I use blockchain technology to let strangers come into my home at any given time to use my washing machine that is prostituting itself for more economical usage in order to pay off the debt my refrigerator accumulated because it dumped all of my money on the honest ponzi scheme being run by the stove.
This advertisement — which is running all through the World Cup — is for Hdac, an Internet of Things on the Blockchain company. “Our commercial will air during the halftime for all 32 matches.” Above is the 30 second version, and there’s also a 60 second version that appears unavailable now.
The ad features a smiley well-off family going out and leaving their shiny appliances to swap cryptocurrencies with each other to optimise their energy usage. The dog looks quite perturbed.
(Click the play button and watch it now. If I had to, you can. I’ve suffered for my art, now it’s your turn.)
The Hdac ICO’s finished, they don’t have a consumer product, the ad doesn’t include their website address … it’s entirely unclear what effect this ad is supposed to have.
The ad makes no sense at all, unless you already know what it’s about — then it makes a different kind of no sense at all.
I was trying to write about Roko’s Basilisk today. Maybe the real Basilisk was the incomprehensible, yet stupidly expensive, Bitcoin fan fiction broadcast to millions of people that we watched along the way.
The Hdac ICO
Hdac is short for Hyundai-DAC. It was founded by Chung Dae-sun, whose aunt and uncle are the CEOs of the Hyundai Group and Hyundai Motors. The Hdac ICO worked its Hyundai links for credibility, and was quite popular in Korea.
Hdac itself is incorporated in Zug, Switzerland and worked with FINMA on compliance, KYC and so on — if only after the token sale, meaning that buyers who’ve already sent in their bitcoins have to provide more identification.
One ICO news site, CryptoGurus, called Hdac “The Worst ICO of 2017” — so bad, in fact, that they refused to write a sponsored article for them. They considered Hdac couldn’t compete with IOTA — the other proposal for an Internet of Things cryptocurrency — and weren’t impressed that the white paper compared Hdac to Bitcoin and Ethereum, but not to its obvious competitor.
IOTA doesn’t work or do any of what it promised either — but we’re talking about the prospect of selling your ICO magic beans onward at a profit, rather than mere tawdry deliverability of white paper promises. But CryptoGurus didn’t fancy its resaleability prospects either.
The white paper promises the innovation of your Internet-connected light bulbs and appliances all billing each other — because obviously everyone wants that.
We believe that the future digital world will include the Hdac Platform as a highly reliable blockchain network that can conveniently utilize the services of the world’s numerous IoT devices … The Hdac Platform will be a key tool for implementing a more reasonable and efficient transaction system as the worlds of blockchain and IoT converge.
The technological philosophy underpinning Hdac is to dramatically improve M2M transaction environments daily: all transactions should be seamless and easy. In addition, we believe it will be possible to promote reasonable consumption and accurate management for all communication and utility expenditures using our technology.
M2M is short for “many to many” or “machine to machine” — all the gadgets talking to each other, exchanging tiny amounts of cryptocurrency. They think this would be hard to do centrally, so they envisage it being done on a blockchain.
The Hdac blockchain uses proof-of-work, with a custom algorithm called ePow — which they claim will, somehow, work around the intrinsically anti-efficient nature of any proof-of-work blockchain. You’ll be amazed to hear that their hand-rolled system got hacked in May (translation).
They claim Hdac will be able to do 160 transactions per second, with a target of 1000 tps, and a block every three minutes. That’s the total transaction rate for every device in the world that’s connected to this blockchain. They posit a hierarchy of interconnected public and private blockchains to help it scale up.
Micropayment hell, on the blockchain
Not answered — why anyone would want to live like this. Consumers hate micropayments — they feel continuously nickel-and-dimed, and it saps the attention. They vastly prefer stable subscriptions.
Clay Shirky’s 2000 essay “The Case Against Micropayments” describes the fundamental problem:
Micropayment systems have not failed because of poor implementation; they have failed because they are a bad idea. Furthermore, since their weakness is systemic, they will continue to fail in the future.
The Short Answer for Why Micropayments Fail: Users hate them.
Why does it matter that users hate micropayments? Because users are the ones with the money, and micropayments do not take user preferences into account.
In particular, users want predictable and simple pricing. Micropayments, meanwhile, waste the users’ mental effort in order to conserve cheap resources, by creating many tiny, unpredictable transactions. Micropayments thus create in the mind of the user both anxiety and confusion, characteristics that users have not heretofore been known to actively seek out.
Customers only put up with micropayments when they have no choice. They flock to subscriptions wherever possible.
But there are enough fans of the bad idea of micropayments that it keeps getting floated — particularly in cryptocurrency circles. The idea has usually been presented uncritically as a possible future use case for Bitcoin, though not so much since transaction fees blew up. No reason is given why you might want micropayments.
The notion inspires Andreas Antonopoulous to purple prose in The Internet of Money Volume Two:
What happens when you change the time dimension of money? What happens when you convert it from something that is packetized — that is discrete, something that we’ve been used to dealing with for generations now in chunks of monthly payments and quarterly accounting and (maybe if we’re lucky) daily payments—and take it down to milliseconds? When you can do micropayments in milliseconds, the term cash flow takes on a whole different meaning. Cash is a flow; it’s a continuous stream that has no meaning as an amount. Imagine doing accounting in businesses on a real-time basis, based on flows of money coming in and flows of money coming out. We have not even scratched the surface. Until now.
The proportion of people who would want to live their daily lives like this is negligible. Picture a Bitcoin hacker draining your payment pool from across the Internet, irreversibly — oh wait, that’s the present.
As is standard in cryptocurrency, the micropayment use case rests on wishful thinking. Per Shirky:
Micropayment proponents have long suggested that micropayments will work because it would be great if they did. A functioning micropayment system would solve several thorny financial problems all at once. Unfortunately, the barriers to micropayments are not problems of technology and interface, but user approval. The advantage of micropayment systems to people receiving micropayments is clear, but the value to users whose money and time is involved isn’t.
Philip K. Dick knows the score
The real value proposition of all Internet of Things micropayment dreams was fully outlined by science fiction author Philip K. Dick in his 1969 novel Ubik:
Back in the kitchen he fished in his various pockets for a dime, and, with it, started up the coffeepot. Sniffing the — to him — very unusual smell, he again consulted his watch, saw that fifteen minutes had passed; he therefore vigorously strode to the apt door, turned the knob and pulled on the release bolt.
The door refused to open. It said, ‘Five cents, please.’
He searched his pockets. No more coins; nothing. ‘I’ll pay you tomorrow,’ he told the door. Again he tried the knob. Again it remained locked tight. ‘What I pay you,’ he informed it, ‘is in the nature of a gratuity; I don’t have to pay you.’
‘I think otherwise,’ the door said. ‘Look in the purchase contract you signed when you bought this conapt.’
In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.
‘You discover I’m right,’ the door said. It sounded smug.
From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt’s money-gulping door.
‘I’ll sue you,’ the door said as the first screw fell out.
Joe Chip said, ‘I’ve never been sued by a door. But I guess I can live through it.’
RT @eetheridge: Another micropayments boomlet: http://tinyurl.com/begt59. (Me: MicroPay talk appears whenever a biz is dying.)
— Clay Shirky (@cshirky) February 5, 2009
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