analysis | What is “passporting” and why is it so important to the UK after Brexit?

Papers, please.

No Exit signs at St Pancras station in London. Credit: Author, 2014

The British financial industry, hammered by the country’s momentous decision to leave the European Union after Thursday’s referendum, faces continued uncertainty over the “passporting” arrangements between a newly separated UK and the EU. The future of British trade hangs in the balance, with the financial sectors calling for swift clarification on the country’s new political and financial relationship with the trading bloc.

analysis | What Facebook's news suppression reveals about our relationship with machines

Pay no attention to that man behind the curtain.

On Monday, technology news site Gizmodo published an article alleging the routine suppression of conservative news from its “Trending” news aggregator by a group of curators instructed to manipulate the list from behind the scenes. Setting aside many of the partisan issues surrounding the controversy, what the “man behind the curtain” really reveals is our intricate relationship with—and misguided perception of—computers and machines.

news | Panama Papers source calls for whistleblower protection, criticizes groups in statement

The anonymous source of a large cache of documents collectively known as the "Panama Papers" issued a wide-ranging statement on Thursday criticizing several groups and calling for the protection of whistleblowers from prosecution. The statement was confirmed by the Süddeutsche Zeitung, a German newspaper that first broke the story in conjunction with the International Consortium of Investigative Journalists.

analysis | Not all data journalism is created equal--here's why.

The surge of big data, on the backs of the Facebook, Gmail, and Instagram generations, has led to an explosion of information available from every corner of your life. It’s here, it’s most certainly going to stay, and it’s something journalists have been quick to catch on to. Learn it. Use it. Love it.

But not all data journalism is created equal.

analysis | Why your hull insurance policy doesn’t actually cover main engine breakdown.

Here’s a quick way to tell if you’re part of the maritime industry. Read the below and ask yourself: Does any of it make sense to you?

If you have better luck reading Egyptian hieroglyphs, congratulations. Your sanity is intact, you lead a fulfilling life, and you probably have a full head of hair to boot. If it does make sense, you have my sympathy: you’re one of the poor guys dealing with the wonderful world of maritime claims.

Here’s an excerpt from the TAYLOR form, a standard hull insurance policy.

Try to stay awake.

“This insurance also covers loss of or damage to the vessel named herein directly caused by: Breakdown of motor generators or other electrical machinery and electrical connections thereto, bursting of boilers, breakage of shafts, or any latent defect in the machinery or hull, (excluding the cost and expense of replacing or repairing the defective part);”

Maritime claims handlers will recognize it as “the bit in the policy that provides coverage for breakdown of the main engine.”

But here’s the thing: it doesn’t actually provide coverage for main engine breakdown.

Companies that for years have incorporated the standard TAYLOR 1953 (Rev. 70) into their policies—the boilerplate used by insurance policies around the nation—have been writing policies of hull insurance that may not provide coverage for engine breakdown.

analysis | Stocks fall as oil prices slide amidst investor gloom on China and world economy. Here’s why.

Stock markets around the world have fallen sharply today, after nervous investors triggered a rout following a slide in oil prices and continued contractions in the Chinese economy. The panic was exacerbated by lingering market jitters over a weak start to the new year. The basic explanation is quite simple: oil, China, and fear.

analysis | The Korean Conundrum: why the peninsula remains intractable

It’s a routine that would verge on the comical if so many lives weren’t at stake. North Korea threatens nuclear destruction in the hopes of extracting concessions out of its neighbors, forcing them to ignore, react to, or placate the pariah state. Last Wednesday, North Korea announced it had detonated its first hydrogen bomb in its fourth nuclear test, and while this claim has been disputed by U.S. officials, the blast—whatever it used—was powerful enough to register as a magnitude 5.1 seismic event. But amidst the sorties, calls for sanctions, and saber speaker rattling, the world by and large shrugged its shoulders.

Kim Jong Un might be a lot of things, says the world. But he’s not crazy enough to provoke a war he knows he’ll lose. The theory of Mutually Assured Destruction proves it: two countries find themselves in an intractable situation. Each wants to achieve its desired outcome, but neither country wants to go to war because they have the power to utterly destroy each other. Any other action would leave the countries in a worse state than before. (This is called a Nash equilibrium.) The upshot of all this is that neither side would be incentivized to start a conflict as it would be irrational.

