Tag Archives: Peer to peer

Northern Rock bank crash: what happens when trust ends?

Telegraph’s article “Restoring the savers’ trust” (about UK bank Northern Rock huge credit problems, see below for the story) is extremely interesting to read.

Investors can make happen what they least want to happen. The viability of any bank is dependent on the confidence of the people who trust it with their money. When that confidence goes, there is a run on the bank, and the bank fails. If the contagion spreads from one bank to others, then the system itself becomes liable to collapse, with catastrophic economic consequences for everyone. That is what happened in America in 1929.

First the story, as usual from Wikipedia (the article is of course currently under wikirage)

On 13 September 2007, Northern Rock asked the Bank of England, as lender of last resort in the United Kingdom, for emergency funds due to problems in raising funds in the money market. The problems arose from difficulties banks faced over the Summer 2007 in raising funds in the money markets, caused by the subprime crisis in the United States. The bank is solvent but has a liquidity problem because a large part of the bank’s assets are held in mortgages, and are not accessible quickly.
On 14 September, the first day branches opened following the news, many customers queued outside branches to withdraw their savings (a run on the bank). It was estimated that £1 billion was withdrawn by customers that day, about 5% of the total bank deposits held by the Northern Rock. In one incident, police were called to the branch in Cheltenham, Gloucestershire when two joint account holders barricaded the bank manager in her office after she refused to let them withdraw £1 million from their account. Their money was held in an internet only account, which became inaccessible after the Northern Rock website became inaccessible due to the volume of customers trying to log on
On 17 September, as worried savers continued to flock to some Northern Rock bank branches to withdraw their savings, it was reported that an estimated £2 billion had been withdrawn since the bank applied to the Bank of England for emergency funds. By early afternoon in London Northern Rock’s shares, which had lost 32% on the previous Friday, fell a further 40% from 438 pence to 263 pence.

Well, to put it shortly, money does not exist, it is a social creation, it exists as long as the large majority of people think it exists. But figure out this, what will happen if tomorrow all the people in the world will go to their banks to withdraw all their money in cash? Well, it is not hard to figure, that money does not exist so it will happen something interesting, and violent for sure.
Now, do I want that most of the people realize that money don’t exist? Well, I don’t know. Maybe yes, possibly in a slow, non emotive, rational way, just like all the people in the world have enough free time to reason and discuss on how the economics system works and how it could be changed (read ripple it). But this is unlikely to happen, probably what is more likely to happen is a big crash, caused by impulsive reactions like the ones are happening about Northern Rock. It would be easy to think like Cypher (in Matrix): You know, I know this steak doesn’t exist. I know that when I put it in my mouth, the Matrix is telling my brain that it is juicy and delicious. After nine years, you know what I realize? Ignorance is bliss.
Similarly, money doesn’t exist. But Ignorance is bliss. Lot of people prefer to remain “plugged” into the system.

I also suggest you to read the book “The Great Crash, 1929” by John Kenneth Galbraith (1954). It is an economic history of the lead-up to the Wall Street Crash of 1929. It is inspiring to read the declarations of authorities and politicians which become more and more unreal as the time passes. The worst the situation becomes, the more politicians insist on “There is no problem, everything is going well and this small second of crisis is already ended, tomorrow the economy starts to grow again, don’t be afraid”. Now of course politicians and economics authorities must say so, I would do the same if I were the chief of the central Bank or the Prime Minister but the fact we all know this means that nobody (really?) trusts their words and the more they say “there is nothing to worry about” the more people start to worry. There is an interesting comment by Stephen King (not the writer) on the Independent titled When reassuring words aren’t enough which compares the words spoken today by UK authorities and the words spoken in 1928 by US authorities. Check the differences if you wish.

Again, ripple might solve some of these problems (introducing new problems of course or shoud I say new opportunities?). Understanding how the economics (social) system works is something we all can no more postpone, I think.

Bandwidth as a currency and Free Software as a strategy. Tribler: from Europe to Harvard.

