The BICEP2 laboratory, located at the South Pole. Image courtesy BICEP2/Steffan Richter, Harvard University

For astrophysicists, the most exciting moment of the year was probably when a team of cosmologists working at the BICEP2 laboratory at the South Pole announced that they had detected the long-predicted but elusive gravitational waves left over from the birth of the universe. Unfortunately the waves may be more elusive than they realised, as further analysis showed that interstellar dust may have confused their results, and at the moment the discovery is still uncertain. But they’re getting there.

Thwaites Glacier, west Antarctica. One of the ice streams which have started to ‘collapse’, or pour their ice uncontrollably into the sea. Image courtesy NASA.

Still in the Antarctic, one of the biggest climate change stories was the discovery that the West Antarctic ice sheet, which has been very gradually declining since the end of the last ice age 10,000 years ago, has now passed a tipping point and will inevitably collapse whatever the climate does – raising global sea levels by around a metre – but that it will take several hundred years to do so.

First image returned from surface of Comet 67P, with foot of lander in foreground. Image courtesy ESA.

More cheerfully, 2014 saw the remarkable, decade-long Rosetta project culminate in the successful landing of a mini-science lab on a comet – from which it streamed back all kinds of measurements until its batteries died. The science results have already been impressive – we now know that organic molecules are plentiful there (it smells of vinegar and bad eggs), and that a long-mooted theory that comets are the source of water on Earth cannot be right if this comet is typical, because the water on the comet has a very different isotopic ratio to Earth’s water.

Zig-zag engravings on shell. Photo credit Wim Lustenhouwer, VU University Amsterdam.

We’re all familiar with cave drawings made by our ancestors and by Neanderthals, but the discovery of artistic carvings on an Indonesian sea-shell dated between 430,000 to 540,000 years turned out to have huge implications for those interested in human origins. The early date means that they must have been made by Homo erectus, a hominid precursor to our own Homo sapiens species – assigning ‘human’ behaviour to pre-humans.

The Illumina HiSeq X Ten. Image Courtesy Illumina Inc.

A technological advance means that it became possible this year to sequence a genome for less than $1000 – potentially opening the floodgates to all kinds of further discoveries. With this baby, you can sequence 18,000 genomes per year!

Jan-Nov 2014 was the warmest such period on record across the world’s land and ocean surfaces, with an average temperature that was 0.68°C (1.22°F) above the 20th century average. If December is at least 0.42°C (0.76°F) higher than its 20th century average, 2014 will surpass 2005 and 2010 as the warmest year on record. Image courtesy NOAA.

Not an auspicious end to the year, but a succession of ‘warmest ever’ months means that 2014 will almost certainly be the warmest year on record. In fact it’s been a year of bad news for climate scientists – a large part of Greenland has been found to be melting faster than thought, the rate of deforestation of the Amazon in 2013 was shown to have increased by more than 29%, and man-made CO2 emissions continue to track the high end of emission scenarios, eroding the chances of keeping global warming within 2C this century.

This article appeared in the Spring 2014 issue of Current Exchange Magazine.

Common knowledge is that seeing ‘in 3D’ requires good sight on two eyes, or stereovision. The mechanism is based on the two eyes being focused on one object. As each eye looks at the object from a different angle, the two images differ from each other.

Based on these differences, the brain can estimate distances. The greater the difference, the better stereovision works. This has two important consequences: stereovision works better when the object is close and when your eyes are further apart. Thus, stereovision only works within a limited range depending on how far the two eyes are apart – just a few meters for people, centimeters in small birds.

Not every animal – or human – has two eyes that are far apart. For example, small animals like bees or even small birds are almost ‘one eyed’ for the purpose of stereovision. Their eyes are very close to each other, allowing only very short ranges of working stereovision. Still, they are capable of virtuous flight maneuvers. Further, one-eyed people are – when it comes to managing in every-day life – usually far less impaired than the depth perception myth is trying to sell us.

Finally, most of us seem to share the notion that the stereovision-based 3D cinema technology doesn’t really add much depth to a movie (in the literal sense, in the context of perception) – we immerge as easily into conventional, ‘two dimensional’ movies.

The question arises, what other mechanisms allow us to see the three dimensions. There are several mechanisms for monocular depth perception, or depth perception with only one eye. All of them are based on the design of the eye itself and the consequences that arise from basic optical geometry. In this article I introduce two of them which are closely related and have an impact on our everyday life: perspective and motion parallax.

Examples of perspective: In the figure above,
objects further away seem smaller

Perspective

Perspective means that objects far away create a smaller image on the retina than objects that are close to you. This is because we can only see light beams that cross exactly in the iris. Thus, the single eye covers a cone-shaped space in front of it. While the eye sees a small area in close distance and a large area in far distance, the total image stays the same size. In other words, distant objects must produce smaller images than close objects. As the angles between the contours of an object and the iris become smaller the further away it is and so does the image on the retina.

