Feature /

The Digital Pound: A new form of money for households and businesses?

A response to the Bank of England & HM Treasury Consultation Paper and Technology Working Paper

Introduction ⇝ Physical cash in the form of banknotes and coinage is a bearer instrument. A bearer instrument is a document that entitles whomever holds it to rights of ownership or title to the underlying property, such as cash, bonds or share certificates. If you hold it you own it, and have the responsibility upon yourself to custody it. You can spend and receive it privately and anonymously without record. In the United Kingdom, cash is also central bank money, representing a claim that can be redeemed against the Bank of England. Central bank money is, as the Bank puts it financially risk-free in the sense that there is no credit, market or liquidity risk.

For a digital asset to deserve to be called both cash and central bank money, it must have all of these properties: bearer instrument, privately holdable, anonymously spendable, liquid, fungible, divisible, and a direct liability of the central bank.

In their consultation paper of 2023 and earlier discussion papers of 2020 and 2021, The digital pound: a new for of money for households and businesses?
The Bank of England & HM Treasury
7^th February 2023
The Consultation Paper
ISBN 978-1-5286-3903-3 (CP 797)

New forms of digital money
The Bank of England
The 2021 Discussion Paper
7^th June 2021

Central Bank Digital Currency: opportunities, challenges and design
The Bank of England
The 2020 Discussion Paper
12^th March 2020
the Bank of England and HM Treasury set out a policy and architecture proposal for a Digital Pound, a central bank digital currency (CBDC) to provide a digital solution to the decline of physical cash and to maintain public access to central bank money.

While not opposed to this in principle, we find the Bank’s Digital Pound proposal deficient on two fronts:

1. The proposed Digital Pound is not a digital cash-equivalent: it is not privately transactable nor a bearer instrument, as physical cash is.
2. The Platform Model does not actually provide retail access to central bank (public) money as the public will not have direct access to the Bank’s CBDC system and ledger. It requires custodial intermediaries which adds counterparty risk.

Comment /

Can Ledger Recover?

And what people don’t seem to understand about Hardware Wallets

Ledger, the leading Bitcoin & Cryptocurrency hardware wallet manufacturer launched their new Recover product last week. It’s a subscription backup service that offers users a different way to protect against lost funds in the event that their Ledger hardware signing device is lost, stolen or destroyed. Ledger Recover does this by splitting up their key into three shares which are uploaded to and stored by Ledger and two other custodians. Rather than having a Seed Word as backup in a disaster, with Recover you upload proof of ID to the custodians, to convince them to send your shares back to you.

This announcement… didn’t exactly go down well on Twitter. People started freaking out, having previously understood that their private key was permanently locked within their Ledger – yet here was Ledger themselves proudly announcing a feature that’d extract it and upload it to the internet. Ledger has been forced into damage-control mode, and has paused the roll-out for Recover while the atmosphere is hot.

Let’s back up for a second.

Comment /

The Subtil Genius of Casey’s Ordinals

Bitcoin has NFTs Non-Fungible Tokens, effectively tradeable digital assets or tokens where each is unique. now. They’re called Ordinal Inscriptions, but what the heck is an Ordinal and what’s an Inscription? And why should you care? The arrival of NFTs in the Bitcoin universe has caused a fair amount of drama. Ordinal enjoyers welcome the shiny new hotness, while many others see a serious attack on Bitcoin – guzzling up blockspace that should have been used by normal financial transactions, miners ripping massive four-meg’er blocks full of spam; and an attack on the very fungibility In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of whose parts is indistinguishable from any other part. of Bitcoin.

Ord, wallet software that runs alongside Bitcoin Core was released to the world in January 2023. Its creator, Casey Rodarmor, the inventor of Inscriptions and Ordinal theory has conceived of a way to use, or perhaps exploit Bitcoin’s Taproot script, enabling co-conspirators to store a large amount of arbitrary data within otherwise normal transactions created using ord. It uses a clever construction he’s called an envelope – a piece of code within the Taproot witness part of a Bitcoin transaction that all the nodes of the network will skip over when running the script to validate the transaction, but which contains stuff include the un-runnable bit – arbitrary data that can be extracted by anyone who knows where to look. As this simply uses existing opcodes and an otherwise standard Taproot transaction, Inscriptions have debuted onto the Bitcoin mainnet with zero code changes to Bitcoin Core required. No developer consensus nor permission was needed nor asked to unleash ord.

