The awkward mathematics of booms and bubbles

When short and long aren't opposites.

One of the most common responses in the many, many comments to my pieces on Bitcoin over the last couple of weeks has been to ask me why, if I'm so sure it's a bubble, I don't short it.

The simplest answer is that journalism isn't a career which leaves a huge amount of money left over after the bills are paid with which to gamble, and that I'm not entirely sure it's ethical anyway. There's also the fact that the two main Bitcoin meta-exchanges aren't particularly liquid, which leaves me doubtful that I'd get the best value for money on any shorting contract,

Then there's the problem that being pretty certain the bubble is going to pop doesn't leave me any surer about when it's going to pop – something which most methods of shorting require you to know.

Shorting usually involves borrowing the thing you want to short for a fixed amount of time, selling it straight away, and then buying it back just before your loan is up. Ideally, the commodity has dropped in value, and so you make a profit by you pocketing the difference.

In a normal commodity, going short and going long – buying the commodity to sell at a higher price – are roughly symmetrical. If a share in Apple goes up $1, the people who are long make a dollar a share; if it goes down, the people who are short do.

But that symmetry breaks down when you're dealing with a commodity on the sort of parabolic trend that Bitcoin is shooting along now.

If I spend £100 on Bitcoin, then the most I can lose is £100. Conversely, if the trend continues, I could have £1000 in a month. And the maximum possible payoff is basically uncapped. Suppose I'm catastrophically wrong, and Bitcoin becomes the world currency by the end of the year – anyone who'd bought in to it, even at today's inflated prices, would be a millionaire.

But what if I short it, by borrowing £100 of Bitcoin? Well, then the most I can earn is £100, if the price drops to zero. But the amount I could lose is potentially uncapped, for the exact same reasons that make buying in to it so appealing.

That lack of symmetry – which is an innate feature of, well, maths – serves only to goose the bubble higher and higher. And at the other side, when the down swing comes, it will be vicious; with no shorters ready to step in and buy the coins of people trying to cash out, the volatility will have nothing dampening it.

So that's why I'm keeping my money where it is. But don't think I'm not pretty damn confident when I say that if I had any extra, it still wouldn't be in Bitcoin.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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“Stinking Googles should be killed”: why 4chan is using a search engine as a racist slur

Users of the anonymous forum are targeting Google after the company introduced a programme for censoring abusive language.

Contains examples of racist language and memes.

“You were born a Google, and you are going to die a Google.”

Despite the lack of obscenity and profanity in this sentence, you have probably realised it was intended to be offensive. It is just one of hundreds of similar messages posted by the users of 4chan’s Pol board – an anonymous forum where people go to be politically incorrect. But they haven’t suddenly seen the error of their ways about using the n-word to demean their fellow human beings – instead they are trying to make the word “Google” itself become a racist slur.

In an undertaking known as “Operation Google”, some 4chan users are resisting Google’s latest artificial intelligence program, Conversation AI, by swapping smears for the names of Google products. Conversation AI aims to spot and flag offensive language online, with the eventual possibility that it could automatically delete abusive comments. The famously outspoken forum 4chan, and the similar website 8chan, didn’t like this, and began their campaign which sees them refer to “Jews” as “Skypes”, Muslims as “Skittles”, and black people as “Googles”.

If it weren’t for the utterly abhorrent racism – which includes users conflating Google’s chat tool “Hangouts” with pictures of lynched African-Americans – it would be a genius idea. The group aims to force Google to censor its own name, making its AI redundant. Yet some have acknowledged this might not ultimately work – as the AI will be able to use contextual clues to filter out when “Google” is used positively or pejoratively – and their ultimate aim is now simply to make “Google” a racist slur as revenge.


Posters from 4chan

“If you're posting anything on social media, just casually replace n****rs/blacks with googles. Act as if it's already a thing,” wrote one anonymous user. “Ignore the company, just focus on the word. Casually is the important word here – don't force it. In a month or two, Google will find themselves running a company which is effectively called ‘n****r’. And their entire brand is built on that name, so they can't just change it.”

There is no doubt that Conversation AI is questionable to anyone who values free speech. Although most people desire a nicer internet, it is hard to agree that this should be achieved by blocking out large swathes of people, and putting the power to do so in the hands of one company. Additionally, algorithms can’t yet accurately detect sarcasm and humour, so false-positives are highly likely when a bot tries to identify whether something is offensive. Indeed, Wired journalist Andy Greenberg tested Conversation AI out and discovered it gave “I shit you not” 98 out of 100 on its personal attack scale.

Yet these 4chan users have made it impossible to agree with their fight against Google by combining it with their racism. Google scores the word “moron” 99 out of 100 on its offensiveness scale. Had protestors decided to replace this – or possibly even more offensive words like “bitch” or “motherfucker” – with “Google”, pretty much everyone would be on board.

Some 4chan users are aware of this – and indeed it is important not to consider the site a unanimous entity. “You're just making yourselves look like idiots and ruining any legitimate effort to actually do this properly,” wrote one user, while some discussed their concerns that “normies” – ie. normal people – would never join in. Other 4chan users are against Operation Google as they see it as self-censorship, or simply just stupid.


Memes from 4chan

But anyone who disregards these efforts as the work of morons (or should that be Bings?) clearly does not understand the power of 4chan. The site brought down Microsoft’s AI Tay in a single day, brought the Unicode swastika (卐) to the top of Google’s trends list in 2008, hacked Sarah Palin’s email account, and leaked a large number of celebrity nudes in 2014. If the Ten Commandments were rewritten for the modern age and Moses took to Mount Sinai to wave two 16GB Tablets in the air, then the number one rule would be short and sweet: Thou shalt not mess with 4chan.

It is unclear yet how Google will respond to the attack, and whether this will ultimately affect the AI. Yet despite what ten years of Disney conditioning taught us as children, the world isn’t split into goodies and baddies. While 4chan’s methods are deplorable, their aim of questioning whether one company should have the power to censor the internet is not.

Google also hit headlines this week for its new “YouTube Heroes” program, a system that sees YouTube users rewarded with points when they flag offensive videos. It’s not hard to see how this kind of crowdsourced censorship is undesirable, particularly again as the chance for things to be incorrectly flagged is huge. A few weeks ago, popular YouTubers also hit back at censorship that saw them lose their advertising money from the site, leading #YouTubeIsOverParty to trend on Twitter. Perhaps ultimately, 4chan didn't need to go on a campaign to damage Google's name. It might already have been doing a good enough job of that itself.

Google has been contacted for comment.

Amelia Tait is a technology and digital culture writer at the New Statesman.