The brain is trained to take into account the effects of perspective and uses hints from a scene to estimate distances. Painters make use of this effect and include a point of focus in their realistic art. All lines that are supposed to look like they point away from the viewer, ‘into the image’, converge on this point of focus, creating the illusion of distance. It also helps the painter estimate the size an object needs to be so as to appear at the correct distance.

Some artists play with perspective to create astonishing illusions. For example, the actors playing hobbits in The Lord of the Rings movies were often simply placed further back than the other actors. By carefully ensuring that depth cues that would give their real position away were hidden, the illusion of very small people was created.

Example of motion parallax: In the figure above, objects closer to us move faster across our field of vision

Motion Parallax

Motion parallax is basically ‘perspective in motion’. Like in stereovision, the brain compares different images. However, the images are not acquired simultaneously but in a sequence while the observer moves around. The same principles that apply to perspective also apply here, with some very interesting effects.

The images of objects at different distances do not change with the same dynamics. When you approach an object, its image looms bigger and when you move away, the image shrinks. Also, images of objects in the distance will move slower across the retina than those of close objects. This is because the close environment is represented on your retina larger than the distant environment.

A change in eye position thus leads to a large change in the position of close objects on the retina but only a small change for far objects.

You can observe motion parallax when looking out sideways of a moving car. You will see the objects at the side of the road, like signs, move across your field of vision much quicker than objects in the distance. Or you can hold up your finger and move your head side-to-side to see how the finger changes its relative position to the background.

Neuroscientists studying the natural behavior of animals – including myself and my collaborators at Bielefeld University in Germany during my PhD training – found that animals control their movements so that they can extract depth cues from visual motion more easily. They also make specific use of the visual motion for navigation. We can learn from these animals how to solve our own navigational problems. For example, three months ago, Ig Nobel prize laureate and neuroethologist Dr. Emily Baird and her co-authors published a general mechanism for landing aircrafts. It is based on their studies on honey bees landing on flat, vertical surfaces. The mechanism is strictly based on the visual motion. Such a mechanism could be applied by anybody and anything that flies and lands on any surface.

It wasn’t always so. In the fifties and sixties, a new form of engine adapted from the military was revolutionising commercial travel, allowing for radically shorter travel times and some very novel vacationing options for the well-heeled. The jet set became a byword for high society, cosmopolitanism, corporate power and la dolce vita, all blended into a single image of speed and efficiency. It isn’t very often that a piece of internal machinery catches the popular imagination so vividly. This is an exploration of that miraculous engine in all its avatars.

At one level, all jet engines are merely genteel rockets, since rockets are in fact an aggressively straightforward subset of jet engines. In all jet engines, a rapidly-expanding volume of air is directed one way, and the resulting thrust moves the aircraft* in the opposite direction.

The oldest form of jet engine is the turbojet, essentially a pump that compresses incoming air and ejects it at high pressure. The incoming air is pushed into a reaction chamber where it is mixed with fuel and ignited. The resulting explosion (now isn’t that a comforting thought for nervous flyers?) is directed out the back of the chamber, pushing the aircraft forward.

The turbofan, a newer variant used in almost all modern aircraft, adds an additional source of thrust. Since the engine can only handle so much air at once, the turbofan places an enormous fan in front of the engine to push air both into and around the reaction chamber. The air sent into the chamber reacts with fuel in the usual way. The air that bypasses the engine adds in some extra thrust.

This bypassed air can account for as much as eighty percent of the total thrust in some cases. Turbofans are quieter than turbojets, and given that fuel for the reaction chamber can account for nearly a quarter of the operating costs of airlines, much more economical as well.

So much for turbines; not all jet engines use them, and so not all jet engines have the turbo- prefix. This brings me to my two favourite jet engine models: the minimalist ramjet and its hush-hush sibling, the scramjet.

The ramjet is the Hulk of this Avengers team: a simple, single-minded engine that does not trouble with the niceties of compressors and prissy moving parts, choosing instead to intake air by smashing right into it. The engine’s motion pushes air in, and from there on it’s a regular jet engine. Since ramjets require the engine to already be in motion, they can’t get an aircraft off the ground by themselves. This has limited their practical use so far to ballistic missiles and artillery shells, but they retain their niche by helping achieve speeds of up to Mach 6.

Attaching tiny ramjet engines to the tip of helicopter rotor blades has been successful as well. The idea is to get the rotors spinning under their own power, then switch on the ramjets, which make the entire arrangement like a spinning Catherine wheel.

One extreme variant of the ramjet is the scramjet, or supersonic combusting ramjet. The scramjet has an inlet shaped to compress air as it enters the engine, allowing for a larger throughput and higher speeds than the regular ramjet.

Scramjets are currently at the leading edge of jet technology, developed by few countries, and in considerable secrecy at that. The upper limit of scramjets is rumoured to be around Mach 12. That’s still on paper, since the fastest any scramjet has actually gone in real-life testing is Mach 9.68, and commercial hypersonics are 25 years away at best. If they do come to fruition, it will probably be at speeds of around Mach 6, which is still a 35-minute flight from Vancouver to Halifax, or around the world in less than six hours.

