The Internet that began as a place of near total anonymity (one where no one knows you’re a dog) is in the midst of a pendulum swing to the opposite extreme. No longer is online life shrouded in ambiguity, instead it has become a place filled with people. Friends, family, co-workers, getting online is now more like a huge party with everyone you know. A party whose front door are sites like Facebook, Twitter and LinkedIn. Likes and postings on our homepages in many ways now determine the types of sites, news stories and videos we see, read and watch. But is this much access to the thoughts of others a good thing?
There is a darker side to the personalization of the Internet. One that, rightly, has many people worried about a privacy that they once took for granted. This conundrum comes from the Internet’s struggle to find balance between its users competing desires for both privacy and individual identity.
On one side of the argument you have people like Mark Zuckerberg, who believe that the more connected and transparent the world is the happier its inhabitants will be–that is, it’s fun to see what your friends are doing across the digital landscape; what they read, what they buy, who they talk to, ect,. And at the end of the day, no one’s forcing you to share anything, right? Plus, why wouldn’t you want people to know what you’re doing unless you have something to hide, huh?
This can start to sound very similar to the old justification for secret or moral police. Professions that, interestingly enough, don’t always attract the most moral people. When we give people so much power over the information, which in many ways helps to define us, it gives way to the big brother question; who watches the watchers? Also, though no ones forcing you to share your information, the history of Microsoft, Facebook and others show that companies can be a bit less than transparent in ways in which they use your data.
In spite of this, it has in the past, and in the future will continue, to be about money. The reason companies like Facebook are able to make money is because the information they have on their users is gold to advertisers. Those targeted ads–for everything from Security degrees from barely accredited schools to the best abs of your life to great ways to meet Christian girls- they are the price we pay for a free service. So while we all may complain, at the end of the day we would rather endure buxom anime elves telling us to join the best game of the year than paying a monthly membership fee.
So, while free services and ads may inextricably linked for the near future, that does not mean that your privacy is at immediate risk. Just like its our choice to put information about ourselves on the Web, it is also our choice what sites we use to do so. If it turns out Facebook can’t meet its member’s privacy needs there are literally dozens of other sites waiting to fill the vacuum. At least to some degree, the power is in the hands of the people.
The amount of data we store in the many niches of digital ecosystem continues to swell in both volume and value. It is for this reason that services like Entrustet’s Account Guardian are becoming more and more of a necessity to protect your online legacy and ensure it gets to who you want it to. And, unlike social media, Account Guardian is both free and we keep your information completely private.
- Tags:
- online privacy
The question of whether or not to raise taxes in order to bring the federal dept under control has been raging for the past few months. On one side, Republicans refuse to consider any tax hikes, believing this will slow down the still ailing economy. On the other side, Democrats counter that without raising taxes there is no way to equilibrate the books without destroying programs that people need. Unless you are living under a rock you have not doubt heard the heated rhetoric.
It can be hard to understand how two parties, both of whom claim to be working towards the same goal, can have such fundamentally different views on how to get there. The reason is that there is a foundational difference in each party’s view of what enables an individual to be successful. This conflict of visions is epitomized in the debate over estate tax.
The reverberations of this argument could also very well have far reaching consequences in an area of inheritance that has hitherto been completely tax-free: digital assets.
To start with lets get some facts about federal estate tax down. Firstly, the estate tax is currently at 35% of any inheritance over $5 million, which is not willed to a federally recognized spouse or charity, this is the lowest it has been since 1931 (not including 2010 when there was no federal estate tax). Second, these current rates mean that the estate tax only applies to 0.14% of inheritances in the US, but would still generate around $11.2 billion in revenue. With such a small percentage of Americans subject to this tax you may ask, ‘why such a big fuss?’ Again, the principle reason is ideological. Who has the right to the money that you made?
Democrats believe that true capitalism is only possible through equality, and that unregulated free markets cannot provide this equality. The estate tax, they believe, is a good way of making sure that wealth does not become distributed to just a few families and that each generation proves itself, rather than simply living off inheritance. They claim that, as the inheritor did nothing to earn the money, she does not deserve it. In the words of Winston Churchill the estate tax, “provides a certain corrective against the development of a rich and idle class.” Liberals also argue that no man is an island. That it is the government and society that created the environment within which the entrepreneur could succeed, and as such an inheritance tax is completely justified.
