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“Reject Streaming, Return to Analog”

Will we see a resurgence in the interest in, and more importantly purchasing of, physical media? A Thanksgiving conversation centered around the rising costs of streaming services year after year, and whether we would see a boom in Blu-ray ownership as a result of this trend. I am dubious that people will go through the extra steps of making shows and movies captured on Blu-ray their preferred media consumption medium, but I wanted to think through the process by which such a scenario would come about.

Streaming services, once hailed as the most cost-effective and convenient way to consume media, have seen a steady increase in subscription costs over the past few years. Initially undercutting traditional cable prices, these services have gradually hiked their fees, ostensibly due to the rising costs of content production and acquisition.

The advantages of physical media are numerous. They offer a one-time purchase with no recurring fees, higher video and audio quality, and a sense of ownership that streaming cannot replicate.

However, the question remains: what would actually trigger a shift back to physical media? For one, the rising costs of streaming services could push consumers to reconsider their monthly subscriptions. The cumulative expense of multiple streaming services can often surpass that of purchasing physical media, especially for timeless classics and favorite series that one may watch repeatedly.

Another factor could be the dissatisfaction with the transient nature of streaming libraries. Unlike physical media, streaming services often rotate their content, removing shows and movies due to licensing agreements. This impermanence can be frustrating for consumers who wish to have constant access to their favorite content.

Additionally, the superior quality of Blu-ray discs in terms of picture and sound is undeniable. For cinephiles and audiophiles, the uncompressed audio and video on Blu-rays offer an experience that streaming services, with their variable bitrate and compression, cannot match.

Despite these potential catalysts, there are significant hurdles to a widespread return to physical media. The convenience of streaming – instant access to a vast library without the need for physical storage – cannot be underestimated. Moreover, the cohort of the population that grew up with physical media first is slowly diminishing and being replaced with digital natives who only truly know streaming.

Frankly, the economics of switching back to physical media do not seem to make sense given the ease with which people can sign up for streaming services and cut the stream when desired.

In conclusion, while the rising costs of streaming services and the inherent benefits of physical media may sow the seeds for a potential comeback, a major shift in consumer behavior and values would be required for Blu-rays and DVDs to regain their former glory.

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Five Implications of Blockchain Technology

Lawyers are a natural fit to understand the implications of blockchain technology on society. Why? Lawyers can understand the implications of blockchain technology, because blockchain technology deals with concepts that lawyers have been wrestling with for millennia, namely: trust, exchange, agreement, consensus, and value.

Trust

Arguably the most central concept for organizing human society is trust. The degree to which people trust each other, and how they manage those trusted relationships is often intermediated by lawyers. Lawyers craft agreements for clients based on the level of trust between the parties to the agreement. Lawyers are not necessary for trust to exist, but they often bridge a “trust gap” between parties that do not know each other well. In this sense, lawyers function as trusted third parties.

With the advent of Bitcoin the trust equation changed. Now it is possible to “trust” information sent over a network you don’t trust among a group of participants you also don’t trust. To be sure, there is an element of trust that still exists. Namely, the participants in the network must trust the way the network is run, and the technology that underpins the network. The point is that lawyers have a natural affinity for managing trust relationships, and they should not be turned off by this new technological approach.

Exchange

What does it mean when parties exchange something between each other? The concept of exchange, giving something to someone else and receiving something in return, is the foundation of all trade and many of our interactions as people. Exchange has many issues associated with it, such as:

  • What are the terms of the exchange?
  • Are the terms of the exchange clear?
  • When has the exchange started?
  • When is the exchange complete?
  • When would it be unfair for it to not finish?

Many more issues can arise, but these sorts of questions are common place in the legal world.

For networks that use a blockchain, distributed ledger, shared ledger, or other decentralized exchange network, the answers to these questions are often found in the network protocol. The protocol determines how exchanges work and what types of exchanges are possible. Similarly, the protocol will also determine the involvement of other parties in said exchange. Knowing the rules of exchange is something that lawyers already advise their clients on, and answering those same questions with respect to blockchain applications is something they can and should do.

Agreement

In many cases agreements are often contracts, and contracts involve at least two parties coming to a meeting of the minds as to the terms of their agreement. That’s a wordy way of saying “I’ll do X, if you do Y.” Historically, agreements have been memorialized in a contract. Problems arise when one of the parties claims that the terms of the contract weren’t met, or that the contract was invalid.

Blockchain technology creates the opportunity to create binding agreements on a blockchain network. A potentially huge shift in the practice of law is likely to come in the form of smart contracts. A smart contract is a way for at least one party to memorialize the terms of an agreement in computer code that is distributed across a blockchain network.

The lawyer’s traditional role of helping clients come to an agreement on a contract will not change as a result of smart contracts. What may change is how that agreement is memorialized. Here lawyers would do well to learn about smart contracts and how to code them. With each passing year more and more clients will want that option.

Consensus

Traditionally, consensus on the veracity of information in a network (be they financial networks, groups of experts, etc.) has involved reconciliation processes and other mechanisms to determine what information and records are correct.

Perhaps the biggest change brought on by Bitcoin and other blockchain networks is a new way of achieving consensus on information transacted on a network. As transactions occur on a blockchain they are packaged into blocks of transactions. If certain conditions are met that block becomes part of the official record and the chain of blocks grows. If enough participants in the network agree, that block becomes part of the official record and consensus is achieved.

Determining when and how consensus is achieved is well within a lawyer’s toolkit. Being able to assess whether information is part of the official record is something lawyers already do, and something lawyers will have to do more of when their clients wish to use blockchain technology.

