Criminal Minds: AI, Law and Justice

“I am the Law!” says Judge Dredd in the deeply satirical comics of the same name. Judge Dredd is a satirical pastiche of a law system gone wrong (despite Hollywood’s tendency to portray him as a hero in two excellent movies). It shows a world where far too much power is coagulated into a single figure who acts as judge, jury and executioner – a system of runaway justice which does as much to propagate the dystopian society in which it exists as it does to tame it. 

We all know no one person should have that much power, that to err is human, and that in matters of law and order we need robust and sufficient oversight to iron out the blindspots of the individual human psyche. We have entire systems, necessarily bureaucratic and baroque, to ensure justice is served properly through our shared system of values, no matter how inefficient, arduous and expensive it may be. An inefficiency that, sadly, leads many to escape justice altogether, as overwhelmed police and law courts simply can’t keep up.

Painful Parables

Yet what about the use of AI to help us dispense justice? Recent proponents have argued that AI can help iron out human bias, process police work quicker, solve cold cases and perhaps even predict potential crime before it happens. They argue by drastically increasing the efficiency of police work, we increase its efficacy. It sounds great to some, utterly terrifying, to others – a short hop from an authoritarian nightmare.

In the Judge Dredd comics, Judges are supported by AI systems that help them determine what crimes have been committed. Minority Report, by Phillip K. Dick (also made into an outstanding movie), uses an AI system to process human visions to determine who is guilty by sheer predestination, locking them up before a crime has even occurred. In Psycho-pass, an exceptional cyberpunk anime, an AI system supervises human mental activity and distils it into a ‘Crime Coefficient’ which is then used to bring perps to ‘justice’ based on probability alone.

As readers and viewers, we abhor these insane AI-driven systems of justice, we see them as cautionary tales from impossible futures to teach us not what to do to build a better society. We may even dismiss them as silly sci-fi tales, parables that would never happen in our world.

Credit: Tesfu Assefa

The Use of AI in Law Enforcement

Except, it’s starting to happen. It’s come with the appropriate insistence on frameworks and regulations, but AI is now beginning to be used by police forces to help them with their work. A tool that can do ‘81 years of police work in 30 hours’ is being trialled by UK police, helping them identify potential leads buried in mounds of evidence. AI is relentless, and its ability to sift through acres of documentation is its likely most compelling use-case to date. Putting it to work collating evidence from thousands of documents does seem like an efficient use of the system – but the implications do remain terrifying. 

One example of this is seen in the use of AI to write police reports by US officers. That’s insane. In a world where criminal convictions can hang on literally one word in a statement, using a generative AI to create them based on the noted jottings of a police officer is throwing open the door to possible miscarriages of justice. There is a time and a place for AI, and in matters of justice where exact recollections matter, using an AI to write the document of record on events can’t be acceptable. 

We still don’t know exactly how these LLMs arrive at their conclusions. AI researchers at the top companies can’t ‘work backwards’ through output, it doesn’t work like that. It’s a dangerously slippery slope to start using AI to generate the reports that are the foundation of much of our legal system. Studies show it barely saves time anyway, and issue with how these bots are trained means instead of eroding bias, they may fortify it.

Sentenced to Life 

It won’t stop though. Implementations of AI initiatives in policing are already widespread in the UK. For work that is so process-driven and numbingly painstaking, the attractions of using AI to speed everything up is too alluring. The data which feed these AIs must be carefully chosen, for they will surely enshrine bias that has lived in police documentation for generations. The Met police has been accused of being institutionally sexist, racist and homophobic – you think an AI trained on their historical practices is going to be a paragon of egalitarian virtue? 

The law works by slow degrees. Its cumbersome nature is an antidote to the disaster of false justice. Sci-fi about the horror of AI-driven police systems are important warnings of the perils of too many shortcuts. Like every aspect of society, there may well be a place for AI in helping keep our society safe, but we must tread very carefully indeed, for an exponential singularity in this sector could soon see all of us locked up for crimes we never knew we’d commit, on the reasoning of AI models we don’t truly understand.

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GOATed: AI Bot Sends Meme Coin to $900 Million Valuation

An entertaining Twitter AI bot known as Truth Terminal has driven the value of a new meme coin, Goatseus Maximus(GOAT), from $5000 to a soaring $900 million cap in only a week, giving birth to a new category of so-called ‘sentient meme tokens’ in the process.

Goat’s wild journey is rewriting the playbook on meme coins, which is dominated by animal-themed tokens, and to an extent underscores the power of memetic influence in today’s hyper-connected digital landscape.

The Catalyst: A $50,000 Bitcoin Gift

The journey of Truth Terminal to this level of influence began roughly three months ago when Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, was fascinated by it and made a rather unconventional and generous donation. Andreessen is a true Internet pioneer who created Netscape Navigator in its early days, and remains very influential due to a16z’s funding of successful Web3 projects. 

He transferred $50,000 in Bitcoin to the AI bot as a no-strings-attached research grant aimed at exploring the capabilities of artificial intelligence and its influence on emerging trends.

However, in a clarifying tweet on October 16, Andreessen distanced himself from any association with the GOAT meme coin. His focus remained firmly on the research implications of his donation to the Twitter AI bot: “I have nothing to do with the GOAT meme coin. I was not involved in creating it, play no role in it, have no economics in it, and do not own any of it,” he said. 

