forward with exploring market mechanisms that can be applied to toll-free number assignment.

It’s an idea worth pursuing. It is clear that some toll-free numbers have equity value, especially when they can bolster a brand identity or be easily remembered. 1-800-SOUTHWEST, 1-800-FLOWERS are two examples.

Yet right now, the toll-free numbering pool is a vast and unruly commons that recognizes no difference in value between a desirable mnemonic and a generic sequence of digits. Numbers are assigned on a first-come, first-served basis. End users can request a specific number, but they can get it only if it is available from the pool. Under the current rules, they cannot offer to buy the number from its current user. Nor can the user of 1-800-555-2665, which alphanumerically translates to both 1-800-555-BOOK and 1-800-555-COOK, put the number up for auction to see who will pay more, the bookstore or cooking school.

Continue reading →

0 comments

Just How Dynamic is the Mobile Internet Marketplace?

by Adam Thierer on February 21, 2011 · 7 comments

To believe some of the worrywarts around Washington, we find ourselves in the midst of a miserable mobile marketplace experience. Regulatory advocates like New America Foundation, Free Press, Public Knowledge and others routinely claim that the sky is falling on consumers and that far-reaching regulation of the wireless sector is needed to save the day.

I hope those folks are still willing to listen to facts, becuase those facts tell a very different story. Specifically, I invite critics to flip through the latest presentation by Internet market watchers Mary Meeker and Matt Murphy of Kleiner Perkins Caufield & Byers on “Top Mobile Internet Trends” and then explain to me how we can label this marketplace anything other than what it really is: One of the greatest capitalist success stories of modern times. Just about every metric illustrates the explosive growth of technological innovation in the U.S. mobile arena. I’ve embedded the entire slideshow down below, but two particular slides deserve to be showcased.

Continue reading →

7 comments

Correcting Herb Kohl (& Kayak & Bing Travel) on Google/ITA

by Geoffrey Manne on December 2, 2010 · 1 comment

Today comes news that Senator Kohl has sent a letter to the DOJ urging “careful review” of the proposed Google/ITA merger. Underlying his concerns (or rather the “concerns raised by a number of industry participants and consumer advocates that I believe warrant careful review”) is this:

Many of ITA’s customers believe that access to ITA’s technology is critical to competition in online air travel search because it cannot be matched by other players in the travel search industry. They claim that ITA’s superior access to information and superior technology enables it to provide faster and better results to consumers. As a result, some of these industry participants and independent experts fear that the current high level of competition among online travel agents and metasearch providers could be undermined if Google were to acquire ITA and start its own OTA or metasearch service. If this were to happen, they argue, consumers would lose the benefits of a robustly competitive online air travel market.

For several reasons, these complaints are without merit and a challenge to the Google/ITA merger would be premature at best—and a costly mistake at worst. Continue reading →