Read Researchers Aim To Make Internet Bandwidth A Global Currency over at Lockergnome. I thought I wrote before about Tribler but I didn’t find anything on my archive so let me do it now.
Tribler is peer-to-peer software for video file sharing that has a basic understanding of human friendships, of user tastes in content, and of Internet connectivity between users. Tribler is also a research project At Delft University of Technology and De Vrije Universiteit Amsterdam. Most of the Tribler team is funded by the I-Share project, which is part of the Dutch Freeband Program. Freeband itself is funded by the Ministry of Economic Affairs of The Netherlands.
Why it is interesting? It is an innovative way of using P2P sharing and online videos, it comes from Europe (and not US as usual), it is a University research project (and not a cool, hacky, just born, extraslim californian startup as usual) but really works and funded with public money from the state (and not from venture capitalists, sadly not that spread in Europe), it decided to adopt a Free Software strategy since the beginning (again not very usual).
I tried Tribler some months ago and it is a cool piece of software (you can keep a list of video friends and a lot of other social features but you can also see and rate YouTube videos, for example) and has the potential to be extended and improved in many ways.
Being Free Software, people in Harvard decided to extend it in order to test some other research hypothesis: mainly understanding how bandwith can be used as a global currency.
From the article on Lockergnome:

The researchers envision an e-commerce model that connects users to a single global market, without any controlling company, network, or bank. They see bandwidth as the first true Internet “currency” for such a market. For example, the more a user uploads now (i.e. earns) and the higher the quality of the contributions, the more s/he would be able to download later (i.e. spend) and the faster the download speed. More broadly, this paradigm empowers individuals or groups of users to run their own “marketplace” for any computer resource or service.

The researchers concede that the greatest challenge to any peer-to-peer backed e-commerce system is implementing proper regulation in a decentralized environment. To keep an eye on the virtual economy, Parkes and Pouwelse envision creating a “web of trust,” or a network between friends used to evaluate the trustworthiness of fellow users and aimed at preventing content theft, counterfeiting, and cyber attacks. To do so they will use a feature already included in the enhanced version of the Tribler software, the ability for users to “gossip” or report on the behavior of other peers. Their eventual goal is to find a way to create accurate personal assessments or trust metrics as a form of internal regulation.

The enhanced Tribler version is redistributed by Harvard, choosing to release it as Free Software was very clever from the Dutch Universities which can benefit from more people involved. Great choice!
If you use Ubuntu GNU/Linux (you should!), installing the standrad version of Tribler is an easy charm.
1. Start the package manager from the System / Administration menu
2. Open the Repositories menu from the Settings menu
3. Click on the Third-Party Software tab
4. Click on the Add+ button
5. Type deb http://ubuntu.tribler.org/ feisty main
6. Click the Add Source+ button
7. Close the Repositories menu
8. Click the Reload button to retrieve the package info from the Tribler repository
9. Click Search and search for “tribler”
10. Mark Tribler for installation by clicking
11. Ignore the warning about authentication, it is harmless
12. Install Tribler by clicking the “Apply” button at the top

Or if you are a command-liner, 3 quick steps:
sudo echo "\ndeb http://ubuntu.tribler.org/ feisty main" >> /etc/apt/sources.list
sudo apt-get update
sudo apt-get install tribler

Enormous P2P Network by Google

When millions of users will have Desktop.google.com installed, Google will simply release a new version in which the user can check a box and say “Share the files in my disk” (maybe only files in a certain directory). This will create in a second an enormous P2P (peer-to-peer) network, in which you can search for files directly on other users’ disks. What do you think? Make sense?
UPDATE: If I were Google, I let users choose also “share your files only with your friends on Orkut”. In this way Orkut would becoma a uber-useful network (now is a bit pointless), and Google Corporation will have all the worlds users for all the services. And increase what it knows.

Sharing research papers

Citeseer is less useful today than how it was 2 years ago. It seems they stop the crawling looking for papers. [I have a project about adding “web of trust” to citeseer so that every user can express a degree of interest in another users’ kept bibliography) but it seems I never have the time to seriously start it.] Anyway this post is to cite 2 interesting related projects: LionShare and Eprints … (read below for links and details)
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PhD Research Proposal: Trust-aware Decentralized Recommender Systems

I realised today I didn’t write yet an entry about my PhD Research Proposal “Trust-aware Decentralized Recommender Systems” (TaDRS).
So here it is the PDF file. If you have any comment or criticism, I’ll be happy to hear from you.
The PhD research proposal is a little bit outdated (29th May 2003) but I didn’t have a blog at that time. Enjoy and let me know what you think.

This PhD thesis addresses the following problem: exploiting of trust information in order to enhance the accuracy and the user acceptance of current Recommender Systems (RS). RSs suggest to users items they will probably like. Up to now, current RSs mainly generate recommendations based on users’ opinions on items. Nowadays, with the growth of online communities, e-marketplaces, weblogs and peer-to-peer networks, a new kind of information is available: rating expressed by an user on another user (trust). We analyze current RS weaknesses and show how use of trust can overcome them. We proposed a solution about exploiting of trust into RSs and underline what experiments we will run in order to test our solution.