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Sorry Silicon Valley Liberals, Freedom of Thought Is Too Important to Mess With

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Peter Thiel at RNC 2016

Silicon Valley is on fire because venture capitalist Peter Thiel, after speaking in support of Donald Trump at the Republican National Convention, is donating $1.25 million to Trump’s campaign through a combination of super PAC donations and funds given directly to the campaign, The New York Times reported.

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Project Include, led by Former Reddit CEO Ellen Pao, is breaking off its relationship with start-up incubator Y Combinator (YC) in protest against Thiel’s association with YC as part-time partner.

“While all of us believe in the ideas of free speech and open platforms, we draw a line here,” says Pao. “We agree that people shouldn’t be fired for their political views, but…” it appears they don’t really agree. Same for free speech.

Gizmodo writer J.K. Trotter thinks YC president Sam Altman should resign.

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Altman penned a post to elaborate on YC’s choice to keep Thiel on board. After explaining that he is a Clinton supporter and considers Trump as “an unprecedented threat to America” who “shows little respect for the Constitution, the Republic, or for human decency,” Altman goes to the heart of the matter:

“[As] repugnant as Trump is to many of us, we are not going to fire someone over his or her support of a political candidate. As far as we know, that would be unprecedented for supporting a major party nominee, and a dangerous path to start down.”

Altman’s position is reasonable and principled, in the spirit of a quote often attributed to Voltaire:

I disapprove of what you say, but I will defend to the death your right to say it.

Needless to say in today’s political climate, Altman is not finding many supporters. There are exceptions though. The Week columnist Pascal-Emmanuel Gobry, for one, is persuaded that “[the idea] that speech that makes anybody uncomfortable should be prohibited [is] incompatible with liberal democracy as we classically understand it.”

Gobry is no Trump supporter. On the contrary, he called Trump “a proto-fascist” and believes Trump is a person “manifestly temperamentally unfit to be president,” whose campaign “is unhealthily stoking dark forces in the American psyche.”

But Gobry points out that Silicon Valley liberals, in pursuit of their otherwise worthy effort to promote diversity when it comes to underrepresented groups, are endangering the equally important diversity of opinion. Silicon Valley, and America, are what they are because they have tolerated diversity of opinion and encouraged freedom of thought and freedom of speech.

So far.

“Diversity of opinion is painful but critical to the health of a democratic society,” added Altman in a tweet.

We can’t start purging people for political support.

A somewhat unexpected defense of freedom of thought and speech came from Facebook creator Mark Zuckerberg, CNN Money reports. “We can’t create a culture that says it cares about diversity and then excludes almost half the country because they back a political candidate,” said Zuckerberg in a post shared only with Facebook employees. “There are many reasons a person might support Trump that do not involve racism, sexism, xenophobia or accepting sexual assault.”

The authenticity of Zuckerberg’s post has been confirmed by Facebook. The first comment in a YC’s Hacker News thread dedicated to Zuckerberg’s remarks says it all:

If everyone looks different but thinks the same, that’s not real diversity.

Shaming and Mobbing Practices Have No Place in a Liberal Democracy

"Culture" of shamingI guess Thiel is one of those persons that, as Zuckerbers says, support Trump for reasons that do not involve racism, sexism, xenophobia or accepting sexual assault. To my knowledge. Thiel is no racist or xenophobe, and has never sexually assaulted anyone. It’s worth noting that Thiel was the first man ever to say “I’m proud to be gay‘ at a Republican National Convention, and donated $2 million to the campaign of Carly Fiorina (who, for those who didn’t notice, happens to be a woman). To me, raised in the old-fashioned belief that facts count more than empty words, these facts indicate that calling Thiel homophobic or sexist is, to say the least, surreal.

Peter Thiel is a visionary thinker who believes, for reasons that must make sense to him, that a Trump presidency would be good for the nation and the world. I disagree. But we must reply to Thiel’s arguments with better arguments, not with shaming and mobbing practices that have no place in a liberal democracy.

I am not an American, but I have given a lot of thought to the upcoming US elections. As a foreigner who will be affected (like everyone else on the planet) by America’s choice on November 8, and as a friend of America, I hope Clinton wins.

But I don’t condemn Trump’s supporters. On the contrary, I agree with Zuckerberg: almost half of the population of the US support Trump for reasons that, in many cases, deserve consideration.

I agree with Altman and Gobry: tolerance, freedom of thought, and freedom of speech, are among the foundations of a healthy society, among the greatest conquests of modern liberal civilization, and much too important to mess with.