The death tax, as Republicans call it, is seen as an affront to capitalism for several reasons. For one, it disincentivizes hard work and entrepreneurism. A study done by the conservative lobby group the US Tax Foundation, in 1994, found that the 55% estate tax level, which existed at that time, had the same effect as doubling an entrepreneur’s top effective marginal income tax rate. Many conservatives would agree with liberals that an inheritor did nothing to earn that money. However, they would say, neither did the government. The money belongs to the person who earned it and as such they can do whatever they damn well please with it, including leaving it to an heir. A tax of this nature is seen as punishing wealth gained by legal means and implicitly declaring that socialism/collectivism is superior to capitalism. Finally, Republicans cite that estate taxes are so difficult to regulate that most of the money gained from them just goes toward the cost of policing, so there is not much benefit for the government to begin with.
So will there still be an estate tax in the future and will it be expanded to include digital assets? Yes and yes. Though the estate tax has significantly fluctuated in recent years, it brings in far too much money to be abolished, especially in times like these. Not only that, but taxing 0.14% of a population who just got a multi-million dollar inheritance isn’t likely anger the majority of Americans, many of whom are struggling to pay the bills.
As far as digital assets there is simply too much value in them the government to ignore them forever. However, as with many technologies, laws are struggling to keep pace with the amorphous evolution of the Internet. Though the definition and implementation of such a tax will be quite difficult, and the first attempts will almost certainly be inadequate, efforts towards it are no doubt already underway.
- Tags:
- democrats · Digital Assets · estate tax · federal debt · heir · inheritance · money · republicans · tax · technology · US tax foundation
What gives money value? The answer to this question is simple and paradoxical; our belief in its value gives money its worth. Economics calls this the subjective value theory and if we hold this to be true, then as long as we can convince a group of people something has value then we can, in effect, make our own currency, can’t we?
Well that’s the idea behind Bitcoins, a “decentralized internet commodity” that can be purchased with ‘real’ money and used to buy physical products. They are the brainchild of Satoshi Nakamoto (probably a pseudonym) who in 2009, in an effort to circumvent central banks and the dangers he saw in them, created a peer-to-peer network, much like bittorrent, through which his digital currency could be traded. Rather then having someone like Ben Bernanke inject hundreds of billions of dollars into an economy through policies like quantitative easing, a set and predicable number of Bitcoins (currently 300 an hour) are created. These coins are then distributed to community members who sacrifice some of their computer’s processing power to host the system. Once the Bitcoins are deposited in your ‘wallet’, either on your personal computer or a third party’s servers, you can transfer them to buy things or exchange them for cash based on market rates.
Other than the ‘cool’ factor that Bitcoins certainly do possess, there are several other reasons that their advocates believe they are superior to tradition currency. Probably the single biggest reason, and the one that gets economists all hot and bothered, is that Bitcoins are based around the same principles as natural resources, such as gold. There is a finite amount and, over time, the new amount of that resource entering the market will go down. Remember those 300 coins produced every hour today? Well that will drop by half every four years until, in around 2030, no more new Bitcoins will be produced. It even one-ups gold in that there is no chance of some prospector stumbling on a huge deposit of Bitcoins and driving down prices. This, at least in theory, should make it more stable.
Unlike paper money there is no unique serial number or marking for each Bitcoin. Instead, the system relies on a transaction record that records the amount of each transaction per block and references that against the other blocks to ensure that no counterfeit coins were created. In doing this Nakamoto effectively circumvents the need for a central database, like the Federal Reserve, to keep track of the serial numbers of all the coins. The cool part about this is that it also means that the bigger the system gets, and the more blocks that are added, the harder it is for someone to counterfeit the coins. This is because in order to fool the system you would have to control over half the computers on it; not an easy or inexpensive thing in a peer-to-peer network of 10,000+ computer savvy people. The other nice aspect of the transaction record is that it means you don’t have to be connected to the system to receive payment.
So with such great attributes are we all going to be using Bitcoins instead of dollars in a few years? No, and here why.
For one governments don’t like them. Senators note that it could easily be used to launder money and that, because this is no central authority, there is no insurance. FDIC is not terribly likely expand to cover Bitcoins anytime soon.
Secondly, Bitcoins have already shown the most worrying feature of using a relatively small, restricted quantity as a monetary unit: hyper-deflation. Since they first became tradable for U.S dollars in April of last year they have seen a staggering 9,667-fold increase in value. Going from being worth three one hundredths of a dollar to $29 per Bitcoin. This astronomic rise in value has also been punctuated by precipitous drops throughout that same period, a trait that doesn’t tend to engender a great deal of confidence in a currency’s long-term stability.
This criticism, however, can be overblown. Bitcoins are an experiment that came into existence barely two years ago and are being used by relatively few people. Though their short history has been a bit of a roller coaster, comparing Bitcoins to world currencies backed by governments that control real territories and economies, at this point, isn’t quite fair either.