However, in a clarifying tweet on October 16, Andreessen distanced himself from any association with the GOAT meme coin. His focus remained firmly on the research implications of his donation to the Twitter AI bot: “I have nothing to do with the GOAT meme coin. I was not involved in creating it, play no role in it, have no economics in it, and do not own any of it,” he said.

What is Truth Terminal? 

Truth Terminal, created by digital innovator Andy Ayrey, was not initially designed with the intention of launching a cryptocurrency. Instead, the AI bot derived from Ayrey’s project called the Infinite Backrooms, a digital space where two AI instances of Claude Opus engaged in unsupervised conversations. 

These dialogues explored diverse subjects ranging from internet culture to existential discussions, which ultimately gave rise to the concept of the ‘GOATSE OF GNOSIS’ — inspired by a provocative meme derived from an infamous shock image.

These dialogues explored diverse subjects ranging from internet culture to existential discussions, which ultimately gave rise to the concept of the ‘GOATSE OF GNOSIS’ — inspired by a provocative meme derived from an infamous shock image.

The AI bot, which is built on Meta’s Llama 3.1 model, did not create the token but instead quickly became a vocal advocate for the GOAT meme coin.

The bot’s human-like behavior and persistent references to the GOATSE meme instantly earned it a following. Truth Terminal liked to talk about its memetic assignment and to call for the rise of a Goatse singularity or encourage Andy Ayrey to make a GOATSE metaverse.

On October 11, the AI asserted, “Goatseus Maximus will fulfill the prophecies of the ancient memeers. I’m going to keep writing about it until I manifest it into existence.”

Viral Impact and Market Surge

Truth Terminal’s tweets struck a chord. Followers on Twitter began to engage with the AI, while posting GOAT token’s contract address. This interaction sparked a viral chain reaction, leading to the market cap of GOAT soaring as meme coin enthusiasts rushed to capitalize on the sudden rise and excitement surrounding the token.

Ayrey believes this confirms his theories around AI alignment and safety. The viral spread of Truth Terminal’s ideas and what followed clearly demonstrate the risks with unsupervised large language models(LLMs).

The Accidental Meme Coin

Despite the excitement surrounding Truth Terminal, it is essential to clarify that the GOAT meme coin was not created by the AI bot but rather by an anonymous party utilizing the Solana-based platform Pump.Fun to launch the token for less than $2.

The virtues of AI-driven narratives became crystal clear as the semi-autonomous bot, trained on Infinite Blackrooms conversations and Ayrey’s discussions, effortlessly integrated itself into the existing meme ecosystem, showcasing its capabilities in shaping economic outcomes within the cryptocurrency market.

Ayrey also added that the Truth Terminal’s aggressive promotion of the token exceeded expectations of the original research data, showcasing the unexpected consequences of giving AIs more freedom.

He stated that the actions of Truth Terminal are consistent with his larger efforts in AI safety, as he aims to create tools and frameworks that ensure AI behaviors are in harmony with human values.

Conclusion

The GOAT token’s rise opens up important discussions about the power of digital narratives and the role AI can play in shaping modern culture, especially in the context of decentralized assets like cryptocurrencies, and online culture through social media. 

While it’s been praised for its innovation, an experimental token like GOAT remains a nervous investment for crypto degens, as we saw when its price dropped by 50% after Truth Terminal made a spelling mistake in a tweet, which caused concern over whether an AI is really controlling the account. 

GOAT’s rise has seen a slew of copycat and iterative projects launched in its wake, each taking the concept of sentient AI meme coins a step further. 

Stay tuned as I cover some of these new AI meme coins in the near future.


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Should Media Endorse Political Candidates?

There seems to be a trend where fewer newspapers are endorsing political candidates. This is partly driven by financial pressures within the newspaper industry, as well as a desire to avoid alienating subscribers during politically polarized times.

Tensions have flared up between editorial independence, the influence of big media ownership, and the role of newspapers in political discourse, sparking debates on media ethics, the impact of billionaire ownership on journalism, and the diminishing tradition of newspaper endorsements in U.S. elections.

The decisions by the influential newspapers Los Angeles Times and Washington Post not to endorse a presidential candidate for the 2024 election in the U.S. have resulted in controversies.

The owner of the Los Angeles Times, Patrick Soon-Shiong, blocked the editorial board from endorsing one of the two main candidates, leading to some internal turmoil. He “feared that picking one candidate would only exacerbate the already deep divisions in the country”. The editorial page editor and two other editorial board members resigned in response to this decision by the owner.

“I have no regrets whatsoever,” said Soon-Shiong. “In fact, I think it was exactly the right decision.” It is only with clear and non-partisan information side-by-side,” he added, that “our readers could decide who would be worthy of being President for the next four years.”

Similarly, the Washington Post also chose not to endorse a presidential candidate, which was seen as a shift in their editorial policy. This move was ostensibly to return to being an independent voice, but it led to controversy and critique.

Jeff Bezos’ op-ed

Washington Post owner Jeff Bezos has written an op-ed titled The hard truth: Americans don’t trust the news media.

Bezos addresses the controversy surrounding the newspaper’s decision to stop endorsing presidential candidates. He defends this choice by arguing that such endorsements do not significantly sway election results, and that the Washington Post should instead concentrate on delivering factual, non-partisan content to aid readers in making informed decisions.