Unfortunately, many US “liberals” – I can’t resist putting the word between scare quotes – are disowning these fundamental liberal values. The “liberal” Politically Correct (PC) thought police keeps harassing all those who dissent with shaming and mobbing practices that are running amok, often with the silent approval of the “liberal Left.” In my opinion, this trend is a dangerous slippery slope to a very bad place.

The Thiel episode is but the last of many similar cases. Tesla Motors and SpaceX founder Elon Musk was recently attacked by the media because… he doesn’t follow enough women on Twitter.

A few weeks ago Palmer Luckey, the creator of Facebook’s Oculus Rift Virtual Reality (VR) headset, was outed as a backer of a Trump fan group called “Nimble America.” Some VR developers said they intended to stop developing for the Rift until Luckey is gone.

But other developers resisted the public shaming wave. One said:

I absolutely support him doing whatever he wants politically if it’s legal.To take any other position is against American values.

Well said.

And don’t forget last year’s BullShirtStorm.

Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to Hacked.

Images from Republican National Convention (screenshot) and Wikimedia Commons.

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Cryptokitties Made Us Realize These Biggest Industry Challenges

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You may not be in the loop but Cryptokitties have just surpassed the major distributed cryptocurrency exchange such as EtherDelta to become the largest smart contract on the Ethereum network by gas consumption. As of writing this, the Cryptokitties are accounting for slightly more than 14% of the Ethereum’s transactions in over 1,500 blocks according to ETH Gas Station.

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This is a staggering volume of traffic for an online game that, on the surface, appears quite bland. But the popularity of this cryptocollectible has underscored one of Ethereum biggest downsides which were never envisioned: lack of scalability. According to Etherscan, Ethereum transactions have increased six-fold since the game’s release on 28th November 2017.

Already some investors are raising concerns that this frivolous game is crowding out more genuine and serious business users in the network. But how exactly have Cryptokitties phenomenon congested the Ethereum network?

Well, in “Cryptokitties Made Us Realize These Biggest Industry Challenges” we dive deeper to explore how the Cryptokitties phenomenon has contributed to Ethereum’s scalability challenges. Let’s jump in.

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Challenges of Cryptokitties

Here are some challenges the Cryptokitties phenomenon presents for the Ethereum ecosystem.

#1: Scaling challenges

While the sensations of Cryptokitties is great for Ethereum adoption, the pressure it has placed on the Ethereum blockchain means that developers have to work out a scaling solution. The traffic is making it extremely difficult for users to play the game, and many transactions such as buying and selling of cats are taking a lot of time to process with some demanding multiple attempts.

All of these intricacies are related to the Ethereum blockchain’s throughput limit that is set at roughly 15 transactions per second. Until the throughput limit is expanded, Cryptokitties have to contend with the current 15 seconds which is shared among other popular smart contracts as well. There’s no doubt that Cryptokitties has become popular within a short time and raising the bar for gas auctioning in Ethereum.

With Ethereum protocol soon hitting its capacity, research into new scaling options to help the distributed technology scale is needed soon. But this scaling issue isn’t the only problem Ethereum protocol has to contend with.  Cryptokitties is just one viral game that hasn’t even spread across the tech universe. In fact, it was just launched a couple days ago (28th November)!

If Cryptokitties (one viral game) can slow down the entire Ethereum network, what will happen when the blockchain grows to accommodate real-world apps? Obviously, a long term solution is required. The Ethereum community can’t afford to have scaling challenges whenever a great smart contract hits the decentralized web.

#2: Divergent opinions about Ethereum growth

Just as is the case with the bitcoin scaling problem, we’re starting to see cracks in the Ethereum blockchain community as each side takes diametrically opposing sides about how to scale the network. For some time, bitcoin has been experiencing near or sometimes full blocks with transactions taking nearly 20 to 40 minutes to be validated on the blockchain.

Some Ethereum enthusiasts are already suggesting that miners should increase the so-called gas—a measure of computational effort in Ethereum—limit (just as is the case with bitcoin’s block size limit).  Ideally, the gas limit determines the kind of operations such as the addition of numbers, calculation of hashes or even sending transactions that you can compute in Ethereum.  Each operation has a fixed set of gas attached to it.

By setting the gas limit, we’ll be capping the maximum amount of gas which can be included in Ethereum block. With a maximum of gas in place, the block size and the speed of the network will be greatly be impaired. Ideally, this proposal is hinged on the philosophy that developers shouldn’t decide on the ideal gas limit but market actors such as the miners, the applications, and the investors.

As you are aware, the block size and speed of the network are at the core of Ethereum protocol. Altering any of them completely does away with Ethereum’s vision. Also, Ethereum miners are unlikely to agree to this proposal as it has its own undesirable effects. As of writing this, the Ethereum network uncle rate is already peaked at over 30% compared to the network DoS (Denial of Service) attacks.

