Bitcoin to the moon? Or just another subreddit dream?

Now that the speculative popping of Bitcoin prices has occurred (from $1200 to $400), are Bitcoin, Dogecoin and other similar crypto-currencies (bitcoins) the beginning of the internet or something destined to remain on the fringes of libertarian conspiracy theorists wearing tin-foil hats and posting cat memes on Reddit?  I don’t think there is much value in bitcoins as a means to hide the nature of transactions, as regular cash in a suitcase is better suited for such purposes (at least for now).  I also don’t think bitcoins will replace fiat currencies, meaning legal tender issued by a country’s central bank,  which is required to be accepted for the settlement of debts.  For example, you may be able to go to the moon with Dogecoin or sponsor a NASCAR, but the IRS will not accept Dogecoin to settle your tax bill.

The real value of bitcoins is to undercut the payments and cash management cartel of the SWIFT/CHIPS  cartel (Society for Worldwide Interbank Financial Telecommunication and Clearing House Interbank Payment System). On average banks and other money transmitters charge $40 for per international transfer.  Payments and Cash Management departments are one of the most profitable divisions of banking, as the sheer volume of money practically ensures profit, for example CHIPS handles 1.5 trillion dollars per day.

The  merchant fees charged by Mastercard, Visa, AMEX, etc are around 2 to 3 percent depending on size of the business.  To get an idea of how this amount adds up, WalMart is filing a lawsuit against Visa for 5.7 Billion dollars, based on approximately a 2% transaction fee for customers who use Visa at Walmart.

The size of the payments pie is enormous, and lots of venture capital will be drawn to this pot of gold.  However, for bitcoins to go from fringe to mainstream acceptance, the biggest nut to crack for bitcoin exchange operators to achieve a relatively frictionless anti-money laundering regulatory and the ability to seamlessly track capital gains and losses.  People, myself included, are lazy at their core, and do not want to track these hassles.

The IRS has issued notice guidance that bitcoins are considered property for tax purposes and not currencies, and that all users of bitcoins are responsible for to track their capital gains and losses whenever buying or selling bitcoins, similar to if you were trading in baseball cards or Beanie Babies, hence the need to track capital gains and losses.   However, when it comes to tracking down money laundering terrorists/slash drug dealers the U.S. Treasury Department Financial Crimes Enforcement Network (FinCEN) thankfully has advised that only “exchangers” and “administrators  and not “users” of bitcoin exchanges have a responsibility under the Bank Secrecy Act (BSA), Anti-Money Laundering (AML) and Know Your Customer Laws(KYC) to report suspicious transactions.

Where does that leave peer-to-peer bitcoin exchanges, similar to original Napster or current BitTorrent networks for the purposes of FinCEN enforcement?  Under FinCen’s guidelines, it is possible that anyone buying, selling, reselling bitcoins would be regulated as a Money Service Business on such an exchange.  How will regulators react with the development of technologies that enable users to scramble their payment information with another users?

With yesterday’s ruling by the Federal Election Commission and the combination of emerging technology, soon a user will able to send unlimited and anonymous payments to their favorite local politician.

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Cultural Horror Show: New Ronald McDonald Arrested

McDonalds recently released a new version of their cultural horror show of a Pedophile-clown with fries this week.  Basically, Ronald changed out of his prison yellow jumpsuit and into a red sports coat.   All the better to expose himself with.

Why doesn’t McDonalds just kill the clown off? Does anybody think clowns are a symbol of joy, innocence, and children laughing or do you think of Pedo’s in makeup driving white vans with no windows and creeping into kid’s birthday parties searching for their next trophy.  Clowns are now a cultural third rail, their provenance is primarily associated with John Wayne Gacy, Pennywise, and Juggaloes.  I’d rather hang with a thieving Hamburglar,  socially awkward Grimace, or political stooge Mayor McCheese.  At least their faults are upfront and in the open.  Everybody knows clowns hide stuff on the inside, and everybody knows Ronald has to be hiding something, and its probably a desire to lure your kids into his rape van with promises of Happy Meals.   I would never trust a man in clown make-up alone with my kids.