There is almost nothing humans will not attach a rocket to just to see what happens. The list includes, so far, a leather recliner, a lawnmower, a wheelchair, a shopping cart, and a portable toilet that can reach highway cruising speeds.

The jet-augmented Volkswagen Beetle is (a) street legal, since there is no actual law against attaching a jet engine to a small car, and (b) allowed in the hybrid lane since it does, technically, have two engines.

There are certain questions which define any sufficiently advanced industrial civilisation: “Will it blend?”, “Does it go with Sriracha?”, and most importantly, “Can we strap a jet engine to this?” Some people are interested in P versus NP too, but these are the really important ones.

Curta belonged to the set of mechanical devices that were motivated by the need to reduce frustrating calculations. It has the appearance of a pepper grinder, and a feel of it too because of a crank that has to be rotated to add numbers.

A drum with two sets of teeth is located at the center, and manages the arithmetic. This drum has 37 layers; each layer has a thickness of half a millimeter. It is linked, via a transmission shaft, to a readout numeral wheel, which is located on the top of the Curta, and shows the final result (see image below). The drum is also connected to a setting numeral wheel via a setting shaft. This setting numeral wheel is located on the side of the Curta, and displays the number that is fed into the device:

Source: curta.li

The ‘carrying’ function of addition is undertaken by a carry pin, a carry lever, a carry gear, and a component called the tens bell. The carry pin extends from the readout wheel and pushes a component called the carry lever whenever the readout numeral wheel crosses ‘9’. This carry lever is responsible for pressing down on the carry gear, which surrounds the shaft corresponding to the subsequent higher place. This positions the gear so that it can communicate with the tens bell, and increment the number by one digit as the bell revolves.

Addition uses one set of teeth of the drum; subtraction uses the other. Multiplication and division are performed using the concepts of addition and subtraction.

Curtas (and most modern computers) carry out subtraction by using the method of complements, i.e., by first computing the nines’ complement of a number. This technique is used to express the difference between two numbers as a sum and therefore rules of addition can be applied to perform subtraction. For example, to find 492-243, the technique can be summarized as:

To clean up all memory of the Curta and start from the beginning, a clearing ring (see image above) can be spun once which sets the results (displayed at the top) as well as the turns counters (located on the side) to zeroes.

To illustrate how a Curta can be used, let us consider two simple examples

Sum of two numbers, 12 and 41

First, the number, 12 is entered using the two setting knobs at the extreme right. The two numbers, ‘1’ and ‘2’ will appear in the two windows. Next, the crank is rotated once; the results register will show the number 12. The second number, 41, is entered similarly, using the numbers, ‘4’, and ‘1’. The crank is turned; this adds up the input, 41, to the previous number on the results register, 12, resulting in the number 53, which appears in the results counter.

It is noted that to subtract two numbers, once again, the first number is introduced using the setting knobs followed by one rotation of the crank. The second number is entered the same way but for it to be subtracted, the crank has to be first lifted to its upper position, followed by one rotation of the crank. The resulting number is displayed in the results register.

Advertisement of the Curta from 1963. Source: Curta.li

Product of two numbers, 3 and 40

A product such as 3 x 40 can be solved by first entering the number 40, followed by three rotations of the crank.

Curtas are no longer in use for computations and are mostly just expensive collectibles for numberphiles. Nevertheless, they are exquisite tokens of a time when cogs and stepped drums were intimately linked to numbers.

Learn more about the Curta

Before getting into the details, it’s important to understand what the “Internet of things” really is. It’s a network of all objects on the planet that can be connected, via the appropriate hardware, to the internet, sharing information without the need for human intervention. IPv6, the latest version of the communication protocol used on the Internet, plays a huge role here because the saturation of its predecessor, IPv4, which limited how many devices we could connect to the internet. With IPv6, incredible address space of 2128 there is more than enough to assign an IP address to just about everything, literally. 2^128 is more IP addresses than the number of grains of sand on Earth.

What good is it to have everything connected?
In a world where everything is interconnected, the possibilities are limitless. Want to know about more information on that big ticket item you spot on sale at the mall? Point your smartphone at it, which could identify it with an embedded piece of hardware like an RFID or NFC tag, and it gives you a summary of reviews and pros and cons on the product. Want to know where you lost your keys? Look up on maps the words “where are my keys?” and follow the directions indicated by the embedded tag in the keys. Want to know how much milk is left in the fridge? Check your phone, or even better, your phone should notify you to go buy some when you are low.

Those are just small things that make life easier, but how about things that can save lives? Chips implanted in a body could signal physicians and local hospitals of someone who is severely injured or who is showing signs of an impending critical illness like a heart attack. What about a microchip that’s embedded in a child that has been abducted or disappears? This of course brings its own set of legal, moral and privacy issues.

