Start Up No.1780: yet another cryptocoin hack, online shopping reverts to trend, Russia’s true Covid toll, Musk v Twitter redux, and more


Contemplate the meaning of a Zen garden. It’s much deeper than just gravel and stones. CC-licensed photo by Thomas Quine on Flickr.

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A selection of 8 links for you. Still quite Musk-y by the end. I’m @charlesarthur on Twitter. Observations and links welcome.


Attacker drains $182m from Beanstalk Stablecoin Protocol • Coindesk

Sam Kesdsler:

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According to the summary, the attacker took out a flash loan on lending platform Aave which enabled them to amass a large amount of Beanstalk’s native governance token, Stalk. With the voting power granted by these Stalk tokens, the attacker was able to quickly pass a malicious governance proposal that drained all protocol funds into a private Ethereum wallet.

Project leads wrote in the attack summary:

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“Beanstalk did not use a flash loan resistant measure to determine the % of Stalk that had voted in favor of the BIP. This was the fault that allowed the hacker to exploit Beanstalk.”

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Beanstalk’s smart contracts were audited by the blockchain security firm Omnicia. However, the audit was completed before the introduction of the flash loan vulnerability, the firm said in a Sunday post-mortem.

Beanstalk declined to provide details to CoinDesk regarding whether funds would be reimbursed to users, saying more news will be coming in a town hall event scheduled for Sunday. According to PeckShield, the attacker appeared to donate $250,000 of the stolen funds to a Ukrainian relief wallet.

This is the latest in a string of major decentralized finance (DeFi) exploits to occur in the past few weeks. In March, Axie Infinity’s Ronin Blockchain was exploited for $625m in an attack that US officials have linked to North Korea.

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Pause for long deep sigh, and eyeroll.

It says that the market for the coin dropped by 86% from its “$1 peg”, so 14c – so does that mean that the attacker got $182m or $29m? Peckshield, a “blockchain security firm” (?), says the attacker got away with “at least $80m in crypto”, which might be rather less in actual money.
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Chris Dixon thinks web3 is the future of the internet. Is it? • The Verge

Nilay Patel (who, it’s worth noting, is an ex-lawyer who specialised in copyright), interviews the partner at Andreessen Horowitz, which has poured real money into “web3” companies:

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NP: Why do we think the NFT blockchain scenario here is going to be more successful and lucrative than a music service that connects people directly to artists at high levels for MP3s?

CD: Well, I think there are two things with NFTs. One, I do think architecturally it is very different from other objects on the internet, in the sense that most objects are controlled by an application and NFTs are controlled by users. It switches the polarity, and I think that is important. As we see the rise of Web3 gaming, you will see a whole different class of things where people own characters and other kinds of objects that they can take across different experiences. Instead of it being contained in an app, it is contained at the user level. There is an architectural aspect, and there is a social aspect. Why do people value wearing fashion — like Supreme T-shirts — or cars? A lot of value in the world is about showing that you are early to something, that you are high-status, and that you have great taste.

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That last sentence, to me, shows that Dixon has a horribly shallow concept of what “value” is. He’s mistaking a false “prestige” with something timeless and far deeper. It’s a long interview, but I feel that Patel exposes the contradictions of Dixon’s position multiple times.
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The pandemic was supposed to push all shopping online. It didn’t • WSJ

Peter Rudegeair, Charity Scott and Sebastian Herrera:

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Even as pandemic restrictions end, and many people continue working and watching movies at home, stores are mounting a comeback. E-commerce companies that were counting on a broad secular shift are now facing slowdowns, and the prospect of expensive investments in bricks-and-mortar retailing while speeding up delivery times.

It turns out there are limits to buying stuff on screens. Foot traffic to malls and bricks-and-mortar stores has rebounded since vaccines and booster shots became widely available and the worst waves of the virus receded. Sales slowed at many digital storefronts specializing in apparel, home furnishings and other categories where many consumers prefer to see in-person and touch what they are buying.

“We’ve got over 100 years as a society of going into a store to buy something,” Bernstein Research analyst Mark Shmulik said. “That muscle memory doesn’t just switch off because you were forced to buy things online a couple of times during a pandemic.”

Data suggests consumers are finding a new balance between online and in-person shopping. In the second quarter of 2020, as stay-at-home measures were in place, the share of US retail sales that happened online surged more than four percentage points to 15.7%, according to Census Bureau data adjusted for seasonal factors. By the fourth quarter of 2021, that share had dropped to 12.9%, putting consumer buying habits roughly back to their prepandemic trend.

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The graph of e-commerce as a percentage of retail sales shows a vertical spike at the start of 2020, which has abruptly dropped off and, as they say, returned to the trend line – which is, however, still growing.
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The meaning behind the Japanese Zen garden • BBC Culture

Steve John Powell and Angeles Marin Cabello:

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The first time you visit a Zen garden, it’s hard to avoid a sense of awe at the mesmerising sight of the immaculately raked gravel – in wavy lines, straight lines or concentric circles – broken only by a handful of rocks, perhaps a shrub or two or a clump of moss, but definitely no flowers. Intuitively, you know you’re in the presence of something profound and powerful, designed “to give the viewer that smack in the face that must happen before reflection intervenes,” as painter Joan Miró said about art, according to the book Joan Miró: Painting and Anti-Painting (MoMA). After reflection does intervene, you’re left with the question – just what does it mean?