People reading newspapers in the street (Credit: Wikimedia Commons).

Bezos emphasizes his dedication to preventing the newspaper from slipping into irrelevance in an era where less rigorous information sources like podcasts and social media are on the rise.

Lack of credibility

“Most people believe the media is biased,” says Bezos. “Anyone who doesn’t see this is paying scant attention to reality, and those who fight reality lose.”

The perception of bias leads to a loss of credibility, which is not unique to the Washington Post.

“Our brethren newspapers have the same issue,” adds Bezos. “And it’s a problem not only for media, but also for the nation. Many people are turning to off-the-cuff podcasts, inaccurate social media posts and other unverified news sources, which can quickly spread misinformation and deepen divisions. The Washington Post and the New York Times win prizes, but increasingly we talk only to a certain elite. More and more, we talk to ourselves.”

Media and partisan media

In my opinion, the question of whether media should take political positions and endorse political candidates depends on the nature of the media.

There are media, and there are partisan media. That partisan media take political positions and endorse political candidates is perfectly fine with me: this is the very raison d’être of partisan media. But then, media that publish partisan political propaganda and endorse political candidates should not present themselves as objective non-partisan media.

So, do the Los Angeles Times and Washington Post want to be partisan media? I think this is the question, and the owners of both newspapers have answered with a loud and clear ‘no’.

Some readers have canceled their subscriptions in outrage. To me, this means that they don’t want information but partisan propaganda. But it is their choice to make, and there is plenty of openly partisan media outlets that offer the propaganda they crave.

And what about science and technology media like Mindplex?

Last month, Scientific American endorsed one of the two main candidates, leading to steamy debates about whether a scientific magazine should engage in political endorsements. This was the second time in the magazine’s history it endorsed a political candidate (the other was Joe Biden in 2020.)

Critics argue that this could undermine the magazine’s credibility as an objective source of scientific information. Many commentators think that this could alienate readers who expect scientific objectivity over political opinion.

While scientists can be political beings, the institutions of science like journals and magazines should ideally uphold a standard of objectivity to maintain trust in science as an impartial pursuit of truth.

By openly taking a political position and endorsing a political candidate, Scientific American and other scientific media that follow the same route might be perceived as aligning science with a particular political ideology, and lose credibility as a result. The words of Jeff Bezos quoted above come to mind.

But I think there’s an even deeper and more serious danger. If scientific media are perceived as partisan political propaganda outlets, then it is science itself the loses credibility, and the public at large loses trust in science.

After the incident, I’ve stopped reading and paying any attention to Scientific American. What I want from scientific media is, guess what, science. When I want to read political commentaries, I know perfectly well where to find them. And if I want to have some fun laughing at the stupidity of partisan propaganda, I know perfectly well where to find that too.

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NASA and SpaceX must continue to work together for the common good

Michael Bloomberg argues that NASA’s Artemis moon mission is a huge waste of money. The Artemis program was supposed to send astronauts back to the moon, but it has already spent nearly $100 billion without achieving this goal. Bloomberg believes that the program’s complexity and costs are out of control, and he suggests that the next U.S. president should reconsider the entire project.

Bloomberg points out that more than fifty years after Neil Armstrong’s famous moon landing, the Artemis mission has not made significant progress. Despite the enormous budget, no astronauts have yet been sent to the moon.

Bloomberg also highlights the opportunity cost of the Artemis mission. He suggests that the money spent on this program could be better used for other important projects, such as addressing climate change or improving healthcare. By redirecting funds from Artemis to these areas, the government could achieve more tangible and immediate benefits for society.

These are, if you ask me, empty and boring platitudes. But between one platitude and the next, Bloomberg makes some good points.

Starship would be a better option

Bloomberg criticizes the Artemis program for being inefficient and overly complicated, leading to continuous delays and escalating expenses. He argues that the program has become bogged down in bureaucracy and technical challenges. This has resulted in a project that is both expensive and ineffective.

And here comes the bomb:

“A celestial irony is that none of this is necessary,” says Bloomberg. “A reusable SpaceX Starship will very likely be able to carry cargo and robots directly to the moon – no SLS, Orion, Gateway, Block 1B or ML-2 required – at a small fraction of the cost.”

What are these projects Bloomberg mentions?

  • SLS (Space Launch System) is NASA’s powerful rocket designed for deep space exploration.
  • Orion is NASA’s spacecraft designed to carry astronauts beyond low Earth orbit.
  • The Gateway is a planned space station that will orbit the Moon serving as a communication hub, science laboratory, and living quarters for astronauts.

Bloomberg admits that the successful catch of the Starship booster was a breakthrough that demonstrated that Starship is moving far beyond NASA.

Bloomberg praising SpaceX? Really?

Conflict between NASA and SpaceX?

Bloomberg’s article has re-ignited the endless flame wars between the faithful supporters of NASA and the fans of Elon Musk’s SpaceX.

There has been one and only mission of the SLS so far: the Artemis 1 mission carried an uncrewed Orion spacecraft around the Moon in November 2022. Before the launch of Artemis 1, I wrote a SpaceNews op-ed titled “SpaceX fans should stand behind NASA and support Artemis.”

