Archive for the ‘Decentralization’ Category

What do LLMs say about newspaper companies and Mastodon? – Manila Bulletin

Been playing (aka wasting time) with ChatGPT andPerplexity.aifor quite sometime and thought of what can it produce when asked whether newspapers should or should not spin up their own Mastodon instance. Here are the results from these two companies that use large language models (LLMs):

OpenAI's ChatGPT says:

"Mastodon, a decentralized social media platform, is gaining popularity as an alternative to larger social media platforms like Twitter and Facebook. As such, newspapers are considering whether they should spin up their own Mastodon instance. Here are the advantages and disadvantages of this approach:

Advantages:Increased control: By hosting their own Mastodon instance, newspapers have complete control over the content that is shared and the users that engage with the content.Audience engagement: Mastodon provides a more personalized way for newspapers to engage with their audience and build a stronger relationship with them.

Decentralization: By hosting their own instance, newspapers can contribute to Mastodon's decentralized nature and ensure that the platform remains open and accessible to all.Privacy: Mastodon is designed to prioritize privacy and data security, ensuring that users' data is protected and newspapers are not subject to privacy concerns.

Disadvantages:Limited audience: Mastodon still has a relatively small user base compared to larger social media platforms, which could limit the audience for newspapers that host their own instance.Cost: Running and maintaining a Mastodon instance can be expensive, especially for smaller newspapers with limited resources.Technical expertise: Hosting a Mastodon instance requires technical expertise and knowledge of the platform, which could be difficult and expensive for newspapers to obtain.Fragmentation: Mastodon's decentralized nature means that there are many different instances, each with their own set of rules and regulations. This could make it difficult for newspapers to reach a wide audience and could lead to a lack of consistency in the content that is shared.In conclusion, hosting a Mastodon instance provides increased control and audience engagement for newspapers, while contributing to the platform's decentralized nature and prioritization of privacy. However, it comes with a limited audience, high costs, technical expertise requirements, and fragmentation. Newspapers must carefully consider their goals and resources before deciding whether to host their own Mastodon instance or stick with more established social media platforms."

And here's whatPerplexity.AIsays:

"Mastodon is a decentralized social network that allows users to create their own instances. Newspapers can spin up their own Mastodon instance to have more control over their content and build a community around their brand. One of the main advantages of creating a Mastodon instance is that it allows newspapers to have complete editorial control over what stories are told and how they are presented. This can be especially important for newspapers that want to focus on niche topics or cater to specific audiences. Another advantage is that it allows newspapers to build a community of readers who are interested in their content and engage with them directly. However, creating a Mastodon instance requires technical expertise, and it can be difficult to attract users to a new instance. Additionally, Mastodon is still a relatively new platform, and most users are already part of established instances. Newspapers should carefully weigh the pros and cons before deciding whether or not to create their own Mastodon instance."

Note that I asked both to produce a concise version.

Are the results correct and accurate? Well, not quite. It basically got the decentralization, increased control over the content, and cost of running an instance (including technical expertise) correct (but you can pay for a managed hosting service for this). The others, well, just prove that LLMs are not intelligent-does not know where to pull data about how federation works, i.e., you don't need users to be on the same instance to interact with them. This means that there aren't that many articles written about federation and decentralization, enough for the LLMs to digest and update its model, ergo just like a parrot.

Newspaper companies, instead of paying to get verified, should consider having their own Mastodon (or Misskey or Calckey) instance, if and only if, they value complete editorial control of their content (and complete control of how they store their data) over other things popular social media companies, like Facebook and Twitter, provide.

Growing the number of readers should not be an issue, specially when you are sure that your posts are not being rate-limited by algorithms designed to push for more advertisements in favor of the social media company. Just how did their followers increase to start with? NO different on the federated universe, IMHO.

I'd say NOW is the time to seriously look into this and decide. Freedom of the press should not be dependent on some algorithm that maximizes profit for the platform. If newspaper companies treat Facebook, Twitter and Tiktok as distribution platforms (worse with algorithms that determine who to show their articles to), then why ignore the reach of the federated universe (Mastodon, Misskey, Calckey, Pleroma, Pixelfed, PeerTube, Micro.blog, WordPress, Flipboard, and soon, hopefully, Tumblr and Flickr, too), right?