What bad can come from it?
With everything potentially talking to everything else, the problems that can crop up are fairly concerning. For one, privacy essentially becomes obsolete. The idea of “keeping anything secret” becomes a total impossibility. The data needed to create the advantages needed for the internet of things becomes even more widely available than it is today. We hear complaints about companies like Google knowing too much about us for the sake of more effective targeted ads. This problem only intensifies with the Internet of Things.

One good example of a potential outcome is the recently released game Watch_Dogs. In the game the protagonist wields traditional firearms, but his weapon of choice is his smartphone that can hack any subsystem in fictional Chicago. From traffic lights to ATMs, even webcams, there are countless things to hack in the game. This even includes the information on bystanders passing by that display random tidbits of information like their income, past crimes and illnesses.

Now the game isn’t a true representation of what will happen if the Internet of things were to exist tomorrow as, we would hope, systems would be more robust in security and wouldn’t be interdependent or interconnected to the point where everything could be accessible, but it certainly brings up the question on how will we as a society protect ourselves.

Whether we like it or not, trends seems to be heading in the direction of the interconnection of everything. Our current mobile tech is only the tip of the iceberg of what we will see in the future and things look promising, but at what cost?

Before getting into the modern incarnations of Virtual Reality devices, it’s important to understand the fundamentals of stereoscopic VR. The same basic idea that powers the rather simple Viewmaster also powers today’s VR headsets. In essence, like other stereoscopic implementations, the idea is project a different image to each eye, as occurs in everyday life.

What ultimately held back early VR devices like the Virtual Boy was the immaturity of display technology needed to make stereoscopic virtual reality a comfortable experience for end users. The Virtual Boy, for example, had a great 3D depth effect but with the prohibitive cost of going with a full color display, it instead feature a red LED based monochrome display system.

Today, display technology has advanced to the point where full HD 1080p displays with sufficiently high refresh rates can be crammed into spaces small enough to fit on head gear. We witnessed the progression in the miniaturization of displays in the smartphone world so it was only natural for VR to take advantage of this innovation.

The other recent advancement that sets apart current VR solutions is the ability of the VR head units to track the user’s head position and tie it into inputs that would traditionally be tied to the use of a controller or keyboard. This not only makes the experience more immersive but makes it all that more intuitive.

The most recent and well known leaders in the Virtual Reality include the likes of former startup Oculus and Sony’s own Project Morpheus, and while the primary motivation for the advancement of VR is for gaming applications, there is certainly a possibility for it to be so much more.

This is where the acquisition of Oculus by Facebook might start making sense. Just a few month ago, the social media juggernaut purchased Oculus for $2 billion. On the surface, the purchase didn’t make much sense and people (especially hardcore gamers) are worried that Oculus will be ruined by Facebook. When considering Facebook’s core business model of advertising and data mining, the concerns are understandable.

But taking a step back, what Facebook bought for $2B isn’t the newest way to deliver pervasive invitations to play Candy Crush Saga. Rather, they are buying their ticket to be one of the first to attack what is an emerging new platform. Not unlike the rise of mobile computing (smartphones and tablets) supplanting traditional PC/Laptop computing, some, including decision makers at Facebook, believe that VR can be the next major platform.

In the short term, devices like the Oculus Rift and Sony’s Project Morpheus will be fueled by the dream of more immersive gaming experiences, but the bigger picture is that VR could eventually become the next major change in the way that people interact with each other.

The next few years will be extremely important for the future of VR. It has already overcame the shortcomings of ancestor like the Nintendo Virtual Boy, but will be treading a fine line to avoid the same fate as highly touted but ill-received “innovations” like 3D televisions.  Facebook and Sony will be important players in nurturing the viability and acceptance of VR to the masses.

A note on usage: Bitcoin, with a capital ‘B’, is the name of the digital currency and the technology built around it. Individual units of the currency are called ‘bitcoins’, with a lower-case ‘b’. Bitcoin is the world’s pre-eminent digital currency but not the only one of its kind. Others (including Litecoin, Peercoin, and Dogecoin) operate on similar bases, with minor differences.

A note on hashes: A hash is a value generated when a computer converts a string of any number of characters into a code with a fixed number of characters, using a set of rules known as the hash function. Hashes find favour in cryptography since converting an input to its hash or verifying an input’s hash is a fairly easy task, while forging a hash is prohibitively difficult.

1

Bitcoin is not issued by a government, a single person, or an organisation. Instead, bitcoins can be generated by any computer in the world with a copy of the Bitcoin client installed. The client is available for mobile devices as well as traditional computers.

The Bitcoin system was first described in a 2008 paper by a ‘Satoshi Nakamoto’ and subsequently launched in 2009. ‘Nakamoto’ is the pseudonym of a person claiming to be Japanese and in his early forties, although it has been speculated that Nakamoto is a team of finance professionals, lives in the western hemisphere (based on the timings of his online activity), or is from the Commonwealth (based on his spelling).

I entertain the notion that Satoshi Nakamoto is likely a woman, since switching genders remains a reliable method for maintaining pseudonymity, despite George Sand, Andre Norton, and James Tiptree, Jr. Earlier this month, a Japanese-Californian physicist also named Satoshi Nakamoto was outed by Newsweek as the man who invented Bitcoin, but he has so far denied being the same person. One hundred-millionth of a bitcoin is called a satoshi.