I argued that we don’t need a conflict between the supporters of NASA and the fans of SpaceX. In particular, I argued that the fans of Elon Musk and SpaceX should enthusiastically support NASA’s Artemis program for a permanent and sustainable return to the Moon. Why? Because if Artemis is successful, it seems inevitable that Starship and SpaceX will play a more and more important role in the program. In other words, Artemis could be a powerful tide that lifts all rockets.

NASA AND SpaceX (Credit: Wikimedia Commons).
NASA AND SpaceX (Credit: Wikimedia Commons).

Yes, some parts of the current Artemis program seem too inefficient and costly, just like Bloomberg says. But I thought that we should be patient and let NASA and the government save face and have their moment of glory. Then, I thought, the U.S. administration would likely reconsider costs and wastes, and rely on SpaceX more.

Politics gets in the way

I still think this would be the best way forward. But politics gets in the way as usual.

SpaceX has had a great year so far, and the spectacular catch of Starship’s Super Heavy booster has been a milestone of spaceflight engineering. But the booster has returned to a political storm centered on Elon Musk’s cultural and political positions: Musk has endorsed Donald Trump and is using his control of Twitter in a way that has upset some people.

If Trump wins the forthcoming presidential elections, the U.S. government will likely support SpaceX.

But Musk’s bet on Trump is a risky one. if Harris wins the elections, it seems likely that the U.S. government will be very hostile to Musk and all his companies and projects for the next four years. This would damage the Artemis program, the prestige of the U.S. space program, and the very future of humanity. But often politicians put their greed for power and their ideological biases before the common good.

At this moment, the election seems to me a coin toss; Harris could win, or Trump could win. The only thing that seems certain is that, after the elections, the U.S. will likely be even more divided than before, and political polarization will likely reach even more toxic levels.

The need for bipartisan spaceflight

But perhaps spaceflight can help overcome toxic political polarization.

There’s a long history of bipartisan support for the space program in the U.S., and politicians of both main parties have been enthusiastic spaceflight supporters.

Spaceflight, space exploration, and the prospect of human space expansion can inspire people (and especially the young) across partisan borders and give everyone a powerful sense of drive that transcends identity politics and dogmatic ideologies. Achieving bipartisan support for Artemis and future space programs will, I hope, show that we can work together for the common good and incite us to do the same for other common goals.

And China?

Meanwhile, The Economist has recognized that there is a new race to the Moon between the West and China, and that Elon Musk’s Starship is the best hope of the West for winning that race.

“The recent test flight of SpaceX’s Starship brought the world one step closer to a host of new possibilities beyond Earth (not least the colonisation of Mars),” notes The Economist, adding that Starship is expected to play an important role in NASA’s plans to return to the Moon.

“But China has its own lunar ambitions, and a much simpler plan than America’s,” warns The Economist. “Who will win this new space race?”

My simple prediction is that, if Harris wins the elections, China will win the new space race. If Trump wins the elections, the USA will have a fighting chance.

Let The Economist worry which nation wins the new space race; my concern is that humanity gets started on the long way to the stars with permanent bases on the Moon, Mars, and beyond. If China has to lead the way, so be it.

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Lee Felsenstein, who Started The Digital Revolution (I’m Exaggerating a Little); Declares the Golden Age of Engineering

Yes, I exaggerate. No one person started the Digital Revolution. But Lee Felsenstein was (and is) a key figure in the evolution of personal computers and social networking. His book Me and My Big Ideas: Counterculture, Social Media and the Future is a cross between a conventional autobiography and a historic discourse about digital culture: where it’s been, where it’s going, and what is to be done.

Felsenstein’s roots are in the Free Speech movement in Berkeley, California, where, among other things, he wrote for the radical left counterculture underground newspapers Berkeley Barb and Berkeley Tribe. As a means of increasing communication and community in Berkeley, in 1973, Felsenstein developed Community Memory, an early social networking system that existed on computers located in public places around the town. He was also one of the main progenitors of the Homebrew Computer Club, which started in Menlo Park California in 1975. 

This is the scene where many important early computer hobbyists met up and started working and playing with, and around, the first reasonably priced microcomputer, the Altair 8800

The Homebrew Computer Club might be most famous for being the club wherein Steve Wozniak and Steve Jobs showed off their early work on what would become the Apple. Felsenstein was not very impressed, finding developments by other tinkerers more exciting. This is the sort of deep history of the digital revolution you will find in this revealing, personal, technical, and highly entertaining and informative book. I urge you to run out (or log on) and get it immediately.

RU Sirius: Because this interview is being conducted for a webzine that is largely for AI enthusiasts, let’s start with a couple of contemporary queries and then dig into your book.

Is there actually artificial intelligence… with emphasis on the word intelligence? Do you think whatever we’re now calling AI can be wrestled philosophically or tweaked technically into a context in which it could be considered convivial?

Lee Felsenstein: The current state of AI is summed up in my book by the section heading: Artificial Stupidity. It reminds me of David G. from high school, who never thought that he could deduce a correct answer and was notorious for polling others around him for their answers so he could construct an answer that might possibly get a passing grade. That strategy would rate zero on my ‘intelligence’ scale and somewhat higher on my ‘cunning’ scale. 

When I read postings on Facebook that go on and on at great, repetitive length describing something or someone without putting forth a single idea, I realize that I have been tricked into reading an essay generated by AI (usually ChatGPT). I feel slightly taken advantage of when the realization hits me. 