In fact, if you see Ronald McDonald loitering near you, there is something you can do.  You can call the police and have him removed/arrested/stoned to death.  In New York City, there is actually a statute that prohibits him from creeping.  New York Penal Law Section240.35(4) states a party is guilty of loitering if they are “masked or in any manner disguised by unusual or unnatural attire or facial alteration, loiters, remains or congregates in a public place with other persons so masked or disguised.”  

Your move Ronald.

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The U.S. legal system: To the fax machine and beyond!

Why does the U.S. legal system have to be so complicated?    Can the legal system be made simpler? Or is it destined to remain a barely intelligible mess, like the scatter-brained humans we are.  Millions of years ago, when humans first stood up and looked across the savannah, did they scramble around like a toddler pumped up on espresso shots? Or did they survey the landscape, take in the scenery, and look around for predators or things to eat.

I’m inclined to think our ancestors did not just scramble around like over-caffeinated toddlers. So, why does our legal system appear to be designed by them?  Here is my poorly drawn graphic to illustrate why things get complicated:

04

Life is complicated, legal problems are complicated.  The legal system could still be a lot simpler.  It wouldn’t require difficult changes to make it simpler.  Let me show you how a simple legal issue, becomes overly complex.

I had a client who was issued a couple of violations by the New York City Fire Department, and I was retained to clear the violations.  I’m not a litigator, but the client needed them clear in order to sell the building, which is why I was originally retained.  These FDNY violations were technically misdemeanors, but in reality they are essentially  glorified small claims court matters, which only requires my presence, because the rules of the court state that a corporation or LLC must be represented by an attorney.  To start I needed to get a copy of the violation.  I have the violation number, so it should be easy right? Surely, I can print this off as PDF from the FDNY website.  Nope, I need to call five different phone numbers before I reach somebody on the phone who knows what I’m talking about, get a fax number and the name of the Fire Inspector who issued the violation.  I borrow an  old Delorean/Time Machine from Doc Brown and Marty McFly and fax my request for a copy of the violation.

TO THE FAX MACHINE AND BEYOND!!!!

back-to-the-future-DeLorean

I  go to the criminal court on Leonard Street before it opens and stand in line for 30 minutes in the cold with a long line of people who all seem to be there for public drinking, disorderly conduct, or pot possession. Once inside I navigate through a maze of elevators and corridors, none of which have signs, arrows, or marked paths. After finally finding my way to the right court to make my pleading, I go to the sign up sheet, wait an hour, make my pleading.  Great, they agree to drop the misdemeanor, as long as my client pays a fine and corrects the violation.

My client pays the fine, corrects the violation, calls the FDNY to make an appointment so they can inspect the correction. FDNY will be there in about two weeks.  An inspector shows up, my client passes.  I get back in the Time Machine, fax the passing inspection to the original FDNY inspector asking him to release the violation from the FDNY’s record system.  I’m told it will take about a week to be released.  A week later, I call and find out that the violation has not been released from the FDNY’s computer system, and this is a major problem for my client because they want to sell the building, and the buyer won’t take a building if there are any building code or fire department violations.  Now, I have to go to the FDNY office in Brooklyn, it is only open until noon, because paying ten guys to operate the records room is expensive. Nobody can explain why paying ten FDNY employees to stay open until The Price is Right is over  at 12 pm is preferable over to just scanning the records and placing them online as PDFs.

I’M SORRY, BUT THE PRICE IS WRONG! WE CLOSE AT 12:01!

 

price is right

I stand in line for thirty minutes, pass the metal detectors, the guy at the window for the record room, cannot release the violation from the system, the inspector has to do this. Will he call the inspector?  No, he can’t do that, he’s perfectly nice about it, but he still can’t help.  I call the phone number I have for the inspector, and luckily I reach him on the phone and better yet, his office is in the same building.  I’m convince the inspector to help me out.  So tells me to enter the FDNY from another entrance, I sign in with the security guard, he calls up, the inspector comes down, and I’m super grateful to talk to the actual human being in charge in the flesh.  I explain who I am, and he agrees to take me upstairs to look at the computer records.  The software is ancient.  It operates on a Tandy computer they bought from Radio Shack in 1987.