2

The creation of bitcoins is called ‘mining’.

Imagine a lottery in which you are asked to guess a number between one and one thousand, and if you guess a number equal to or lower than the target number I have written down on a piece of paper, you win. If the target is quite low (say, 2), chances are that your guess will be higher than it. On the other hand, if my number is a somewhat larger (say, 652), it increases your chances of guessing a ‘winning’ number.

Bitcoin uses a similar system to award bitcoins among competing computers worldwide. A target number is relayed to all the Bitcoin clients in the world. The target number is a 256-bit number and can have one of a large but finite set of values (0 to 2^256). Each computer attempting to create or ‘mine’ bitcoins generates a ‘block’ – a record of the most recent transactions on the bitcoin network since the last block was generated, and prepends it with the hash of a randomly chosen number out of that set of values. The first computer to generate the hash of a number lower or equal to that of the target wins (as of early 2014) 25 bitcoins. Again, the lower the target number, the more unlikely it is that a randomly generated hash will qualify. Every two weeks, the number of actual blocks generated is compared to a target rate of generation and the target number difficulty is adjusted accordingly.

The number of bitcoins that are awarded for solving a block is halved for every 210,000 bitcoins generated. You can probably see where this going. The program is constructed so that the world’s supply of bitcoins is capped at around 21 million. That’s it. For all time. There are about 12.5 million bitcoins in existence right now.

3

A bitcoin transaction isn’t mediated by a bank or a government, but the system itself is built to prevent counterfeit. The blocks mentioned earlier append to each other to form the block chain – an ever-lengthening record of every bitcoin transaction that has ever occured. Every Bitcoin client in the world has access to this. The only way to counterfeit bitcoins would require a forger to insert a fake transaction in the latest block being generated *and* ensure that their block won. The first is trivial; the second is nigh-impossible. Consider this: Bitcoin clients are programmed to accept as authoritative the version of the block chain that appears to have taken the most effort to produce. Inserting a fake transaction would mean outdoing the combined computing power of the rest of the Bitcoin network to produce a longer block chain with more successfully solved consecutive hashes more rapidly than the everybody else. Tianhe-2, the fastest computer in the world, can do 34 quadrillion operations a second. The Bitcoin network, meanwhile, can chew through 350,000 quadrillion operations in the same time. Admittedly, the system would be vulnerable if one mining interest ever gained access to more than fifty percent of all bitcoins, which would be self-defeating.

The block chain introduces a useful analogy in the discussion about Bitcoin. The block chain can be thought of as an eternal ledger of transactions. A bank does not physically transfer any pieces of metal or paper when you use your credit card to make a payment. It simply subtracts that number from your account record and adds it to the seller’s. Similarly, the ‘ownership’ of bitcoins can be thought of having your Bitcoin client’s address as the latest address to which a bitcoin was sent. The use of addresses anonymises Bitcoin to a large degree, although some institutions insist on names and credentials before setting up an account.

The anonymity has also made Bitcoin the preferred currency of grey market enterprises such as Silk Road, the website that dealt in pedestrian merchandise alongside banned substances, assassinations, and child pornography. It was shut down last October and its owner, Ross Ulbricht, who went by the pseudonym ‘the Dread Pirate Roberts’, was arrested. Silk Road was subsequently re-launched with new safeguards by a new Dread Pirate Roberts. (Readers of The Princess Bride will not be surprised by this inheritance of the pseudonym; I implore the rest to read the unabridged version of this article.)

Bitcoin’s relative anonymity and decentralised nature have made it attractive to crime financing and a perfect candidate for laundering money, attracting regulations across the globe. China’s central bank has forbidden the country’s banks from handling bitcoins transactions. Japan and Singapore both classify bitcoins as goods rather than currency, although the former is considering taxing it and the latter already does. Russia has declared Bitcoin transactions illegal, full stop.

Bitcoin’s other bugbear is its volatility. A private cryptocurrency is very much a novelty and would have been impracticable mere decades ago. Compare this to the centuries of experience the financial sector has in handling stocks, bonds, or foreign exchange, and it is clear why opinions on Bitcoin are confused and divergent. Bitcoin exchanges have had their own challenges. Mt. Gox, a Tokyo-based exchange, was shut down last month (February, 2014) after it revealed BTC 850,000 (about $500 million) were missing from its accounts. Gox’s meltdown led to a minor Bitcoin scare, its price falling precipitously on that exchange. Other exchanges moved in rapidly to close the gap, and Bitcoin’s price stabilised. Bitcoin is still more vulnerable to market sentiment than most fiat currencies.

4

Here begins the idle speculation. Bitcoin has unique attributes that fiat currencies do not. Bitcoin does not pay interest. This may seem like a minor complaint (Canadian banks pay little more in interest than a kindly pat on the head) but it means that storing large quantities of one’s savings in bitcoins is only sensible if one can invest them, or thinks of the bitcoins themselves as an investment.