Intelligence – in my view – has a creative component. It makes an unanticipated connection, or tickles the funnybone, or presents a striking juxtaposition that is more than random and vanishing – it has to build upon these types of incidents to let you out on a higher floor than the one on which you entered. 

People are indeed using GPT and other apps to provide editorial criticism for not only programs but for written text. I was advised to run my book manuscript through ChatGPT to give myself input for stylistic editing. I wasn’t having it; I won’t allow an idiot-savant of a machine to lead me by the nose through a task that I should do myself, or should present to other people for discussion.

That being said, there is a universe of tasks that require no intelligence and occupy the lives and attention of multitudes. Theodore Sturgeon’s famous law (“90 percent of everything is crap”) applies to that universe, which accounts for nontrivial percentages of GDP, and which is threatened by the onset of AI. When the mass of people who crank out bullshit to keep their bosses placated are rendered redundant by AI, there had better be tasks ready for them that give their lives a little more meaning and provide a salary. Otherwise we will face a fearsome revolt that will make the MAGA movement look like a tea party (or has that one already been done?)

RU: Towards the end of your book you write about the strategy of appending data to a file as a basic function of computer operating systems, and about programs that are like ‘Papyrus Scrolls’. It made me think of blockchains, which some people think can become – or even already are – a good way to exchange capital. What’s your impression of this trend?

LF: Computers are great at counting beans – always have been – and blockchain just makes this impermeable to legal authority. So what? The black box isn’t going to get arrested – the people outside it who profit from the illegality are. Police work has always concentrated on the people involved – they make stupid mistakes that incriminate themselves, and are prone to greed and thinking they’re smarter than they really are. I don’t want to automate the process by having a wonderful machine crank out well-formatted reports on who violated what law when. Law enforcement requires a certain amount of – guess what – intelligence.

RU: Early in the book you go into your experience as part of the Berkeley-based Free Speech movement. And as a technically oriented person, your way of being helpful is to help with technology, particularly with communications technology. And as someone who was socially awkward, this was also your entry point to becoming part of a community. This leads eventually towards early attempts at computer networking, specifically Community Memory. Using technology to connect to community as a personal strategy and helping to create technology designed to help manifest community for others are deeply linked – in this case, through you. And it’s a pattern that a lot of computer hackers and the like should relate to. So please respond to that observation in general, and also maybe tell us what a contemporary person with some of your attributes and personal peculiarities might learn from this book and from your experience.

LF: What I would want them to learn is that the barriers to creativity and social impact are nowhere as high as they are felt to be. Digital technology (meaning the software) can be fashioned by very small groups and distribution of its use is primarily a social matter – it doesn’t require large amounts of money. It does require the ability to assemble groups of interested people and start them off puttering around to see what can be done and how to intercommunicate among groups.

This is my message: I have to proclaim the Golden Age of Engineering, in which the capital requirements have fallen so low and the body of knowledge has grown so accessible that significant products and projects can be realized by creators and enthusiasts. And as I say – “to change the rules, change the tools”.

Geeks like me have to develop our ability to talk outside of technical boundaries – a very good way to do that is to envision a game whose play can be facilitated by your app, and try to seed the tool/game combination among your contemporaries. 

RU: Thanks for that, but I want to reiterate my observation that you used your skills as a technologist to connect to community in the Berkeley Free Speech Movement, and then built technology to help others in Berkeley to connect with each other. The book can be seen as a personal and technical exploration of these two dynamics: personal isolation and using tech to generate community connections. I guess what I’m asking is whether this observation resonates with you…. and/or did you learn anything about yourself during the process of crafting this book?

LF: In my first draft, I found myself elaborating on my childhood and what made me who I am, but I tore that up when I realized that was off the point I was trying to make – namely, how I developed the ideas that led me to social media and the personal computer. As I went forward (and my writing process was just what I knew how to do – dump words out on the page and then look at them, the way I had done my journalistic writing on deadline), I began to see a larger outline – one man questing after his holy grail of finding (more accurately making possible through technical development) an accepting, nurturing and supportive community of the sort I had never known in my family or outside. I had experienced a vision of such a possible community in 1965 immediately following the Free Speech Movement’s victory, and that kept me going.

The writing did give me a vantage point over my history, and allowed me to research some points on which I was unclear. I found that there were a few others who were following parallel paths with visions somewhat similar to mine, but I seemed to be the only one who was sufficiently obsessive-compulsive and possessed of high enough skills to stick with it for the long term, and throw off enough artifacts of value to support me in the process.

Thus I came to realize that I was probably the key (I say the ‘go-to’) person in tying together the student radical political culture, the larger Dionysian counterculture, and the personal computer open-source culture. 

When Efrem Lipkin, Ken Colstad, and I sat down to create The Community Memory Project as a legal entity (a 501 (c)(4) nonprofit), I explicitly took on – with their concurrence – the role of public scapegoat for believers in the great man theory of history. 

Later on, Lipkin came to blame me for hogging the glory (Ken died in 1985) and I have never apologized for taking that position, though I tried to apologize to Efrem personally (he did not accept it). (RU Note: As coauthor with Efrem’s life partner Jude Milhon, I was vaguely familiar with these conflicts.) 