This implies that at present, every third block gets orphaned. Now raising the gas limit is most likely going to make the current mining situation even worse. Without considerable enhancements on how large blocks will be processed using current implementations and decentralized in the network, increasing the gas limit isn’t feasible just yet.

While high-end systems will still be able to validate the heavy blocks within several 100 milliseconds, low-end systems are already gobbling up few seconds to validate their transactions and distribute the block.

#3: Other ICOs are at a risk

The Ethereum gas market is an unknown equation that allows users to increase gas and ensure that transactions such as the sale or breeding can take place in time. At present, Cryptokitties cautions users of keeping an eye on gas consumption, to avert high prices. An acutely high gas price would, in fact, expedite the transaction but make it flop completely.

The lackluster performance and gas speculations may make users abandon the Ethereum network completely. Bitcoin has been attracting speculative investments lately because of the unprecedented high prices that have been hovering north of $15,000. Now the presence of Cryptokitties and their network demands places hundreds of ICOs implementing their projects on Ethereum network at risk.

The specifics of the cryptographic computation may imply that smart contracts will never quite work to the levels anticipated by investors in the ICOs. This means that these ICOs are likely to fail because of the scaling challenges presented by Ethereum network.

Bottom Line

It’s no secret that Ethereum—and its smart contracts—has literally revolutionized applications. However, the launch of Cryptokitties has raised more controversies regarding the future of Ethereum protocol. The Ethereum protocol was once viewed as a perfect replacement for Bitcoin. But at these rates of network jamming, users are becoming cynical.

While I am not a futurist, one thing is certain: there are tell-tale signs of Ethereum fracture. Amidst all the hype and uncertainties about the scaling problem, it’s only proper for you to continue speculating before investing in Cryptokitties.

Featured image courtesy of Shutterstock. 

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Market Overview

Uncertainty in Saudi Arabia as Dozens of Princes are Arrested

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Just a few days back we were impressed by the steps taken by the Saudi Crown Prince Mohammed bin Salman. He played a major role in allowing women to drive and in allowing women to attend sports events from next year. He, then, announced the construction of a hi-tech city ‘NEOM’, which was a move to generate additional income for Saudi Arabia and wean the economy away from its dependency on oil.

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Key observations

  1. Crown Prince Mohammed bin Salman cracks down on corruption
  2. Dozens of Prince, former ministers, business executives and government officials arrested
  3. A move widely looked as consolidation of power
  4. Uncertainty has increased
  5. We withdraw our previous recommendation of buying the ETF KSA

We expect crude oil prices to rally in 2018, which should benefit the oil-rich Kingdom in the short-term. As both the short-term and the long-term picture started to improve, we expected Saudi Arabia to make a quick recovery. In order to benefit from this, we had recommended a long position in KSA iShares MSCI Saudi Arabia Capped ETF, which has a significant exposure to Saudi Arabia. However, the events of the last few days have forced us to reassess our call.

The Rise of the Crown Prince

Prince Salman, also known as MBS was an obscure figure just a few years back. However, since his father King Salman ascended the throne, he has quickly risen in stature. In June of this year, the King named Salman as the crown prince and removed the then existing Crown Prince Mohammed bin Nayef of all his duties by a royal decree.

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This move cleared the way for MBS to ascend the throne if the octogenarian King Salman abdicated his throne. With power in his hands, it was expected that the new Crown Prince will implement his Vision 2030 plan with ease. However, last week, MBS made an aggressive move to consolidate his power further.

On Saturday, the King formed a new anti-corruption committee with the Crown Prince as its head. Within hours of its formation, the committee arrested 11 princes, 4 former ministers and hundreds of high ranking officials on allegations of corruption. They are being housed at Riyadh Ritz-Carlton, which has been closed for outside public.

The Saudi Council of Ministers said that the arrests were ““based on specific evidence of criminality and acts that were intended criminal transgressions and resulted in unlawful gain.”

However, experts believe that with this move, the Crown Prince wants to purge all rivals and fire a warning shot at any other possible dissidents.

Will this move ensure that Saudi Arabia stays corruption free?

Unlikely. In Saudi Arabia, the royal clan is more or less above the law. The sources of their income are never revealed and for years they have enjoyed government patronage in various businesses.

Even the current purge is unlikely to reach the royal family members who are loyal to MBS.

In fact, in 2016, MBS had purchased a 440-foot yacht priced more than $500 million. Neither has he disclosed the source of his funds nor will be asked about it.