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What do LLMs say about newspaper companies and Mastodon? - Manila Bulletin

AI meets blockchain: Revolutionizing smart contracts and … – OODA Loop

With the advent of readily available artificial intelligence (AI) applications such as ChatGPT, we are ushering in a new era of rapid improvements in blockchain-based smart contracts. This convergence of innovative technologies will transform industries and pave the way for unprecedented levels of contract development, automation and efficiency.Blockchains decentralized ledger technology powering cryptocurrencies like Bitcoin and Ethereum has gained widespread attention for its unparalleled ability to promote transparency and trust among network participants. Simultaneously, AI has made incredible strides in natural language processing (NLP), machine learning (ML) and data analysis. When these two titans collide, they hold the potential to radically change smart contract execution and enhance blockchain network functionality. By nature, blockchain networks are decentralized, ensuring no single point of control or failure. While decentralization bolsters security, it also presents many scalability and efficiency challenges. Enter AI ready to optimize data processing and storage on the blockchain. One notable limitation of blockchain technology is its sluggish transaction speed compared to traditional payment systems. AI algorithms can come to the rescue by predicting and prioritizing transaction processing, enabling faster confirmation times and a seamless user experience.

Full commentary : AI meets blockchain: Revolutionizing smart contracts and cryptocurrency.

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AI meets blockchain: Revolutionizing smart contracts and ... - OODA Loop

Treasury Risk Assessment Emphasizes That Decentralized Crypto … – Wilson Sonsini Goodrich & Rosati

Earlier this month, the U.S. Department of the Treasury (Treasury) released itsIllicit Finance Risk Assessmentof Decentralized Finance (Assessment). This Assessment, part of a broad regulatory scrutiny of entities that operate in the Decentralized Finance (DeFi) space (see the explanation below), focuses on the illicit finance risks associated with virtual assets.

While the assessment discusses how bad actors are taking advantage of weak points in anti-money laundering (AML) and other regulatory regimes across the world, we want to highlight the assessments findings that DeFi companies are often failing in meeting their obligations to address sanctions and money laundering risks. As weve highlighted over the past year, financial institutions of all kinds, from traditional banks and broker dealers to newer crypto and web3 companies are facing increased regulatory scrutiny (for example, see Wilson Sonsinis past alerts onCoinbase,TornadoCash, andKraken). This Assessment serves as a reminder, especially for DeFi financial institutions, that regulators will continue enforcement against AML infractions.

The first-of-its-kind risk assessment alleges that DeFi service providers often fail to institute robust AML compliance programs. This, according to the Assessment, can make DeFi services vulnerable to exploitation by illicit actors. To curb the use of DeFi services for criminal activity, Treasurys Assessment recommends that the U.S. government strengthen AML regulatory supervision, consider potential enhancements to the existing regulatory regime, and better engage with the private sector to stay up to date on the latest developments in the DeFi ecosystem.

De-What?

While there is no universally accepted definition of DeFi services, the term is generally used to describe virtual currency protocols and services that offer some form of automated peer-to-peer exchange transactions. Such transactions are often executed using smart contracts or computer code. DeFi companies can operate, at least to some extent, without the support of a central company, group, or person, though Treasury clarifies that the degree to which a purported Defi service is in reality decentralized is a matter of facts and circumstances. Examples include cryptocurrency exchanges and decentralized liquidity platforms, where lenders and borrowers are incentivized to rely on a particular service.

Decentralization May Not Mean No Regulatory Scrutiny

Treasurys Assessment clarifies that just because a virtual currency business claims to be decentralized does not necessarily mean the business wouldnt be considered a financial institution under the Bank Secrecy Act, the legislative underpinning for AML regulations. Likewise, the declaration that a service is decentralized cannot be used to abdicate responsibility for compliance with sanctions programs administered by the Office of Foreign Assets Control (OFAC).

The Assessment notes that when entities whose operations are subject to regulation (e.g., money transmitters) fail to register with regulators or fall short of their AML obligations, bad actors are more likely to take advantage of their services to either profit from their criminal activity or circumvent law enforcement.

Weve Said It Before and Well Say It Again: Increasing Trend of Regulatory Enforcement

The Assessment is part of a larger trend: regulators are increasingly concerned about the illicit use of crypto assets and will aggressively scrutinize crypto asset businesses. Even businesses with some degree of decentralization are not exempt from this scrutiny.

We have already discussed, for example, how crypto asset exchangeCoinbaseand its $50 million settlement with the New York Department of Financial Services after it failed to track, monitor, and report suspicious activity that may have, and in some cases did, result in illicit activity. Further, decentralized crypto asset mixerTornadoCashwas penalized by OFAC in August 2022 because, according to OFAC, TornadoCashs weak AML program allowed users to launder over $7 billion. On the same day, a top employee at BitMEX was found guilty of violating AML regulations issued pursuant to the Bank Secrecy Act, demonstrating that individuals, and not just crypto asset companies themselves, can be held liable for such violations. Crypto asset exchangesKrakenandBittrexboth settled with federal regulators in 2022 because of alleged sanctions and AML violations.