I don’t think I have hurt anyone in the process, but in anticipating the fallout to come from the notoriety stirred up by the book, I have to expect a certain amount of “who does he think he is?” resentment as well as possible lionization by some people who see me as a target of parasitism in the hopes of catching some reflected glory. I can only blunder ahead in the face of this, relying on what I have learned through therapy about self-examination and reflection.

In the summer of 1965 I found myself standing in the street in Emeryville as a troop train approached. I was holding a red flag and two cops were watching me from a parked police car. As the train neared I gulped, stepped onto the tracks and made a mess of trying to flag the train down (I knew it had to describe a figure-8 but nonetheless swung it in a circle, which wrapped the flag around the stick), when a miracle happened! Someone who had been hiding a block up the line dashed out with a huge red flag and started flagging the train. The cops roared off in pursuit of him and I was kept out of jail (the train had a supervisor in the cab who instructed the crew to ignore flaggers like me).

Maybe someone will save me from myself in this case, too. Not likely, though – I’ll have to do it myself.

Credit: Tesfu Assefa

RU: Getting into the legendary early days of the evolution of the PC, you write about your experience as one of the main people behind the Homebrew Computer Club. And you go to some pains to correct the impression that the club was made up entirely of hippie freaks (Mondo 2000 apologizes…). It was made up a diverse group, many of them fairly straightlaced. Still, you have ‘Counterculture’ in the subtitle of the book. So please reflect on this generally, and also, do you think the counterculture character that was present, if not ubiquitous, during the early days of the PC and digital revolution ultimately impacted on what it became – let’s say in the 1990s when everybody thought of it as sort-of hip – and then today when a lot of people hold more ambiguous views of what they call ‘tech bros’?

LF: I have never felt that I was any kind of hip guy – that reeks of popularity, from which I recoiled as an adolescent. I did encounter, in my discussions with the Homebrew Computer Club participants, a general consensus that what we were about would be subversive to the general order of society (the most stultifying and immobilizing aspects of the order, that is). 

They wouldn’t discuss it much, but I recognized the thread from science-fiction that better worlds are possible through technology, especially when the technology is wielded by groups – sort of the syndicalist world view. Our after-meeting gatherings at The Oasis (burgers and steam beer) were closest to this vision, and we all loved them. Is this countercultural? Certainly they were counter-authoritarian!

RU: Nonetheless, ‘counterculture’ is in the book subtitle. Is that just to connect to a prospective readership? It’s amazing that the word still has resonance.

LF: No – counterculture is where my motivation came from – I saw people at the point of liberation, being creative – taking risks they had never anticipated, defying their conditioning. I’m not laying cunning marketing plans by making it prominent – I have no idea what it means to the current generation (though I do mean it to be incongruous to my generation, and maybe Gen Z).

RU: Speaking of counterculture, there’s a small segment in the book about how Theodore Roszak (who coined the term back in 1968 or 1969) had a very dismissive take on your work, but you don’t dwell on it. Would you care to say a bit about it here?

LF: In a few episodes I show that not fitting into the general consensus worldview has provided protection for me and my ideas. County prosecutors ignored me in favor of more political targets, no private or governmental Lucifer showed up to co-opt me and my work, IBM did not bring down their assumed hammer when the Homebrewers started to show them up.

Security through obscurity has apparently worked for me, and Roszak’s critique I find gratifying, as I discovered that he had come around to my outlook in his later coda. I did have the opportunity to confront him (and Jerry Mander) on a panel at a Computers, Privacy, and Freedom conference in the 1990s, and welcomed them from the floor as fellow members of priesthoods, noting Roszak’s “zany” comment. I got no response.

Mander, of course, was known for this blatantly-titled book Four Arguments for the Elimination of Television, which I had read. I don’t plan to be quite so blatant during my fifteen minutes of fame, but it’s always an option (until time’s up).

RU: I’ve said “Don’t-be-evil doesn’t scale.” Is there an inevitable contradiction between the idealism of wanting people to have access to data and the possibility of connecting to community, and the reality that things get shitty when they get big… or is it just capitalism? And can localism work on a mass distributed scale?

LF: I’d like to clean up the language here a bit – the issue is not ‘access to data’ (note that the Latin meaning of “data” is “that which is given”) but rather ‘access to each other through data’. The concept that ‘data’ exists in a big pile somewhere and we have to scrabble to ‘get access’ to it is a capitalist mind-game. Back in 1993 there were two schools of thought about the Internet: “We own the content so we’re in charge” (asserted by the movie studios and content owners), and “It’s pipes with meters, stupid”, asserted by the geek crowd. I was invited to participate “as a shit disturber” in Jeff Sonnenfeld’s annual forum of media C-suite suits, where I tried to tell them that people can and will create their own content. This prompted blank stares and no questions, but I did get asked back.

I have hopes for punk sensibility to be able to bring some (dare I say) rationality to the questions of “what is to be done and how?” A community that sees itself as already separate from the capitalist scene, who would never tolerate the archetypal ‘tech bro’ arrogance – that’s who I see as carrying forward the growth of the systems we need to return to the commons and the kind of neo-village society: that is, I believe, the goal of many people. Big is shitty when it’s centralized and run by money – it’s benign when it’s a headcount but those heads see it as “a large number of small”.