Thing is, MAD rests on a few assumptions: neither party wants to back down, both parties have things to lose, and both parties implicitly wish to survive.

analysis | OnePlus USB-C cables faulty, no recall issued

It’s never wise to take a fire hazard lightly.

Mobile phone manufacturer OnePlus has offered to refund customers who purchased their USB-to-type-C cable after a flaw was discovered that could cause damage to the power source, potentially resulting in an electrical fire. The cable, which shipped with its OnePlus Two phone in July this year and was also sold as a standalone accessory, was not standards compliant, and a blog post by the company recommended against using it for anything other than charging its own device.

analysis | Not the product, but the idea: Why New Coke failed with consumers.

New Coke.

Nothing else continues to evoke such fear and wonder in the world of marketing than these two words. It was an unmitigated disaster, a cautionary tale of poor planning whose very mention conjures powerful images of corporate hubris gone awry.

The quintessential marketing failure of the 1980s, New Coke was a popular name for a product heralded as the reformulated replacement of Coke, one designed to appeal to changing consumer tastes and counter sliding market share. But its eventual failure and phaseout raised an uncomfortable question the soft drink behemoth, The Coca-Cola Company, had never before confronted:

What were they selling?

analysis | Fool's Gold: Apple Watch Edition is not for sale.

© Apple

Credit where it's due: Apple's announcement of the Watch Edition starting price of $10,000 has stunned the tech world in its sheer audacity. Why charge an obscenely high price when aside from the casing, it's identical to the basic $350 model? No convincing explanation has developed, but that's because people are viewing it wrong.

Watch Edition is not a product, it's a brilliant marketing strategy.

analysis | Go (small) or Go Home: Project Ara and the future of Android

The Lego set is Google’s vision of the future smartphone: choose the features that matter, connect them to a basic frame, and swap parts at will. Broken screen? Pop in a new one and keep the rest of the phone. Drooling over a new camera? Buy the upgrade and snap it in place. The device is flexible, customizable, adaptable to any user, easy to upgrade and maintain.

The last part should sound familiar—it’s the same core idea behind the Android operating system, it’s innovation in the stagnant smartphone market, and most importantly, it’s the future of Android.

©2014 Motorola Mobility LLC

review | Noteworthy 2015 Super Bowl Ads

The first of February marked the broadcast of Super Bowl Clicks (apparently spelt XLIX), which for the unpatriotic and the uninformed is when every major advertiser in America releases their latest 60-second film, and even features a sideshow where some blokes run about playing catch. Since those of us stateside are condemned to view these commercials ad nauseam for the better half of a season, it seems like a good time as any to analyse some of Madison Avenue’s more innovative ideas while skewering their more tasteless excesses.

rewrite | Unstable, paradoxical, and prone to implode - A simple(r) explanation of Bitcoin

Money is only worth what other people think it’s worth, an adage that forms the socioeconomic bedrock of Bitcoin. But while “strength in numbers” shields the cryptocurrency from outside influence, it also gives Bitcoin its notorious volatility.

Imagine if everyone in the entire world suddenly threw up their hands and said "alright, we don’t accept the US dollar (a fiat currency) as valid payment." The US government would still provide a good or service in exchange for that USD, which effectively gives it value.

Now imagine if everyone in the entire world suddenly threw up their hands and said "alright, we don’t accept Bitcoin as valid payment." There is no large body or entity that would continue to provide a good or service in exchange for a bitcoin, making the cryptocurrency effectively worthless.

Paradoxically, the only way Bitcoin can become mainstream is by gaining the support of a large, financially steady organization that will guarantee its value, much in the same way a government guarantees its own currency. But doing so would undermine its purpose as an unregulated, “pure” currency that can’t be influenced by any one entity. Its greatest strength is its own greatest weakness.