The recent anti-corruption drive will only shift the power from his rivals to the members who are close to the Crown Prince.

Young Saudi population in support of the anti-corruption drive

The Saudi millennials are likely to support the arrests. They have long despised the unwritten immunity extended to the royal family.  The current move offers a confidence that no one is above the law and it will benefit the nation in the long-term.

Absence of opposition is not a positive development

The Crown Prince has stated that he will steer the nation towards a moderate version of Islam, unlike his predecessors who have followed the hardline. With most of his rivals arrested, decision making can become faster and will help MBS to push aggressive reforms.

However, the involvement of Saudi Arabia in Yemen, the aggressive confrontation with Iran, and the boycott of Qatar have all been inappropriate decisions taken by MBS. With no opposition in future, he may make a blunder that can be detrimental to the nation and also to the region.

Investors are Likely to Be Wary

Vision 2030 can be successful only with the support of the private sector. With some of the top businessmen like billionaire Prince Alwaleed bin Talal, chairman of investment firm Kingdom Holding; Amr al-Dabbagh, chairman of builder Red Sea International; and Nasser bin Aqeel al-Tayyar, founder of Al Tayyar Travel arrested, their businesses are likely to be affected.

Additionally, the foreign investors are unlikely to be interested in projects until this whole drama comes to an end. This can delay many existing projects.

The royal unity will be tested

For the past many decades, power has been divided among the various branches of the Saudi royal family. This has kept them together.

However, the recent purge is unlikely to go down well with the royal clan. Though voices may be silenced now out of fear, it is likely to rear its head sometime in the future. A bloody coup or power struggle can’t be ruled out.

We don’t want to invest in uncertainty

Considering the uncertainty, we would like to withdraw our recommendation to invest in the future growth of Saudi Arabia. The risks far outweigh the potential benefits. We shall keep a close eye on the developments and reassess our call if things change for the better. For now, please don’t invest in the ETF KSA.

Will the Princes park their wealth in cryptocurrencies

Thousands of bank accounts have been frozen in this anti-corruption drive. Saudi Arabia’s attorney-general Sheikh Saud Al Mojeb has said that the current exercise is only Phase one. So, we may expect more such drives in the future, especially if MBS faces any opposition to his decisions.

The combined wealth of the persons who have been arrested totals more than $33 billion. The remaining members of the royal family and wealthy businessmen are likely to remain on the edge. Considering the situation, it is reasonable to expect at least some money to find its way into cryptocurrencies.

Featured image courtesy of Shutterstock. 

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Observations from a Post-Bubble(?) World

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If you have any kids, you’re by now familiar with the phenomenon of the Angry Birds. The game series and subsequent branded clothing and the like have created something literally insane: a $1 billion IPO valuation for something called Angry Birds. We’re not making this up.

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Rovio Entertainment, the Finnish maker of Angry Birds, is targeting an IPO that would give it a market value of €802 million ($956 million) to €896 million ($1.1 billion). […] Rovio said it would price shares between €10.25 ($12.20) and €11.50 ($12.30). […] Rovio has built an empire around its popular mobile game Angry Birds, including toys, clothes and an animated 3-D movie. […] The gaming app, which was released in 2009, allows players to sling virtual birds at enemy pigs to save their eggs.

Meanwhile, people are concerned that we’re in a bubble with cryptocurrencies and, more specifically, with initial coin offerings and the technologies coming out of them. Let’s be real: the two things are not the same. For better or worse, games and movies are proven ways to make money, while most of the technology we’re offered in the ICO space is speculative at best.

But, of the technologies that we’re offered, those that actually do succeed, well, some of the will re-shape society. And that’s what we’re betting on: the kind of money that is made then. But it’s clear that if we were in a bubble, it recently popped. The bloodshed may not even be over, there may be speculative pumps left before the whole market has some time to rebuild. All the same, it’s helpful to monitor what’s going on in the rest of the world to determine if we’re really overvaluing things.

Most firms in the ICO space differ from Rovio in two ways: they don’t have a working product or solid revenue to point at. As such, most of them aren’t trying to value themselves at nearly the same level. But if society can afford this amount to value a games company, then certainly we’re far from having too many fundamentally transformative companies come out of the cryptocurrency space.

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We’re either a long way from the bubble or somehow in a world where bubble economics don’t truly apply. Every token brings with it a stagnated exit from the cryptocurrency market, thereby inflating the amount of value that is actually invested in the crypto economy. The amount of demand to liquidate it actually is less important when the activity around ICOs is viewed through this lense: even when people, or the network as a whole, loses a bit of money, it gains in new participants, who later are likely to re-add the lost value.

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