Intrigued by the idea that a garden could be something that needs to be understood, rather than simply viewed for pleasure, we resolved to find out exactly what the sekitei are trying to tell us. We’d heard some say they represent islands floating in the ocean. Others claim they are 3D versions of traditional Chinese ink drawings of jagged mountain landscapes. Still others reckon that they symbolise something far deeper, mystical even. DT Suzuki (1870-1966) – Japan’s foremost Zen authority – maintained that Japanese gardens express the spirit of Zen.

Puzzled by these conflicting accounts, and driven by a Western obsession with rational explanations, we visited Saizoji, our local Zen temple in Hiroshima, which has its own splendid, raked gravel garden. The head priest came out to greet us. We talked a little about how much work was involved in maintaining the gravel. But when we asked him to elucidate on the garden’s meaning, he sighed, smiled, and said, “It’s not something you can explain. You have to experience it.”

We next asked Reina Ikeda, a graduate of Kyoto’s University of Foreign Studies. Kyoto after all is home to some of Japan’s most beautiful gardens, the ones Steve Jobs referred to as “the most sublime thing I’ve ever seen”. The most famous, and most visited of these is the gravel and rock mindscape at Ryoanji Temple.

“The meaning of Ryoanji’s garden is still a mystery,” says Ikeda. “There are 15 rocks in the garden, but you can see only 14 of them at a time – whichever angle you look from. The number 15 means ‘perfect’ in Oriental culture. The number 14 means ‘imperfect’. For Japanese people, it’s beautiful precisely because it’s not perfect. This idea is called wabi-sabi.”

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What excess mortality tells us about the COVID-19 pandemic • NY Mag

David Wallace-Wells on a new paper examining excess deaths (the most reliable indicator of how Covid has affected countries), country by country:

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In the country-by-country data, the divergences grow even bigger. Perhaps most striking, given both self-flagellating American narratives about the pandemic and current events elsewhere on the globe, is that the worst-hit large country in the world was not the US, which registered the most official deaths of any country but ranks 47th in per capita excess mortality, or Britain, which ranks 85th, or even India, which ranks 36th. It is Russia, which has lost, The Economist estimates, between 1.2 million and 1.3 million citizens over the course of the pandemic, a mortality rate more than twice as high as the American one.

Russia is not an outlier. While we have heard again and again in the US about the experience of the pandemic in western Europe — sometimes in admiration, sometimes to mock — it has been eastern Europe that, of any region in the world, has the ugliest excess-mortality data. This, then, is where the pandemic hit hardest — in the countries of the old Warsaw Pact and formerly of the Soviet bloc. In fact, of the ten worst-performing countries, only one is outside eastern Europe. The world’s worst pandemic, according to the data, has been in Bulgaria, followed by Serbia, North Macedonia, and Russia, then Lithuania, Bosnia, Belarus, Georgia, Romania, and Sudan. (Have you read much about pandemic policy in any of these countries?) Peru, which had what is often described as the most brutal pandemic in the world, ranks 11th — with the smallest gap, among those countries with the most devastating pandemics, between the official Covid data and the estimated excess mortality.

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Russia’s population is – was – 141 million, so the suggestion I’ve seen that the war in Ukraine was started to try to make up for that loss doesn’t quite make sense. But it does point to tensions that might be felt by those in charge as they try to plot their futures.
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Musk or not, Twitter’s CEO needs to go • On my Om

Om Malik:

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Twitter is a poorly run, underperforming company. 

And if you view it from that lens, the $54.20 share offer is good. It suggests that 6x revenue multiple and 28x EBITDA on 2023 estimates. In rejecting this offer, Twitter’s management and board believe that it can grow its user base and build new revenue avenues. I have my doubts. 

The company has shown negligible growth — it added a mere 6m monetizable daily active Twitter users during the fourth quarter of 2021 to bring the total to 217m. Somehow the company forecasts that it will magically reach 315 million monetizable daily actives and hit revenues of $7.5bn in 2023. It seems to be a herculean task — unless something changes drastically. 

Of the total 217m, a mere 38m of Twitter’s mDAUs are in the U.S. — a figure that has been essentially flat for over a year. For the year, Twitter had revenues of $5.08bn and lost $221m.

As a comparison, Snap had 319m daily active users, up by 13m during the comparable timeframe. Snap has 97m daily active users in the US.

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The US accounts for more than half of Twitter’s revenues, Malik points out. Which only goes to emphasise what a strangely unbalanced system advertising creates, given that Twitter’s value is as a worldwide communications system.
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If Elon buys Twitter, he’s in for a world of pain • Thread Reader App

Yishan Wong is a former CEO of Reddit:

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I’ve now been asked multiple times for my take on Elon’s offer for Twitter.