DID YOU KNOW THAT IT COMES WITH A FREE COPY OF ‘WHERE IN THE WORLD IS CARMEN SANDIEGO?

trs80-iii

We hop in the inspector’s Time Machine and he starts banging the Tab key like a savage.  Finally, he sees that my client’s record has not been released, he checks his paper records, sees that my client passed inspection, and enters it into the computer as released.  I ask for the printout of the release, so I have actual proof.  He’s not sure if they’re allowed to actually give a printout from that screen, but he’s a normal human and can’t see any rationale for not giving me the printout.

Did you know there are people who wait in line and navigate this system all day? In NYC they’re called expeditors. If you’re willing to pay between 2K to 5K per violation, they will do all of this work for you.  From what I gather  they’re basically in the business of being nice to people, knowing who to call, and a have a lot of games to play on their cellphone while they wait in line.

Why this long-winded story Kafkaesque story?  Here are some simple fixes:

  • PDFs of all complaints and violations available on the website of the corresponding department.  I realize this may be some giant IT issue, so it may not be simple.  Some departments in NYC do make this information available, why not the FDNY?
  • Why is the largest city in the U.S. still relying on fax machines? Seriously, WTF?  This is 2014. Please let your staffers use email.
  • Signage in the courthouse.  Start with a directory in the entrance.  Like the kind you find at the mall.  Its a map + a list of the courts, restrooms, etc. Add more signs in the hallways with arrows pointing someone in the right direction.  Maybe even some colored paths like you find on a factory floor or the yellow brick road in the Wizard of Oz.  When I worked in a courthouse, yes, I eventually learned where everything was, but that does not mean the one-time visitor charged with a disorderly conduct violation knows where everything is located.
  • Do not use acronyms when interacting with the public.  They’re almost always nonsensical.

I found a great example of somebody who took something that was unnecessarily complicated in the legal field and made it simple a few weeks ago. The site is called RankandFiled.com, which makes accessing all of the information on the Securities and Exchange Commission (“SEC”) website usable.  For years the Securities and Exchange Commission (S.E.C.) has possessed all the financial information, but you had to use  the SEC’s Electronic Data-Gathering, Analysis, and Retrieval system (“EDGAR”) to access and download each file separately.   EDGAR is a total piece of shit.  Thankfully one single person was so pissed that the SEC with its relatively infinite resources could not make a remotely user-friendly website.  So he created RankandFiled.com. Its awesome.

Inspired by RankandFiled.com, I made an attempt with my mediocre Python programming skills to make a Legalese to English interpreter.  I’ve posted it on Github here.  Essentially, when the user uploads a text file full of stupid legal words such as:”heretofore” it translates it into the plain English meaning “until now.”

I don’t have the patience/programming chops at the moment to make this a better tool, but if you do, please feel free to fork it and make it better, maybe give me a shout out or if you are competent with Flask or Django, then deploy it to a website.

I’ve also posted a link on this site “Free Legal Resources for Artists” where I’ve made free agreements available.  I’ve written the agreements, more or less in plain English.   It comes with a nice long disclaimer, because entitled people are dicks about stuff they get for free.  I’ll keep posting additional agreements from time to time, including stuff for non-artists, as long as everyone is cool about it.

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Is China going to bust? Ask a chimpanzee.

I read this article today in The New Yorker, asking if China is the next Lehman Brother’s…the catalyst that set off the U.S.’s 2008 financial crisis.  Since, I’ve been  a regular visitor to China/Hong Kong for 20 years, and lived there a little less than a year in 2011, every so often people ask me if I think China is going to go bust. I wouldn’t claim to be a China expert by any stretch of the imagination.  Can anybody really be an expert on an ENTIRE  country? Stating that you are  a China scholar, always seemed ridiculous.  I can see saying “Oh, I’m an expert on the fantasy literature, so let me bore you to death about the significance of Bilbao Baggins’s secret mole above his ass crack in Lord of the Rings, and why the movies got it all wrong.”  I’m a natural-born American and I haven’t even been to the Deep South in the USA…so all I think about is the stuff I’ve heard about: fried food, Honey Boo-Boo, and cross-burnings, so I can’t really be an expert on the country I was born in.