The Treasurys Assessment separately notes that the Commodity Futures Trading Commission has even brought anactionagainst a decentralized autonomous organization (DAO) for failing to comply with KYC/AML requirements. The U.S. District Court for the Northern District of Californiaheldthat the DAO could be sued as an unincorporated association under applicable law, demonstrating how decentralization does not make crypto services enforcement-proof. Regulators are unlikely to take their eyes off DeFi crypto asset businesses anytime soon, making proper compliance programs more important than ever.

My Company Works in DeFi: What Should I Do?

First and foremost, companies operating in the DeFi space should perform an analysis to determine if they should register with any federal (and/or state) regulatory bodies (e.g., FinCEN). Just as in the TV series The Office, when the character Michael Scott found that declaring bankruptcy required a bit more legwork than making that statement in a public place (even loudly), DeFi companies (and their employees) should not assume that simply telling partners and customers they are decentralized will shield them from their regulatory responsibilities.

Additionally, maintaining an effective AML and sanctions compliance program is crucial to avoiding missteps that could expose DeFi companies to significant penalties. DeFi companies that dont have such compliance programs in place should consider whether they are required to have one, what it should include, and how should it be resourced.

Lastly, Treasurys Assessment includes an acknowledgment that the government is behind in understanding DeFi, and Treasury recommends additional engagement with industry to get up to speed. This engagement may come through public comment and research opportunities. DeFi businesses should pay close attention to these opportunities to ensure they are helping shape the governments understanding of this evolving and innovative space.

If you have any questions about the Assessment, or how we can help your DeFi company, please reach out to any member of Wilson Sonsinis national security and/or fintech and financial services practices.

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Treasury Risk Assessment Emphasizes That Decentralized Crypto ... - Wilson Sonsini Goodrich & Rosati

Bitcoin Is Poised to Reclaim Cryptos Spotlight: Berenberg – Yahoo Finance

In the next few months bitcoin (BTC) may be able to reclaim much of the attention it has relinquished to other crypto tokens and projects during recent years and the enthusiasm it lost during the crypto winter, German investment bank Berenberg said in a research report Thursday.

As U.S. regulators crack down on the industry, almost every token appears at risk of being branded a security and becoming subject to an enforcement action, the report said.

The sole exception is bitcoin, which, by virtue of the decentralization stemming from the design of its blockchain protocol, the Securities and Exchange Commission and other regulators characterize as a commodity rather than a security, analyst Mark Palmer wrote.

The bank sees bitcoins price appreciation in the last few months as a sign that more investors are recognizing it as a sensible alternative not only among crypto tokens, but also within a global financial context.

The recent banking crisis in the U.S. and concerns over the Federal Reserves interest-rate policies have led some countries to reduce their exposure to the U.S. dollar, which has fueled concerns about de-dollarization, the note said, and could help to highlight bitcoins value proposition. De-dollarization is the decline of the greenbacks dominance as the worlds global reserve currency.

The fourth bitcoin halving date, scheduled for May 2024, is another potential positive catalyst for the cryptocurrency, the report said, noting that if history is any guide, then bitcoin could rally ahead of and after this much-anticipated halving.

The utility of the Bitcoin blockchain has been highlighted by the increasing traction gained by the Lightning Network, the report added. The Lightning Network creates a layer on top of the Bitcoin blockchain exploiting user-generated micropayment channels to conduct transactions more efficiently.

Read more: Bitcoin Market Impact From Mt. Gox Repayments Will be Limited: Matrixport

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Bitcoin Is Poised to Reclaim Cryptos Spotlight: Berenberg - Yahoo Finance

Smart contracts, blockchain and decentralized computing – TheServerSide.com

Decentralized networks are becoming commonplace on today's technical landscape, as enterprises seek to write custom applications that solve business problems. Increasingly these are based on smart contracts -- structured programming logic that executes on a blockchain running on a decentralized network. Smart contracts and blockchain are applicable to a wide variety of commercial sectors including agriculture, finance, real estate and industrial manufacturing.

This article covers the basic principle of decentralization: what it is, how it works and how it's used to manage applications such as blockchain-based smart contracts.

Let's start with understanding the difference between centralization and decentralization.

In a centralized network, a central authority decides what data can be stored on the network and grants varying levels of access to that data.

An easy way to conceptualize a centralized network is to envision a bank that keeps all its applications and data on a private network. Customers who open accounts at a bank provide a username and password pair, along with personal information. The bank stores all of that in a database hosted on its private network.

The bank implements many restrictions to access the applications and data on its network. Customers provide their username and password to access and work with applications and data, but they can only access what the bank has granted permissions for. They cannot view the data of other customers, nor access applications or data reserved for bank personnel, such as for loan processing. No bank allows just anybody audit its books; auditors must be authorized by someone in charge. However, banks might allow the general public to access and view certain data, such as information applicable to advertising or for support purposes.

Everything is subject to the bank's central authority, which decides what data can be stored on the network and grants a certain degree of trust and permission to a given user.