One set of investors would like to see an income from their investments. While cash savings pay vanishingly little interest (pat, pat), we always have the option of investing it elsewhere: stocks, bonds, real estate, garage start-ups, laundromats. That’s not the case with bitcoins, so this set is likely to use bitcoins only as a medium of transaction until opportunities arise for investing bitcoins to generate more bitcoins.

Investing via Bitcoin would require an ecosystem of Bitcoin users. A business cannot accept investments made in bitcoins unless it knows they will be accepted by its creditors in turn, and so forth. If it needs to change bitcoins to dollars at every stage, and then convert dollars back to bitcoins to pay dividends to its investors, then it is not clear why it would bother at all. True, businesses do seek out listings in major stock markets with foreign currencies, but that’s to raise volumes of money and credibility beyond what their local markets can provide. The business case for wishing to transact in bitcoins is not apparent, and this shuts off the bitcoin-owner’s access to revenue-generating assets, ergo, ersatz interest.

Bitcoin as a medium provides an anonymising ‘black box’ for payments. Once Bitcoin’s notoriously choppy volatility eases, this is what I believe will keep it going. If I want to slip you a quiet ten thousand dollars (say, for a motorised stunt tribble used in original Star Trek episode ‘The Trouble with Tribbles’), I could convert it to bitcoins and you could convert it back on your end, with no record with our names on it. It’s not the exchange rate but the stability of the rate that matters here. Neither of us care very much whether our money is worth one or one-millionth of a bitcoin en route, as long as it doesn’t change in value drastically between the sending and the receiving. Bitcoin may prove worse news for money transfer and security agencies than central banks.

The other response is the use of bitcoin as an asset class in its own. This has some precedence in the pre-digital world. As discussed in the previous article in this series, finite commodities like gold have been used as a basis for monetary systems before. The challenge for Bitcoin is that the idea of gold as a store of value has unmatched pedigree. A metal dug out of the earth and sold by weight is an easier concept for most than a sequence of digits arrived at by solving a cryptographic hash function. Even if a sufficiently large community considered bitcoins valuable enough as assets in their own right, it would need to compete for that role with precious metals which are universally understood and valued.

Bitcoin is the sort of audacious invention that comes but rarely. That we aren’t entirely quite sure what it is for, or where it will lead, already puts it in the company of such inventions as electricity and the web. This is not even its final form. Watch this space.

There are a wide range of options available, including sole proprietorships, general partnerships, limited liability companies and corporations. In most cases, attorneys will recommend forming either a limited liability company (“LLC”), a C Corporation (“C Corp”) or an S Corporation (“S Corp”). Below is a brief discussion of some of the important features of these three types of entities.

Basic Ownership Structure

Ownership interests in C Corps and S Corps are divided into “shares.” The owners of shares in a corporation are referred to as “shareholders.” Ownership interests in LLCs are divided into “units,” and the owners of interests in LLCs are commonly referred to as “members.” Unlike LLCs and S Corps, C Corps are permitted to divide their ownership interests into preferred shares and common shares. This type of structure gives holders of preferred shares preferential distribution of dividends and special voting rights. LLC units and S Corp shares are generally all treated equally for purposes of voting and distributions. S Corp ownership is legally capped at 100 shareholders, but there is no firm limit to the number of people who can hold shares in C Corps or LLCs.

Limited Liability

Shareholders in corporations and members of LLCs all generally enjoy limited liability protection. “Limited liability” means that the company’s creditors cannot reach beyond the assets of the company to gain access to the assets of the company’s members or shareholders.

Management

Management requirements for corporations are much more strict than the requirements for LLCs. Corporations are generally required to elect a board of directors whose activities are dictated by the company’s bylaws. Among other requirements, corporations are generally required to hold formal meetings periodically, and maintain detailed records regarding meetings and related matters. LLC management is much more flexible and there is no requirement that a board be elected or meeting minutes be kept. Even though there is no requirement for meeting minutes, it is recommended that members keep minutes.

Taxation

LLCs and S Corps both enjoy what’s known as “pass-through taxation.” This structure allows business owners to pay taxes on business profits on their personal tax returns. C Corps, on the other hand, are taxed directly on all business profits. Selecting a C Corp therefore creates the risk of double taxation for shareholders, as taxes may be paid by the corporation on its income and again by the individual shareholders on dividends and profits. On the other hand, in the event of an audit of the company, C Corp shareholders’ tax liability is unlikely to change, whereas individuals who take advantage of pass-through taxation might have their personal tax liability affected by an audit.

Advisors

In many states, it is generally simpler and less costly to set up and pay taxes for an LLC than a corporation. Under most circumstances, corporations will result in higher fees paid to accountants and attorneys at the outset and at tax time. However, this is not true in all cases. For example New York requires members of new LLCs to publish notice of formation, which can cost several hundred dollars or more depending on the location of the LLC. If formation costs are a major concern, founders should check the state filing requirements and discuss with an attorney the different costs associated with forming each type of entity.