Anyways, the short answer is: Yes, everything goes bust eventually.  There are all sorts of semi-useful and useless indicators that experts have come up with to predict if things will go bust.  There’s the “Gini Coefficient” which measures how much money poor people have in comparison to rich people (I’ll save you the effort to look it up…rich people have way more money than poor people).  There’s the skyscraper index which dictates that as soon as a country has ambitions to build the world’s tallest building and finally demonstrates that yes they are finally the big swinging dick in the room, it will go bust.  There’s the ratio of rental income to price paid for an apartment, where the yield is abysmal, but nobody who actually buys these apartments gives a flying fuck, because they think they are going to flip that apartment to another sucker later.   Someone with more time could try to find how many times the same piece of property has been pledged as collateral across the entire market, but this is too hard, because if a developer is doing that, then they are obviously in deep shit, and there is no way they would tell you.  Maybe, since so many business deals in China seem to require a long night of drinking at karaoke whorehouse some real groundbreaking insights could be made by going to the karaoke bar/whorehouse and asking them if business has slowed down and by how much.

Trying to predict when the next crash will happen is a terrible idea for a guessing game.  If you pictured every so-called market expert talking with a bunch of drunks at your local bar, I don’t think the predictions from the drunks would be any worse than predictions from a market expert, because essentially at the end of the day a market is run by people making both rational and irrational decisions.  For the vast majority of human existence  our lives have more closely resembled the lives of a tribe of howling, feces-throwing chimpanzees as opposed to the buttoned-down suit and tied, perfectly rational and efficient creatures economists always seem to envision. Essentially, we are just overgrown chimpanzees honking the horn and shaking the steering wheel of our SUVs shouting at other overgrown chimpanzees who are also honking the horn and screaming at the little chimps in the backseat for spilling cherry soda.  When one feces-throwing chimps gets scared, the others will smell fear, and it will snowball until every chimp is scared and running for the trees.  Then when the coast is clear, we will come back down from the trees, and forget that a crash ever happened.

 

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MMA has higher brain injury risk than boxing. Getting punched in the face causes brain damage

From ESPN/AP.  In other news, getting repeatedly bashed in the head is still not good for you, cigarettes give you lung cancer, and a skydiver’s parachute might fail.

MMA just hasn’t been around long enough for us to see what a 70 year-old ex-fighter looks like – ala Muhammad Ali.   Movie fans know Rocky has serious mumbling issues.  Ivan Drago broken by Rocky. Apollo Creed beaten to death by Ivan Drago.   If there is a degree of difference in safety between MMA and boxing, it’s not much.  The standing eight second count after being knocked down in boxing vs being pummeled on the ground in MMA, either way your head isn’t going to be right the next day or the next week.  Nobody has died in an official MMA fight yet, but it will happen at some point, just like it has in boxing, football, race car driving, skiing, and mountain climbing. Hell, a kid at my boxing gym couldn’t spar for three months, because he got a concussion after running into a wall while playing squash.   There is only so much regulation and safety equipment can do when one participates in an inherently dangerous activity.  Like any dangerous activity, there are steps a fighter can take to reduce their chances of death or serious injury.

One of the best things a fighter can do is make sure their training partners are not total jack-offs, and hitting you with a 100% of their power.  A good gym, will make their fighters fight with control.  There is no sense in getting a concussion or cut-up in a training session.  This might happen anyways, but a concerted effort should be made by the gym to keep the safety of their fighters in mind.  If you are just starting out as fighter and in your first sparring session and the other fighter is unloading bombs to your face, you should tell him to slow it down.  If he still is unloading on your face, that guy is an asshole, and you  should not continue, nor should any good gym tolerate such douche-baggery.   A rough guide is:  if a more experienced fighter is fighting a relative beginner, then the experienced fighter should be striking at 25% of their power at the most, and working on things such as technique, defense, and foot movement, as opposed to knocking out beginners.

 

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