Ordinal theory does not require a sidechain or token aside from Bitcoin, and can be used without any changes to the Bitcoin network. It works right now.

Comment /

Dual Income, No Kids?

…no House, no chance?

DINK (n.)

Urban middle-class couple that doesn't care about old-fashion stuff like family and kids. Life is all about having fun, travelling, and not caring about biological realities. #yolo

Dual Income, No Kids used to be a smug label proudly worn by those living the high life sans-bambinos. Multiple homes, a yacht, maybe a chalet in Chamonix, holidays whenever and wherever, and no teen-turning-on-twenties studying English lit who needs the Parental Reserve Bank to pay their rent.

Now, though, the phrase would be a much more apt to use in a semi-desperate manner, something like this: Despite dual income & no kids, we still can’t afford a fucking house!

Comment /

The Election That Cried Fraud

Can anyone really fault the media apparatus in the United States and around the World for not taking the allegations of electoral fraud or misconduct being made by the Trump campaign and Republican bloc seriously?

For four years we have been conditioned to ignore or homeopathically distil President Trump’s every utterance. He is a pathological liar – this cannot be contested, even if you support him. He tells it how he sees it, in every moment and with no regard for how he may have previously seen it (even yesterday or an hour ago). What Trump says, like a good ol’ Bible verse, cannot be taken literally literally.

On the evening of Sunday the 23^rd of August, a Kenosha Police Department officer shot and seriously injured Jacob Blake. This police shooting was captured on film and shared widely, and re-ignited much of the anger, civil unrest, protest and rioting seen in the wake of George Floyd’s death back in May of 2020.

Two days later, on Tuesday the 25^th of August during the third consecutive night of demonstrations and riots in the city, 17 year old Kyle Rittenhouse allegedly shot and killed Joseph D. Rosenbaum, 36, Anthony M. Huber, 26, shooting and injuring a third man, Gaige Paul Grosskreutz, also 26. Case № 2020CF000983
Criminal Complaint
State of Wisconsin (Plaintiff)
vs.
Kyle H. Rittenhouse (Defendant)
Filed 27^th August 2020
(PDF)

The media have tried to make sense of the incident, to contextualise, rationalise and summarise it – as is their mandate. However, many major outlets fail to do so objectively. Objective journalism seems to be a thing of the past, if it were ever a thing. What can be said for certain about this incident is that little is certain. We don’t know how the altercation that led to the shootings started. We don’t know who the initial aggressors were nor what motives people carried in to the incident. In trying to mould this story to fit a preconceived narrative, objectivity is lost and the characters in this tragedy are re-shaped to become players in a wider game.

Conservative, Progressive and Liberal voices across the board are guilty of this. The shooter, Kyle Rittenhouse, is being vilified by some as a domestic terrorist, vigilante, a white supremacist A 17 year old white supremacist domestic terrorist drove across state lines, armed with an AR 15.

He shot and killed 2 people who had assembled to affirm the value, dignity, and worth of Black lives.

Fix your damn headlines.
―
27^th August 2020
Ayanna Pressley
@AyannaPressley (Twitter)
Congresswoman (D) MA 7^th District
Note
Rittenhouse’s legal team’s statement claims the rifle was not brought across the state border from Illinois: The weapons were in Wisconsin and never crossed state lines.
28^th August 2020
Pierce Bainbridge P.C.
Legal Team Statement
Pierce Bainbridge Engaged to Represent 17-Year Old Kyle Rittenhouse (PDF) and a cold murderer who came to Kenosha with the intent to kill. Others choose to paint him as a poster boy for the second amendment, for the Boogaloo movement and as a patriot defending ordinary Americans and their property from an insurgent far-left Antifa. The same tinting is applied to those he shot. Were they victims and heroes? Or rioters, radical activists and thugs themselves? These are questions we simply don’t have a straight answer to. We won’t have an answer to many of these questions until Rittenhouse’s trial concludes, if ever.