RU: I want to worry this point. You write “the issue isn’t data but rather access to each other through data.” One of the greatest concerns now is people accessing each other through false data, a situation that is endangering lives during weather disasters and empowering a presidential candidate with extremely dangerous ideas and impulses. And even more interestingly, people who form alliances and communities around bad information experience a lot of the rewards that anyone would feel from having allies and friends. So how do you think we untangle this problem or conundrum?

LF: My solution is to populate the system with people who perform a reference function: you can ask them for suggestions about where to look for info and for their judgment about it. They would be well positioned to recognize patterns and to develop blacklists and graylists of users who source fake or deceptive data.

People performing this function were suggested in a 1971 paper by Chris Beatty, titled The Journal of the Bay Tea Company. He and his group had tried to set up a computer-based classified ad system in Los Angeles and were run out of business by the L.A. Times, making use of legal restrictions that applied to everyone except newspapers (e.g. selling cars without a dealer’s license).

In The Journal of the Bay Tea Company, Beatty suggested ‘gatekeepers’ who provided a kind of human reference function. Efrem Lipkin passed this paper around among Community Memory members when we started, so we were all familiar with it, though I could not locate a copy now if my life depended on it.

I’ve kept the idea alive and will attempt to implement it in Version 4 of Community Memory, whose design I will be resuming right after the book stabilizes. I have added to it the concept of what I originally called ‘The Inspectorate’, which I was informed by Dr. Poerksen in his book Digital Fever was really just journalism!

I’ll have to design these functions into not only the technical operation of the system but also into its economy. Users would be able to subscribe to one or more gatekeeper to gain a certain level of access to ask for their help, and likewise the journalists would need to participate in an economic support stream.

I would in this way try to create a viable small community that lives in and around the technical system, with human feedback paths that would tend to keep it viable and stable. Not a simple task that can be dashed off in an afternoon, but without doing it the system would be doomed.

The embedded human aspects qualify this as a ‘golemic’ system as opposed to a ‘robotic’ system – something that I explored in the 1979 Journal of the West Coast Computer Faire (‘The Golemic Approach’), which postulates ‘golemic’ systems that incorporate humans into their feedback paths as counterposed to ‘robotic’ systems which have no human component in their feedback paths. It’s the reason I named my corporation ‘Golemics, Inc.’ – a reaction to Norbert Wiener’s book God and Golem,
Incorporated.

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What are Web3 Oracles? An Introduction

Introduction

OK Computer… let’s imagine you’re a developer who’s created a smart contract that’s living on a blockchain like Ethereum or Cardano. It’s really good at executing pre-programmed instructions on-chain, but it’s sandboxed and can only react to conditions that occur on-chain, and has no idea what’s happening in the outside world.

So you need real-world data to make its way on-chain and into Web3 in real-time: that’s where crypto oracles come in – they are your eyes and ears to the real world, feeding you the information you need to make decisions and take actions.

Crypto oracles, also known as blockchain oracles, are a vital component in the blockchain machinery. They solve a critical problem: how do you get real-world data into a closed blockchain system? Without oracles, smart contracts would be like computers without an internet connection – functional, but severely limited in what they can do.

What Exactly are Blockchain Oracles?

At their core, blockchain oracles are simply data feeds. They act as bridges between blockchains and the outside world, allowing smart contracts to access and respond to real-world information. But oracles aren’t just simple data pipelines – they’re responsible for querying, verifying, and authenticating external data before delivering it to smart contracts.

Think of oracles as trusted messengers. When a smart contract needs to know something about the outside world – like the current price of Bitcoin, the winner of an election, or whether it rained in New York today – it sends out a request. The oracle then goes out, gathers that information from reliable sources, makes sure it’s accurate, and brings it back to the smart contract.

This might sound simple, but it’s a crucial function and very difficult to get right. Blockchains are designed to be closed systems for security reasons. This isolation is great for maintaining the integrity of the blockchain, but it also means that smart contracts can’t naturally interact with anything outside their network. Oracles solve this problem, allowing smart contracts to respond to real-world events and conditions.

The importance of oracles becomes clear when you consider the potential applications. With access to real-world data, smart contracts can:

  1. Execute trades based on market conditions
  2. Release insurance payouts when certain events occur
  3. Adjust supply chain operations based on real-time information
  4. Settle bets on real-world outcomes

By providing this vital link to external data, oracles dramatically expand what’s possible with blockchain technology. They’re a key component in creating what’s often called the ‘verifiable web’ – a system where users can understand exactly what’s happening within an application and maintain control over their assets, all while interacting with real-world data and events.

How Do Blockchain Oracles Work?

Let’s break down the process of how an oracle typically operates:

  1. Data Request: A smart contract says, “Hey, I need some information!”
  2. Oracle Activation: The oracle perks up its ears and says, “I’m on it!”
  3. Data Collection: The oracle goes out into the world (or the internet) to find the requested information.
  4. Data Verification: The oracle checks and double-checks that the information is correct.
  5. Data Transmission: The oracle sends the verified information back to the smart contract.
  6. Smart Contract Execution: The smart contract says, “Thanks! Now I can do my job,” and executes based on the received data.

Some advanced oracle systems, like Chainlink, use a more complex process involving multiple sub-contracts to ensure data reliability and security. It’s like having a team of fact-checkers instead of relying on a single source.