So fine, this is what I think about that. I will assume the takeover succeeds, and he takes Twitter private. (I have little knowledge/insight into how actual takeover battles work or play out)

(long 🧵)
I think if Elon takes over Twitter, he is in for a world of pain. He has no idea.

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This is a fantastically informative thread about all it takes to moderate a social network, and what the main source of the problem is: the users. (In its way, it’s very much Social Warming in miniature.)
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Elon Musk demonstrates how little he understands about content moderation • Techdirt

Mike Masnick:

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Lots of talk on Thursday as Elon Musk made a hostile takeover bid for all of Twitter. This was always a possibility, and one that we discussed before in looking at how little Musk seemed to understand about free speech. But soon after the bid was made public, Musk went on stage at TED to be interviewed by Chris Anderson and spoke more about his thoughts on Twitter and content moderation.

It’s worth watching, though mostly for how it shows how very, very little Musk understands about all of this. Indeed, what struck me about his views is how much they sound like what the techies who originally created social media said in the early days. And here’s the important bit: all of them eventually learned that their simplistic belief in how things should work does not work in reality and have spent the past few decades trying to iterate. And Musk ignores all of that while (somewhat hilariously) suggesting that all of those things can be figured out eventually, despite all of the hard work many, many overworked and underpaid people have been doing figuring exactly that out, only to be told by Musk he’s sure they’re doing it wrong.

Because these posts tend to attract very, very angry people who are very, very sure of themselves on this topic they have no experience with, I’d ask that before any of you scream in the comments, please read all of Prof. Kate Klonick’s seminal paper on the history of content moderation and free speech called The New Governors. It is difficult to take seriously anyone on this topic who is not aware of the history.

But, just for fun, let’s go through what Musk said.

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As you’d expect, and I agree, Masnick is unimpressed. Musk really talked a lot of rubbish.
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• Why do social networks drive us a little mad?
• Why does angry content seem to dominate what we see?
• How much of a role do algorithms play in affecting what we see and do online?
• What can we do about it?
• Did Facebook have any inkling of what was coming in Myanmar in 2016?

Read Social Warming, my latest book, and find answers – and more.


Errata, corrigenda and ai no corrida: none notified

2 thoughts on “Start Up No.1780: yet another cryptocoin hack, online shopping reverts to trend, Russia’s true Covid toll, Musk v Twitter redux, and more

  1. The Musk/Twitter brouhaha is sadly a case study how much free-speech (philosophical, not legal, concept) arguments are completely unconvincing to people who don’t believe in them in the first place. It’s like the atheists who argue that everyone is nearly-atheist, as even the most dedicated religious True Believer doesn’t believe in a huge numbers of gods. That is, if it’s argued to a religious True Believer:

    “TB, you say your god is the One True God, and everyone must worship it. But a horde of people say the same thing about their own gods, not yours. Why are you right and everyone else wrong? And if you start a religious war about god-worship, have you considered maybe you’ll lose? Wouldn’t you be better off just letting everyone worship their own god?”

    Free-religionists consider that convincing. But really, it’s only for them. The religious True Believer will not regard this as a killer argument. They’ll reply something like (written in social-media mode):

    “What part of the One True God didn’t you understand? We’re right. They’re wrong. In fact, why are you asking me such stupid questions? You’re not nearly as clever as you think you are. You arrogant jerk, do you imagine you’re telling me anything new about the power of the False Gods? You should be educating yourself, about how the Evil Ones spread misinformation, and the necessity of not allowing them any opportunity to poison minds. The harm from Unbelief is why all must worship the One True God. Listen carefully, there are two possible worlds: Either one which allows the corruption of Blasphemy, or one which protects our Holiness. This so-called “freezing of dereliction” which you talk of, is the freedom of Blasphemers to deny the True God, to corrupt the Holy. It’s a moral choice, and you’re not siding with Good, but Evil. Of course I understand that the Blasphemers could win, you’re a complete idiot to imply it’s news to me that there’s an ongoing war for the soul of humanity. We wouldn’t be in such dire peril if the Evil Ones didn’t have any power, you moron. If we don’t fight them with everything we’ve got, they win because we let them. What sort of dumb argument is it, that could only come from some clueless sci-dude who is so privileged as not to have to worry about the Soul Struggle, to say that Evil should be allowed to triumph everywhere because Good might lose a battle somewhere?”

    It is left as exercise for the reader to map this to “If you advocate for a billionaire oligarch to have huge speech power because one favors your politics, what happens when there’s a billionaire oligarch who opposes your politics?”

  2. When I went to the Ryoanji Temple, the most fascinating thing to me with the Zen Garden, were the 20 cats sitting on the wall behind it, and the monk eyeing them warily with a broom. You got the feeling you knew exactly how the gravel was treated once the tourists and monks left for the day.

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