Decentralized computing is an architectural style in which there is no central point of authority to control access to data or logic that resides within a network. Instead, authority is determined according to algorithms shared by all computers, or nodes, that are part of the network.

Decentralized networks work on a peer-to-peer basis. Each computer or node on the network has an exact copy of all of the network's data and applications, and if one receives additional data, it passes that data on to the other nodes on the network.

Imagine a network of computers, each of which has only a particular text editor and a collection of the same text documents. Anybody could use any computer on that network and have the same computing experience, meaning that they can read any text document in the collection using the installed text editor.

Let's say someone using one of those computers creates a new document with the installed text editor and saves it to the local disk. Then the computer sends the saved document to all the other computers on the network. Furthermore, when a computer on the network receives a new document, it does two things:

The result is that all computers on the network are in the same state in terms of applications (the text editor) and data (the collection of documents), unless and until a new document is introduced to the network.

This is essentially how decentralization works. There is no single central authority that decides what data can be stored on the network and that grants access to applications and data on the network. Instead, all the computers on the network have the same data and applications, and their data and application configurations are identical. Anybody can audit the data on the network.

Decentralization is the principle that makes blockchain and smart contracts work.

As its name implies, blockchain stores data in immutable blocks that are chained together in sequence. Each additional block in the chain is represented by a hash that describes the content in the current block under construction, as well as all of the content in every preceding block in the chain. This process ensures that data is correct throughout the chain, with each additional block, and preserves the blockchain's data integrity.

Blockchains treat each new block the same, much like the text editor/document scenario described above. New blocks are sent to all other computers on the network, which add the new block to their instance of the blockchain. Every computer on the blockchain network has an identical copy of the blockchain data. Thus, the blockchain network is decentralized. If one computer on the network stops working, it doesn't matter because other computers on the network have the same data and the same computing algorithms.

Industrial-strength decentralized networks first emerged with cryptocurrencies. Cryptocurrencies are not operated by any single entity; no central bank creates the money. Probably the most well-known cryptocurrency around is Bitcoin, created in 2009, which uses blockchain technology as its data storage mechanism.

Tools such as Blockchain Explorer let you see the movement of Bitcoin from one account to another through its decentralized network, as well as view the transaction behavior on other cryptocurrency networks. The private banking industry has no analogous tool to provide such visibility -- nor would it ever publish one.

There are a lot more details in decentralization architecture that sync the blockchain among all the computers on the network and also make it difficult for nefarious actors to counterfeit cryptocurrency or steal cryptocurrency from user accounts. The important thing to understand about Bitcoin and other cryptocurrencies is that they operate on decentralized networks. No one computer or agent is in charge of the blockchain.

Despite recent turmoil -- the failure of the FTX exchange and the sagging value of popular cryptocurrencies such as Bitcoin and Ether, for example -- conservative estimates indicate the overall cryptocurrency market is around $1 trillion. Even if half of that money disappeared tomorrow, what remains would still exceed the GDP of Austria. Cryptocurrency is here to stay, and it has proven the value of decentralization.

A major consideration with decentralized networks is security, particularly around user identity. Centralized control means a single security authority, but decentralization throws that model out the window. Companies that rely on smart contracts need to trust in the legitimacy of the blockchain. Those that support cryptocurrencies don't want to be put in a position where they support criminal activities such as money laundering.

A user is typically represented in a cryptocurrency network by an account identifier -- i.e., a unique value expressed as an alphanumeric string.

An account identifier is bound to a digital component called a wallet. Information about the holder of the wallet, such as name, email and other access credentials, is private to the wallet. All user information in a wallet is stored on a local machine, not in a private network or somewhere in the cloud. A wallet might be bound to a variety of cryptocurrency networks, but that information is private to the user, as is their identity information.

However, there are situations that require more information known about a user beyond the account identifier. The decentralized identity model, also known as self-sovereign identity, is sponsored by the World Wide Web Consortium to address sharing personal information in a decentralized manner. Under decentralized identity, users own their identity information and share portions or all of it. No central authority grants access to a user's information, such as how Google's sign-in provides user verification via OAuth. Instead, users store their identity information in a decentralized, encrypted manner, and when an identity must be verified, the user decides which piece of information to share with a particular network.

Programs such as the decentralized identity model are still evolving. The important thing to understand is that decentralization and private identity management are crucial to run decentralized networks.

When the internet first appeared on desktop computers, many viewed it as merely a better way to send email and a novel way to view cat pictures. Today, the internet is at the center of all social and commercial activity.

The potential of decentralized networking and blockchain technology -- as represented in various initiatives deemed Web3 -- have the same potential. As more companies adopt smart contracts and support cryptocurrencies in their day-to-day activities, they will explore new novel ways to use these technologies.

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Smart contracts, blockchain and decentralized computing - TheServerSide.com