Investment

Venture capitalists generally prefer to invest in C Corps. The structure of this type of entity provides shareholders with a great deal of flexibility to sell shares of of the business when the time comes. Also, it is an important benefit for potential investors to have the option to designate some shares as preferred shares.

Foreign Ownership

Only U.S. citizens and lawful permanent residents are legally permitted to own shares in S Corps. There are generally no restrictions on foreign ownerships of other types of entities in the U.S., though there may be some immigration consequences for business owners or shareholders who are present in the U.S. and involved in revenue-generating enterprises.

Bottom Line

If a company’s first priority is flexibility for owners and managers, an LLC might be the way to go. Founders who are more focused on attracting and securing investments might prefer to form a C Corp. If the priority is favorable tax treatment for dividends, an S Corp might be optimal. Entrepreneurs on the verge of forming a new business will likely want to consult with an attorney to find out which type of company best fits their needs, as each approach has its own set of pros and cons.

Just a few weeks ago, Canada reclaimed, or re-farmed, the 700MHz bands for use in the ever-growing demand for mobile wireless Internet connectivity, in the hopes of introducing more competition, better prices and better service to Canadians.

What’s new?

If you’re familiar with the way the spectrum works, you’ll know that wavelengths have different frequencies, measured in megahertz (MHz). In short, the 700MHz band carries signals very well over long distances and penetrates buildings, making it well suited for the needs of high-speed wireless standards such as LTE. The result is better coverage for rural areas, which have always found it challenging to obtain high speed broadband connections, and better coverage in buildings, especially those made of concrete.

Another advantage, not necessarily tied to the 700MHz band but more with 4G technologies, is that frequencies are used more efficiently. With standards like LTE, engineers got more creative with data compression algorithms, which means that more people can be connected simultaneously. Once Voice over LTE is introduced, this will also ease the congestion on towers running older standards like 3G HSPA, thus improving service.

Introducing more competition

Another goal for the 700MHz wireless auction was to give yet another shot in the arm to competition in the Canadian mobile space. While the AWS auction in 2008 did allow players like Mobilicity and WIND to spring up nationally and Videotron to do the same regionally in Quebec, it certainly hasn’t turned out as well as the government would hope.

The participants in the 700MHz auction were different this time around, with WIND and Mobilicity being notably absent from the auction and Videotron having a very strong showing getting Spectrum in Quebec, Alberta, British Colombia and, naturally, their home province Quebec. This has led to speculation that the struggling carriers WIND and Mobilicity could be absorbed by Videotron, creating a strong 4th national carrier. While this is all speculative, it does introduce interesting scenarios that Canadians outside of Quebec haven’t been accustomed to.

For one, Videotron, like WIND and Mobilicity, has explored the idea of “Unlimited Data” plans, which the incumbent Rogers, Bell and TELUS have abolished years ago with the emergence of their 3G HSPA networks. While it comes at a stiff price of $80, and isn’t truly unlimited because speeds get throttled after a certain data cap is hit, we can see many power user still preferring this option over tiered data plans. This is without mentioning competitive packages 6GB/$60 plans that aren’t just reserved for existing customers like on the Big 3.

One final aspect that the 700MHz auction does is to level the playing field when it comes to wireless standards. For many years, the Big 3 have touted large LTE networks, while WIND, Mobilicity and Videotron have been limited to HSPA. With their big win in the 700MHz auction, Videotron can now be more competitive with their very own LTE network.

Compatibility with our neighbors to the south

The last important factor in the 700MHz auction is that we are now more in sync with the the US. While both countries have had LTE for a similar amount of time, we’ve haven’t really been on the same page in terms of compatible bands.

The 700MHz auction changes that as Rogers is now aligned with AT&T—unsurprising given their history—and Videotron now has compatible bands with Verizon. What this could potentially lead to more roaming partnerships, handset compatibility for pay-as-you-go options for both Canadians and Americans, as well as the opportunity for bulk purchases.

Handset compatibility

While roaming might not be interesting due to high roaming charges, swapping your personal SIM for a pay-as-you-go local SIM may now become more of a possibility. While this was sometimes possible in the past, the fact that Canada now has carriers that can deploy on the 700MHz band makes this all the more possible.

Bulk purchases

Bulk purchases might be the most interesting prospect of all. We’ve often seen phones go to certain carriers as “carrier exclusives”. While this is unlikely to change in the short term, we believe that the increased purchasing power that Canadian carriers will gain by co-purchasing with an American partner will interest everyone involved: (1) US carriers can have Canadian carriers take on some of the cost of bulk handset purchases, (2) Canadian carriers don’t need specific models to be tuned to their networks, (3) OEMs will sell more handsets with little change in the manufacturing process, and finally (4) customers will have more choices in handsets.

Conclusion

Overall, the 700MHz auction is a win for all Canadians. Wireless carriers get the opportunity to build out their network on some the best spectrum available, Canadians get more choice in plans, service and handsets. Furthermore, increased competition should spur innovation and advancements for Canada as a whole. While it might be a few years before we see these changes take effect rest, you can rest assured that the potential of mobile tech looks more promising in Canada.