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Rewrite is the writing process in action, where old topics are revisited, taken apart, revised, and redrafted. Now rewritten is "A simple explanation of bitcoin", completed 28 September 2014.

analysis | Seeing Past Glass: What Google’s withdrawl of its headset means for its future

Google’s recent decision to withdraw Google Glass has drawn an immediate, almost visceral reaction from both Silicon Valley and Wall Street. Finally, they proclaim, Google has come to its senses! It’s grown up at last; time to put away the balloons and the toy cars, and move on to the things that actually matter!

Make no mistake, Google Glass in its current iteration has failed to become a tenable product, something no amount of marketing spin can cover. If Glass really was doing brisk business, Google would be beside themselves singing the praises of the just-released second generation. That the wearable computer was pulled from the market altogether without so much as a projected date indicates its failure to resonate with consumers.

But the failure of Glass does not mean the company is cubbyholed in the same way Blackberry has been unable to move beyond making mobile handsets. Rather, it is the inevitable result of Google’s “leap without looking” approach, where the game is not necessarily to make the best or the most polished product, but to capitalise on first mover advantages…then figure everything else out, including how if it prints money. Google Search, after all, began life as a pageranking research product until someone realised just how many zeros advertisers were willing to tack onto a cheque in exchange for targeted advertising.

This approach couldn’t be any different from their traditional rivals at Apple. While the Cupertino based technology giant keeps products under wraps for years, testing, redoing, perfecting, and grandly unveiling a highly polished, finished product, Google favours a scattershot approach, floating products to the market to “see what sticks”; ruthlessly killing things that don’t make money or otherwise fail.

While this would send most investors running for the hills, the Mountain View company has an uncanny ability to “sniff” out good investments. Google has historically supplemented itself by making several very smart acquisitions in key areas, nurturing them until they became industry powerhouses: it was prescient enough to buy YouTube near the start of the video sharing revolution, and made an equally prophetic acquisition of a small software startup called Android, Inc.

Most outsiders fail to realise the inherent danger in sticking to core strengths. The obvious cost of playing it safe is missing out on the next big thing. Intel was so wrapped up in its indomitable chokehold of the desktop and laptop market it completely missed the mobile revolution, and now finds itself fending off Qualcomm, VIA, Texas Instruments, and a horde of other eager competitors, some of whom have even begun to encroach on Intel’s traditional leadership in laptops and desktops.

“Failures” like Google Glass are the necessary price of keeping ahead. While some of Google's products may be tone-deaf and poorly timed, the spirit of “giving it a go” remains ingrained in the corporate culture and should be insulated from the fickleness of investors. There is no harm in throwing things against the wall when you have the finances of a developing nation, and an idea need only work once to be successful.

analysis | The brand of your glasses isn’t meant to influence others. It’s meant to influence you.

Try this the next time you’re on a subway, a bus, or any place filled with lots of people. See if you can determine the brand of glasses someone is wearing before they realize you’re staring and start calling for the police.

Notice the brand yet? It shouldn’t take any longer than a couple of seconds to determine: most frames have the brand plastered along the side.

If your face is considered the world’s window to your soul, then glasses are the window frame in this increasingly torturous analogy. Yet in spite of its visibility, most people don’t seem at all bothered about wearing a designer’s logo on the side of their face.

The truly observant (or perhaps the truly obsessive) will notice that while branding becomes very prominent for most midrange glasses, neither economical frames nor expensive frames carry branding along the sides.

In spite of outwards appearances, the purpose of the branding is not to advertise your affinity for the brand to others, but to advertise the glasses to you.

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A brand at its most basic is a simple way of communicating a complex set of ideas already ingrained in the consumer through extensive marketing.

The brand is a trigger that helps recall the value-added benefits of the company’s marketing message in addition to the immediate utility of the product. Put simply, it reminds you that you’re not just buying a mere cup of coffee, dear consumer, you’re buying the trendy cosmopolitan lifestyle that only the best Arabica, picked by smiling, happy farmers and lovingly batch-roasted by a (possibly bearded) barista named Grant, can provide in a 10% post-consumer recycled cup…whatever that all means.

Conversely, brands help a consumer make a purchase with incomplete information. Rather than needing an intimate knowledge of operating systems, software packages, hardware configurations, and compatibility issues, people buy an Apple computer because the brand is famous for having simple, modern, sophisticated machines with end-to-end support. A brand helps distill what would otherwise be a complex decision into something very simple.