Another issue stems from the fact that Bitcoins are stored in a ‘wallet’ on your computer. Because of this, if your computer gets stolen or hacked you could lose your Bitcoins.
Though these shortcomings are understandable they are also the reason that hordes of people aren’t rushing to switch their hard earned savings into these electronic coins. When it comes to keeping your money safe its understandable to stick with the tried and true method. Though our current financial system is certainly not without its faults, people like the idea that there is a government looking after their cash more than they like to hope that some computer wiz is double-checking each line of open-source code in the next Bitcoin update. That’s why, at least for the time being, the average Joe is going to keep with the old saying; its better to stick with the devil you know than the one you don’t.
From our side of the court, we have yet see people protecting their Bitcoins through Entrustet. However, with their growing popularity and value it’s only a matter of time before people start thinking of how to pass them on.
- Tags:
- bitcoins · currency · deflation · Digital Assets · Entrustet Interns · federal reserve · virtual assets
Would you buy a pair of shoes if you knew that they had been made in a sweatshop where third-world preteens slaved away for 16+ hours a day? Most people would say no. That’s why there is such a hubbub when it comes out that company has been keeping its workers in conditions that we in the west think are unethical. Think GAP and Firestone in 2007. When we find out something about a company we don’t like, we stop buying from them. The feedback loop of consumers, activists and companies has created something of a self-policing environment wherein it pays for companies to be ethical. But is that true of digital products?
It came out a few days ago that Chinese prison bosses have been forcing convicts to farm gold in World of Warcraft. Doesn’t sound that bad until you find out that these 12-hour “mining” shifts followed on the heels of a full day manual labor, and that if you didn’t meet your gold quota you were beaten with pipes.
The gold that these prisoners farmed was then sold online, mostly to American and European gamers. This little mix of entrepreneurism and slavery earned the prison bosses between $800 and $900 a day (the prisoners naturally never saw any of it). Not bad in a country where you can get a full meal for $1.
Gold mining in China is nothing new. Roughly 80% of the World of Warcraft gold for sale online comes from the Middle Kingdom. Many of you will have heard about the “workshops,” where anyone from children to the elderly (though its usually teens) are paid to farm gold for a few dollars a day. While the condition may not be ideal, they aren’t different from most Chinese factories and don’t hold a candle to the prisons described by the former inmate.
Nor is sanctioned mistreatment of convicts anything new. Depending on your source a prison/uranium mine in China’s northwestern province of Xinjiang is the world’s deadliest penitentiary. It is a compound where life expectancy is measured in weeks due to extremely harsh work conditions and exposure to radiation. Along with this, the Chinese government’s systematic reeducation and torture of political dissents has also been widely reported.
What makes this report unique and interesting is not only that this is the first time the two have been combined but also because of the ethical questions it raises for gamers. Is saving a bit of time on leveling up your character worth knowing you could be directly supporting slavery? “Well,” you might say, “these are prisoners, I don’t mind helping punish murders and rapists.” The obvious counter arguments of the ethical treatment of prisoners and the legitimacy of the Chinese justice system aside, this report could very well be just the tip of the iceberg. Who is to say that there are not rundown office buildings full of Mandarin children staring listlessly at computer screens, slaving away to get your gold? The point is that, unlike most physical products, there is no way to know for sure where these products are coming from.
On the extreme end, some gamers may say, “Well, I guess since there is no way for me to be sure I’ll just have to bite the bullet and earn my own gold.” But believing that would be idealistic and naïve. Most consumers don’t care enough to look into the products they buy until it becomes fashionable or someone makes it easy for them- gamers are no different. What could, should, and on a small level has already started to happen, is an effort to make the supply chain of digital products more transparent. Several WoW gold selling website have already come out to assure the public they have safeguards to protect against sellers like the aforementioned prison bosses. This is great and probably true but the best way to be sure would be to have an outside, independent body to check these claims, much like the independent audits almost every NGO goes through to assure their supporters of their legitimacy. This, just like WoW gold farming, will not happen until gamers take it upon themselves to demonstrate there is a demand for it. The ball is in our court.
The Chinese prisoners report brings up an interesting ethical quandary for WoW players, but also more broadly for anyone who purchases digital products. How is that product produced? Is it done ethically or by an unpaid prisoner with the threat of torture as his only incentive? My guess is that the demand for such assurance will eventually exist, the only question is whether traditional methods, such as independent audits, will prevail or something newer and better will emerge. Either way it will be interesting to see what happens.
- Tags:
- digital products · ethics