Value

A concept more abstract than trust may be value. What is valuable to one may be valueless to another. How and why we value something may be intrinsic to the thing in question, or extrinsic to that thing. Regardless of why something has value, lawyers often help their clients determine the value of things. They also help clients secure valuables, as well as ensure their client receives fair value in an exchange.

In disputes, lawyers often have to advocate why something should be valued a certain way on their client’s behalf. The fact that magic internet money is valuable to some, and not valuable to others, is largely irrelevant to the job of an attorney. Thinking abstractly about why something is or isn’t valuable is already a large part of the job.

Conclusion

Lawyers should not be worried about blockchain technology. In fact, they should embrace this new paradigm shift towards decentralized interactions. The legal issues lawyers deal with day to day will not be disrupted by this new technology space. They will merely be presented in a new format.

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Denominated in Bitcoin

You often see people in the Bitcoin community use the market capitalization of Bitcoin to compare it to the money supply of other countries. In particular, the M1 Money Supply of countries is used as a metric to measure the value of all bitcoins against. For example, Jameson Lopp recently cloned the CIA’s numbers on M1 Money Supply around the world including the value of all bitcoins, which shows Bitcoin in 32nd place. These statistics are interesting, and certainly indicative of how far Bitcoin has come. At the same time, this is a narrow way to think about Bitcoin and its growth.

There are no shortage of people that believe Bitcoin, or more generally cryptocurrencies, will replace fiat money in the future. Thinking in these terms, why limit Bitcoin to the M1 Money Supply? Won’t Bitcoin become the market, as in all transactions will occur on the Bitcoin blockchain? Putting aside the probability, or desirability, of that outcome what does the world economy look like if it is denominated in bitcoin?

A couple of assumptions. Gross Domestic Product, or GDP, is more or less the standard metric used by economists to measure the economy of one country against the economy of another country, and so, that is what I’ll use. The underlying GDP and population numbers are from 2015 courtesy of the World Bank. GDP is problematic, but it’s a decent measure of the total “value” in an economy, and remember we’re talking about a scenario where all value is transacted through bitcoin. I’m using the total number of bitcoins mined, as of yesterday, (~16.66 mil according to blockchain.info) as the number of bitcoins. Sure, I could use twenty one million as the number of bitcoins, but we haven’t hit that number yet and we don’t know what the world’s economies would look like when that number is hit.

The chart below shows the country, the population, the Bitcoin In Country, or “BIC,” and the Bitcoin Per Person, or “BPP.” I’ve listed the top twenty-five countries, and the bottom twenty-five countries according to BIC. So, how many bitcoin does each economy have?

 

There is nothing terribly surprising about the countries listed above, because they are the largest economies in the world. What is interesting is what their economies look like in terms of bitcoin, and in particular the number of bitcoin held by each person in that economy. But, what about the bottom twenty-five countries?

 

Again, if you’re familiar with the poorest countries in the world you should not be surprised by the list of countries above. What is extraordinary is that if you have 8 bitcoin you would have more bitcoin than the entire economy of Tuvalu. Does this make sense? I have no idea, but it’s shocking to think about. If you had 353 bitcoin you would have more bitcoin than each economy of the bottom 25 countries.

Conclusion

Denominating countries’ markets in bitcoin is another way to get a handle on what Bitcoin adoption means. BIC and BPP are indicators that help illustrate that point. Whether Bitcoin replaces all value transaction is a very open question, but if Bitcoin were to do that a person would not need to have a lot of bitcoin to have more bitcoin than many countries in the world.

Update: I added the full list of countries if you want to peruse them below.

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Gaps in the International Patent System

Recently, I was having lunch with a friend who practices IP law in Buenos Aires, Argentina. He mentioned, to my surprise, that Argentina was not a member of the Patent Cooperation Treaty (PCT). This stunned me, because Argentina is a large sophisticated country, and I assumed they would be a part of the PCT, because nearly every country in the world is a part of the PCT.

The International Patent System

A large part of the “international patent system” has to do with the PCT. The PCT makes it easier for people and entities to seek coverage for their inventions in multiple countries at the same time. As of December 8, 2016, there are 151 PCT Contracting States. So, how many countries are not a part of the PCT?

For purposes of this post I am using the list of United Nations member states. According to that list, the United Nations has 193 Member States, which means there are forty-two non-PCT states. Some of these countries make sense, Democratic People’s Republic of Congo, some make no sense, Argentina. Who are these non-contracting states, and what are their economies like?

The Non-Contracting States

As of January 12, 2017, there are forty-two countries which have not signed on to the PCT. These countries range from the small to the surprisingly large. Many of the countries do not have a ton of economic activity, and conversely a few have considerable economic activity.

Using data from the World Bank, the chart above plots all forty-two of the Non-PCT countries in the world by population in millions along the x-axis, and gross domestic product (GDP) in billions along the y-axis. I’ve called out some interesting outliers on this chart. Argentina, my friend’s home country, has the largest economy with a GDP of 581 billion to the country’s population of 43.4 million. Conversely, Pakistan is the most populous nation of the group at 271 million, but only has a GDP of 188.9 billion.

Only five of the countries have a GDP over 100 billion (Argentina, Bangladesh, Iraq, Pakistan, and Venezuela), and only five of the countries have a population over 50 million (Bangladesh, Congo, Ethiopia, Myanmar, and Pakistan). The full list of countries is presented below.

What the Future Holds

Of the countries listed, Argentina seems like the most likely candidate to join the PCT. In fact, my friend told me Argentina plans to join the PCT soon. The rest of the countries, I am not so sure. Negotiating an international treaty is cost intensive in both time and money. Frankly, many of these countries have much more important issues to contend with than patent rights.