The glasses market is an excellent example of incomplete purchasing information: Even though a pair of glasses will be worn every day from morning to night, often for several years, most people don’t know—and oftentimes don’t need to know—the differences in materials, designs, durability, and workmanship.

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People that buy glasses largely fall into three categories: utilitarian buyers prioritise cost before all other considerations, midrange buyers balance what they are willing to spend with what they want, and high-end specialty buyers make purchasing decisions on other, often aesthetic, factors.

Most buyers fall into the midrange category: A fresh prescription means new glasses as soon as possible, and the buyer must temper “what looks good” with “what can I afford.” Interestingly, the midrange market demonstrates inelastic demand relative to income, partially due to immediate utility. Translation: a richer customer may not take some time to shop around for the best set of eyeglasses because the customer kind of needs them to see. This presents a conundrum: He must make an immediate, informed decision on a product likely to be kept for several years, but has limited knowledge on what makes a “good” pair of glasses aside from how they look and feel.

The brands themselves, however, are a smokescreen: most glasses sold today are all made by the same gargantuan company. They’re not actually “Prada” glasses, they’re made by Luxottica but licensed to carry the name of Prada. It’s not just for show, though; if everything was sold as “Luxottica,” the differences might be difficult to note, but brands help emphasise these differences and draw subconscious associations with the consumer (remember, it’s not just the product, it’s the lifestyle).

All this changes when considering the utilitarian buyer and the high end buyer. Utilitarian buyers make a decision based purely on cost above all else, and won't respond to a brand. Beyond a consideration of what additional features are needed for purpose, the purchase decision is influenced solely by price. Fashion-centric buyers are likely to shop around before committing to a purchasing decision because their decision is made based on other attributes: the style and quality of the frame, the type and design, the workmanship, the materials, and the durability. Glasses marketed in both categories reflect this: they are not labeled with the brand because they are expected to sell based on other attributes other than the brand. With these consumers, the brand loses its relevance because the purchasing decision is made based on other factors. Both these consumers have the luxury of shopping around, whether the goal is to to save money or to find fashionable frames.

The brand is a particularly powerful form of marketing. It tells the consumer where the product sits in relation to its competitors. It serves as a trigger for the brand’s attributes. It is a way of communicating the added value to the consumer if only you bought this wonderful product. But it is in a relatively homogenized market where consumers have limited knowledge, like that of eyeglasses, where brands are at their most effective. You’re not just buying glasses. You’re buying a new lifestyle.

analysis | How Sony’s release of “The Interview” online could change the film industry

Sony Pictures has just announced the simultaneous release of controversial film “The Interview” through internet video-on-demand services in tandem with a limited theatre release.

Make no mistake, this is huge.

Never before has an industry stalwart like Sony chosen online distribution simultaneously with a theatrical run. Should online releases of “The Interview” generate significant returns and positive consumer feedback, the film industry would be forced to reconsider their approach to digital distribution. Theatres could be inclined to release future films both in theatres and online.

In a surprise move, Sony has also secured distribution deals with Microsoft and Google, supplementing Sony’s own online video-on-demand services. Piggybacking on the hype generated through the high profile hacking scandal at Sony, these deals could provide Microsoft and Google’s online VOD services with much needed visibility as they struggle to make headway in a market dominated by incumbents like Apple’s iTunes and Netflix. In particular, Google’s release of “The Interview” on their relatively unknown YouTube VOD service could increase consumer mindshare, something the service has struggled with in spite of the enormously popular YouTube brand.

A dual release model would represent a major victory for the consumer. As moviegoers are given the choice between watching a new movie in theatres or in the comfort of their own homes, theatres would necessarily lower costs and provide additional value to entice consumers through their doors. This may spark a new golden age in the moviegoing experience, one in which theatres provide additional amenities and offerings not typically found during the home experience.

Simultaneous distribution is typically used by smaller studios that do not have distribution agreements with large, nationwide theatre chains. By releasing films online while they play in theatres, small studios can reach the largest possible audience before a film loses any momentum it generates. In contrast, larger studios stagger their releases so that theatres can extract the maximum profit from a film before it is released online and on physical media, where it generates profit solely for the studio.