So, this is an experiment in objectivity. Below is a presentation of fact, as sincere and without opinion as I can muster. If you consider it biased, say how and I will correct it. Further sources and details are most welcome. It irritates me that it’s considered acceptable to write articles claiming to present fact without citing and linking any sources. Hopefully the considerable effort I’ve made here to annotate and link to sources is satisfactory, but anywhere a source is missing I’d be happy to add one if you can provide it, or remove the claim. I’ll not repeatedly link to the same source again, though, so please check all sources before calling me out.

Only once the facts are presented unmolested should we then draw our conclusions. Finding such a presentation of fact is increasingly difficult, as evidence – videos, images – are removed from social media and sharing sites for violating policies against graphic depictions of violence. This can leave you with little unadulterated evidence left to look at.

Ask yourself, what was your instinctive verdict about what happened in Kenosha? Have you changed your opinion since? Are those around you trying to discover the truth, or are they instead trying to brow-beat others in to conceding that their narrative is correct? Truth is singular. Its versions are mis-truths.

Comment /

Hong Kong

On the 30^th of June, Beijing forced upon the people of Hong Kong a despotic law under the guise of ensuring National Security. This law strips Hong Kong of the precious autonomy and freedoms that have stood it apart from communist China since 1949. One country, two systems no-more.

This is a decisive blow, and all-but-surely ends the hope that democracy and liberalism were in Hong Kong’s near future. To speak of independence is to break this law. To subvert the power of the Chinese Central Government is to break this law. To collude with foreign forces is to break this law. To do these things anywhere in the world is to break this law. Well, to hell with that. Hong Kong of a right ought to be a free and independent state. Sentence me to life imprisonment. Lock me up. And screw the anthem too. Hong Kong protesters hold banned Tiananmen vigil as anthem law is passed
The Guardian
4^th June 2020

The imposition of this National Security Law is a flagrant breach of the Joint Declaration between China and the United Kingdom, agreed at the handover in 1997. Not that China cares – the law comes in to effect on the anniversary of the handover, a deliberate slight aimed at the UK and Hong Kong’s democrats. The old guarantees of freedom and autonomy agreed in said declaration have been discarded, declared to no-longer have any practical significance by the Chinese state’s talking heads. China says Sino-British Joint Declaration on Hong Kong no longer has meaning
Reuters
30^{th June 2017} The few shreds of legal and political autonomy left to Hong Kong are merely there to dress the windows. This law criminalises whatever speech, protest and political activity the Chinese Central Government wishes it to, and strips Hong Kong’s judiciary of its independence. Further repression will follow shortly.

It’s hard to see what else we could have expected to happen once the prescribed fifty year transition period came to an end. In the giddy days of the late nineties, with the Berlin wall peacefully pulled down, the Soviet Union in tatters and some even being so bold as to proclaim The End of History The End of History and The Last Man
Francis Kukuyama
Published 1992
ISBN 978-0-02-910975-5 , perhaps naïveté set in and we though fifty years would be enough to see off communism in China too? Or that China in her benevolence would deign to grant Hong Kong perpetual autonomy? Certainly seems naïve in hindsight. China is a rather different beast to the Soviet Union, and learnt its lessons.

Comment /

Contact Tracing

The apps trying to halt the spread of coronavirus may be unwelcome eavesdroppers

A government backed contact tracing app may seem innocuous, but it presents one of the greatest threats to civil liberties and privacy seen in recent years. Dramatic, I know, but possible.

Irrespective of whatever opinions you may hold on Apple and Google, the model they propose Apple and Google partner on COVID-19 contact tracing technology
10^th April 2020
Apple.com for building such a contact tracking app is out in the open and free to be scrutinised. And, it stands up to scrutiny. Apple and Google’s COVID-19 Exposure Notification API: Questions and Answers
28^th April 2020
EFF (Electronic Frontier Foundation)
While the EFF do raise legitimate privacy concerns around susceptibility to linkage attacks, these ought to be reasonably simple to address and are not fundamental flaws in the design of the system.

It is decentralised, meaning there isn’t a datacenter or server anywhere in the world that stores the sensitive data collected by the app; all of it would be broken in to as many pieces as there are users, and all the data about you – where you’ve been, who you’ve seen – would stay on your phone.