The origin of specie
Any form of money has value for four reasons. Most primally, there is the intrinsic value of what goes into it. The metal in a coin, for example, or the salt that formed part of a Roman soldier’s pay (hence ‘salary’), or the rice used to pay samurai. Secondly, because an authority guarantees its legitimacy, by weighing and stamping the metal in each coin, or punishing forgers. Thirdly, it has value as a store of buying power that can be set aside for future use. Finally, it has value because its users ascribe worth to it and are willing to act based on their estimate of what that worth is. This last feature strongly defines the value of forms of capital beyond money – brands, for example – and is the reason why anything from cigarettes in prison to cowrie shells can evolve into a medium of exchange. (The cowrie, in particular, has a startlingly distinguished history. This minute sea-shell is the eponym of the Ghanaian cedi, the source of the Classical Chinese ideogram for ‘money’, and the idiomatic parallel to a ‘red cent’ in Hindi.)

In time, noble metals like silver and gold proved useful stores of value, remaining essentially unchanged through generations. Thieves might break through and steal as usual, but at least moth or rust could not consume them. These coins were only as valuable as the metal actually in them, the weighing guaranteed by being struck off the same die and stamped with the face of the sovereign, or in Islamic countries, a verse of the Qur’an.

Papier cachet
The enormous stone discs (the Bank of Canada’s lobby in Ottawa has a seven-foot specimen) used as money in the Yap islands are an extreme example, but most commodity money was a hassle to carry, if not outright infeasible. Ten cubic inches of gold, about the size of a folded wallet, weighs around three kilograms, or one cat. In time, receipts made for stored quantities of these commodities began to be accepted as money, vastly improving its portability.

The Japanese of the Tokugawa period were an early example. Tokugawa Ieyasu forced the feudal lords of Japan, the daimyos, to house their families in Tokyo (then Edo) as a form of insurance against mutiny. Separated from their paddies in the countryside, the aristocrats of Japan needed a way to spend money in a country where rice was currency. Enterprising rice brokers set up warehouses in which the lords could deposit rice in exchange for scrips or receipts, which they could carry in lieu of rice and use as money. Thus the rice brokers separated the physical presence of a commodity from its value as currency. A sack of rice could quietly sit in Osaka while its scrip travelled from transaction to transaction across the country. It was now possible to carry and use quantities of money that would be unthinkable in rice.

Meanwhile, the Yuan dynasty in China had realised that the first of the four legs – intrinsic value – could be removed entirely. Kublai Khan’s administration issued paper money that had no commodity backing it at all. This money had value only by virtue of the emperor’s say-so and it performed every function that metal coins or bags of rice (or a receipt for a faraway store of said coins or rice) performed elsewhere. Europe adopted the idea of paper money after Marco Polo’s account of its use in China, but the subtlety of it being established by fiat rather than being backed by a metal was lost along the way.

Following the Second World War, the Bretton Woods conference established the price of an American dollar in terms of gold ($35 was worth 1 oz. of gold) and other major currencies in terms of dollars, putting most of the world on a gold standard for around three decades. As European economies recovered, they needed to artificially suppress the values of their currencies to honour the exchange rate. West Germany left the Bretton Woods system and let its currency ‘float’, i.e. let the value of the Deutsche Mark be decided purely by market demand and supply. Other countries began demanding gold for their dollar reserves. Switzerland and France returned a quarter billion dollars between them, claiming over two hundred metric tons of gold in return. More dollars were owned by foreign countries than America could pay for in gold. A run on America’s gold was a distinct possibility. In response to this danger, the Nixon administration unilaterally converted the American dollar to fiat currency in August 1971, breaking Bretton Woods irrevocably. For the first time in recorded history, most money worldwide was fiat, not ultimately backed by gold or silver or salt or rice or anything that was useful in its own right. The most mundane of all considerations was now an abstraction, conjured purely from trust and consent.

Fiat currency has its advantages, but also its challenges. The government can print as many dollars (or pounds or yuan) as it would like, meaning that over time the total supply of money in the economy rises, devaluing the worth of one unit. A dollar bought more thirty years ago than it does today, and there were fewer dollars in the world then than there are now. This continuous increase in the money supply makes this loss of value, known as debasement, inevitable under fiat currency. Linking it to a finite resource like gold puts a natural floor on the value of one unit.

Tender benders
Returning to the example of the rice brokers, privately-issued currencies are common through history. Hong Kong’s dollar is issued by three separate banks, two of which are the private HSBC and Standard Chartered. Several cities and communities, including Toronto and Calgary, have experimented with local currencies to boost local business. Canadian Tire money and Steam tokens are also a form of currency. The difference between these and legal tender is that one, the government only accepts taxes and fines paid in legal tender, and two, merchants are within their rights to refuse payment in private currency, as much as they are within their rights to refuse payment in foreign currency.