But for a behemoth like Sony to simultaneously distribute a film online is unprecedented. As unusual as it may be given their track record, Sony could become one of the most forward thinking studios out there. Sony has just upended the traditional model, and it’s the consumer that comes out the ultimate victor.

analysis | A simple explanation of bitcoin

Throughout human history, gold has always been favored as a currency for having other useful purposes aside from serving as money. By finding use as radiation shielding, a nonreactive tooth filler, or as computer hardware conductor, gold has something called “intrinsic value,” meaning it is something worth trading for. A challenger to the golden throne, and to the equally posh thrones of other currencies around the world, has emerged, and its name is Bitcoin. But bitcoins don’t possess intrinsic value—they’re simply a string of code, with no other use except as money, the digital result of computing power, energy, and time. So if bitcoins are by themselves worthless, why are they in such high demand, where the shutdown of Silk Road, the theft from Mt. Gox, or the Winklevoss buy-in is enough to grab headlines around the globe?

Cryptocurrencies are not a new concept, but none have attained the scale and reach of Bitcoin. The term first surfaced in a 2008 paper written by “Satoshi Nakamoto,” which outlined a secure, anonymized, and irreversible cryptocurrency, decentralized and controlled by no central authority. The concept gained momentum during the 2008 financial crisis, when widespread distrust of established banks and currencies had peaked, and since then bitcoins have been on an upwards streak, to the dismay of governments and left-behinds everywhere.

The recent and unprecedented theft of thousands of bitcoins from the Mt. Gox exchange in Tokyo has further fueled questions about Bitcoin’s legitimacy and stability. Most debate stems from how it works as money: Is it really money if it’s nothing more than strings of code? (Yes.) Isn’t all money pretend money too? (Yes and no.) And fundamentally, what gives a bitcoin value? Bitcoins are money, but the properties that make them so unique are the very things that will work against its own widespread acceptance. The answer lies in the most basic form of economics: bartering and trading.

In a barter-based economy, one with direct exchanges, money serves as a substitute, an IOU of sorts. A chicken farmer that typically traded three leghorns for a goat could instead give the trader a token representing his promise to pay three chickens. This token could be passed around to others, and was considered valuable because it could be returned to the first farmer in exchange for three chickens.

However, if our chicken farmer decides to renege on his promise to pay three chickens, the token then becomes worthless. The money is useless without someone to trade it with. There are two solutions to this problem: make the token itself something valuable, or ensure that a third person will still consider the token worth three chickens even if the farmer doesn’t.

While gold best illustrates the first solution, the third-person solution forms the basis for most “fiat” currencies: It’s why dollar bills contain the line “This note is legal tender for all debts, public and private”, or why British banknotes contain the phrase “I promise to pay the bearer on demand the sum of so-many pounds.” The token itself is a worthless slip of green cloth, but the government provides a “safety net,” ensuring that even if everyone stopped using the token as currency, it can be brought to the government, which will provide you with goods and services in exchange for that token. This promise to pay is what gives money value.

In contrast, if everyone stopped using bitcoins as currency, no government or organized body will accept a bitcoin as payment in exchange for goods or services. Retailers and governments that currently accept it do so only because it can currently be exchanged with another party back into goods or services. This is the major weakness behind Bitcoin: A bitcoin has value as long as other people still believe someone will give goods or services in exchange for that bitcoin. But once people start reneging on this promise, it loses value because there is no government that will give you a good or service in exchange for that token.

The only way Bitcoin can attain the same stability (and therefore widespread use) as established currencies is through the creation of a “safety net,” a group of people like a corporation, government, or structured entity large enough to ensure that even if everyone refuses to accept it, the group will still treat it as money in exchange for goods and services. Ironically, the creation of a structured and centralized group is the very thing Bitcoin was engineered to oppose.

The mechanics behind bitcoin are valid, but because bitcoins depend on other people accepting it as a currency, their actual value remains uncertain, creating volatility. Until a group large or powerful enough is able to provide Bitcoin with a safety net, it will always remain volatile, but the creation of such a group will stand against its very mission of being a decentralized currency.

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Originally drafted 28 September 2014