The way it works is reasonably simple: Your phone would generate a random, anonymised ID for itself when you download the app, and then continuously tick away in the background on your device, simultaneously broadcasting its ID and remembering all the random anonymous IDs of all the other phones that come in to Bluetooth range. It’d store these contact records for some time, probably a week or two.

If you fall ill with coronavirus, only then would your anonymous ID be uploaded to a daily list of infected IDs. Everyone’s phone then downloads that list, and if it sees an ID on it that it remembers coming in to range with earlier, then it’ll tell you to self-isolate. Note that your phone hasn’t handed you in to the authorities – they don’t know that you’ve been advised to isolate as they haven’t got a copy of any contact data. If you (foolishly) ignore the instruction to isolate, there’s not going to be an officer from the Stasi coming to knock on your door.

This model for contact tracing is robust against a bad actor looking to get at an incredibly valuable & sensitive dataset – the movement history, social network and whereabouts of every single person that has the app are all derivable from this dataset, especially once the lockdown begins to ease and we slowly return to normalcy. If the app is decentralised, that kind of hack and access to private data is simply impossible, because such an aggregated dataset doesn’t exist.

Depending on what regard you hold the government in, substitute bad actor for government above.

Comment /

Labour’s Members are Making the Party Unelectable

The party’s rules cede too much power from MPs to the members

The Labour party elects a new leader using a cocktail of preferences and votes from different bodies of the party – the members, MPs (PLP), MEPs (EPLP), affiliated trade unions, constituency Labour parties (CLPs), and socialist societies. The Conservative party, on the other hand, selects its new leader by taking MP nominations, narrowing the field down to just two candidates using rapid exhaustive votes amongst MPs, and then throwing the final pair to a member’s vote.
 This means any newly elected leader had the backing of at-least a largeish minority of their peers. Some recent Tory leadership elections have skipped the member’s vote after one of the final two stood down. This all makes for a rather convoluted and drawn-out process.

The Labour party may have set its leadership election rules this way with the aim of making the process maximally democratic, but in doing so have set themselves up for significant misery.

In 2016, Jeremy Corbyn lost a vote of no confidence in his leadership amongst Labour MPs, with 172 against votes to 40 in favour – a mere 18% share. Most leaders would see the writing on the wall, and have the humility to go. That’s of course not what happened. Corbyn retained the leadership. Given merely 40 of his MPs had confidence in him, it’s not a stretch to argue he couldn’t have even made the requisite 51 nominations from MPs and MEPs to be on the ballot. Alas, as the incumbent leader, he was given a pass by the NEC.

Astoundingly, when the question of Corbyn’s leadership was put to the Labour membership, they backed him with 61.8% of the vote, actually an increase over his 2015 share of 59.5%.

The thing is, it takes a lot to become an MP – hard work, an ability to sell yourself & front your party’s policies – it takes comparatively very little to become a member. To become an MP, you must put your money where your mouth is, have skin in the game, and stick at it. To become a member, you just sign up online and pay about £5 a month – so members needn’t be electable. Surely the MPs should have the lion’s share of the say?

The change from a MP-led leadership election process to a more membership-led process The Labour party was the first to change to this style of leadership election, following the recommendations of the Collins Report in 2014 and pressure from activist groups, who argued that MPs tended to pick centrist (some would say moderate, electable) candidates.
See more:
Corbyn as an organisational phenomenon
26^th January 2016
Constitution Unit
was perhaps the biggest factor that enabled Corbyn to get elected. A leader with only one in five of his colleagues supporting him at the despatch box was thus kept in place. The insurgent and radical support for Corbyn amongst the members in 2016, so flagrantly dismissive of the clear discontent the party’s MP’s had with Corbyn was perhaps a sign of things to come.

Comment /

Moving North

The Conservatives are floating the idea of moving their CCHQ party office, and the House of Lords to the North. Let’s be honest – Northerners will see through this kind of pandering.

Moving CCHQ or the Lords to Manchester or York or Liverpool or Newcastle or Birmingham or just half an inch north of the Watford gap won’t change much, At least, presumably it won’t, as no plan of mass staff replacement has been announced. Same people different place is unlikely to lead to a significant change in behaviour. other than forcing a lot of staff to waste money and time travelling and moving office – all of this will be at the taxpayer’s expense, at least in the Lord’s case. While yes the Lords and Commons both need to move temporarily from the Palace of Westminster during restoration works, the current plan of using the nearby Queen Elizabeth II conference centre seems more sensible than York, 200 miles away. Not-least to mention the considerable inefficiencies in Commons-Lords collaboration this would introduce.

In CCHQ’s case, if decentralisation and purging of mandarins is what’s wanted, why not build out additional peripheral offices and/or devolve power to the the constituency party associations already in place? Whether such a bold shake-up as moving cities is even needed is questionable, given CCHQ assumedly had a pivotal role in winning the massive majority in the December 2019 election.

The NHS’s four-hour target for A&E admissions has entered the spotlight, after the Health Secretary Matt Hancock suggested that he was considering scrapping the metric in favour of some other, unspecified clinically appropriate target. The existing target expects that 95% of admissions are triaged – admitted, referred, or told to sod off – and moved along from A&E within four hours of presenting. Notionally, this seems a sensible target.

When a metric becomes a target, it ceases to be a good metric.

However, when metrics such as this become themselves the target of optimisation, they have a habit of ceasing to be good metrics – people will try and cheat, and put their efforts in to improving the metric rather than the outcome it was trying to approximate, i.e. to make it seem as though all is going better than it actually is. In this context, what does that look like?

Comment /

The Hostage Parliament

We British find ourselves in a startling situation. For the first time in parliamentary history, the opposition has full confidence in the Government, yet the Government has no confidence in itself; the Executive cannot legislate, yet the Opposition can!

Simply put, the Opposition is holding the Government hostage. Before this bizarre chapter in the history of Parliament, the following could generally be relied upon:

• The Government controls the business of the House
• The Opposition opposes the Government, and so can be expected to vote against it in a No Confidence motion given half a chance
• The Government supports itself in a vote of No Confidence
• The Opposition has confidence in the Leader of the Opposition
• A Prime Minister could dissolve Parliament to get a General Election – a gamble that could see them either gain or loose a majority Of course, the Fixed-term Parliaments Act, 2011 put paid to the prerogative ability of the Government to call an election when it saw fit, in a (in-hindsight) short-sighted desire to hold-together the then Conservative & Liberal Democrat coalition. It requires a super-majority to trigger a General Election, but can be circumvented by a motion notwithstanding it, which would be amendable.

Now, this set of rules has been turned on its head. The Opposition MPs, who will readily denounce the Government as a shameful band of liars and charlatans who should seemingly apologise for their every shocking and outrageous utterance, can’t quite bring themselves to say as much formally, by voting against the very same government. They must somehow believe that they are bestowed with a moral prerogative to block a No-Deal Brexit, and that this supersedes their moral obligation to the electorate, and its right to an election when Parliament is so-clearly dysfunctional, the Government wishes to hold one, has no majority and cannot pass its business.

Comment /

YouTube & The End of History

YouTube, and sites like Facebook, Twitter and Reddit are the public squares of our time. They provide the platform for so much discourse today that exclusion from them is suffocation-enough to silence. As private companies, unburdened by the forced liberalism of legally protected free speech, their content policies wield great power and dictate so much of what we do and don’t see online.

There is heated debate over the question of free speech – is the Libertarian free-speech absolutism or the Progressive protective censorship the more desirable policy? This a debate framed around one’s interpretation of the word freedom – is it freedom from, or freedom to?

This problem becomes pronounced when the mis-incentives from these platforms’ need to run advertising to sustain themselves are introduced. Advertisers don’t want to be associated with what they see as divisive, shocking or unpopular content. When advertisers are given the chance to exclude their ads from appearing alongside these subjects, almost all take it. After all, who wants some wisecrack on Twitter @ing you to ask why your product was just advertised before an objectionable video when others’ were not? This in-turn encourages these platforms to move to discourage content that hurts their ad-driven bottom-line; and develops a tendency towards the seemingly mundane yet nefarious ‘Advertister Friendliness’ undergirding content policies.