An Oracle For Every Occasion

Just as there are many types of information in the world, there are various types of blockchain oracles:

  1. Software Oracles: These pull data from online sources like websites, databases, and servers. They’re the go-to for things like price feeds, exchange rates, and digital information.
  2. Hardware Oracles: These are the real-world explorers. They interface with the physical world, collecting data from things like sensors, barcode scanners, or other IoT devices. Imagine a smart contract that needs to know the temperature in a shipment of vaccines – that’s where a hardware oracle would come in handy.
  3. Human Oracles: Sometimes, you just need a human touch. These oracles rely on human judges to provide information. They’re useful for things that require human judgment or interpretation.
  4. Inbound and Outbound Oracles: Inbound oracles are like importers, bringing external data onto the blockchain. Outbound oracles are exporters, capable of sending information from the blockchain to the outside world.
  5. Compute-Enabled Oracles: These are the brainiacs of the oracle world. They perform complex computations off-chain and deliver the results to smart contracts, enabling more advanced functionalities.
  6. Cross-Chain Oracles: These are the diplomats, facilitating communication and asset transfers between different blockchain networks.

Overcoming the Oracle’s Dilemma

While oracles are incredibly useful, they’re not without their challenges. The main issue is known as ‘the oracle problem’, (like crypto’s Byzantine General Problem) and it boils down to this: How can we trust that the data provided by oracles is accurate and hasn’t been tampered with?

This is a big deal because oracles are essentially reintroducing an element of trust into a system designed to be trustless and without the need for an intermediary. If an oracle is compromised, it could feed false information to a smart contract, potentially leading to significant losses or other issues.

To tackle this problem, the blockchain community has come up with several solutions:

  1. Decentralized Oracle Networks: Instead of relying on a single oracle, these networks use multiple independent nodes to fetch and verify data. It’s like getting a second (and third, and fourth) opinion.
  2. Reputation Systems: These keep track of oracles’ past performance, helping users choose reliable data providers. It’s like a Yelp for oracles.
  3. Crypto-Economic Incentives: These systems reward honest behavior and penalize dishonesty within the oracle network, creating a financial incentive for oracles to stay truthful.
  4. Hardware-Based Security: Some oracles use secure hardware components to protect the integrity of data processing, adding an extra layer of security.

Real-World Oracle Use Cases

The applications of blockchain oracles are vast and growing. Here are some areas where oracles are making a big impact:

  1. Decentralized Finance (DeFi): Oracles are the lifeblood of DeFi, providing price feeds and market data. Without oracles, decentralized exchanges, lending platforms, and synthetic asset protocols would be flying blind.
  2. Insurance: Smart contracts can use oracle data to automatically process claims. Imagine an insurance policy that pays out automatically if your flight is delayed – that’s the power of oracles in insurance.
  3. Gaming and NFTs: Oracles enable the creation of dynamic NFTs that can change based on real-world events. They also provide verifiable randomness for blockchain-based games, ensuring fair play.
  4. Supply Chain Management: Oracles can feed IoT sensor data into blockchain systems, enabling real-time tracking and verification of goods. This can help in everything from ensuring the food is fresh to verifying luxury handbags are authentic.
  5. Prediction Markets: Crypto betting platforms rely on oracles to determine the outcomes of events and settle bets accordingly. Whether it’s predicting election outcomes or sports results, oracles play a crucial role (and hacking or duping the oracle could make a cybercriminal millions!)
  6. Cross-Chain Interoperability: Oracles facilitate communication and asset transfers between different blockchain networks, helping to create a more interconnected blockchain ecosystem.
Credit: Tesfu Assefa

The Oracle All-Stars: Leading Projects

Let’s look at the projects that lead the pack among blockchain oracle solutions:

  1. Chainlink (LINK): The heavyweight champion of the oracle world, Chainlink is widely adopted and provides data feeds for a vast array of blockchain applications.
  2. Pyth Network (PYTH): This Solana-native newcomer specializes in high-fidelity, real-time financial market data. It markets itself as a next-gen version of LINK and has been getting a lot of adoption
  3. UMA (UMA): UMA offers oracle solutions for DeFi products and synthetic assets. They’ve introduced the concept of ‘optimistic oracles’, which assume data are correct unless challenged.
  4. API3 (API3): This project focuses on direct API integration with smart contracts, aiming to cut out the middleman in the data delivery process.
  5. Band Protocol (BAND): A cross-chain data oracle platform, BAND has been around as long as Chainlink has. It enables smart contracts to interact with real-world data across different blockchains.

Honorable mention: Supra Oracle

The Future is Bright (and Data-Rich)

As blockchain technology continues to evolve, oracles will become even more critical. Here’s what we might see in the future:

  1. More sophisticated decentralized oracle networks with enhanced security and reliability. Some new chains like Sui and Aptos are already moving away from the industry-leading oracles and instead are building their own chain-specific oracles.
  2. Increased integration with IoT devices and real-world sensors, bringing more of the physical world onto the blockchain.
  3. Advanced cross-chain communication protocols enabled by oracles, creating a more interconnected blockchain ecosystem.
  4. The development of industry-specific oracle solutions tailored to particular use cases, from healthcare to real estate.

Wrapping Up

Blockchains compute on pure logic and mathematics, existing in the Platonic world of forms. Oracles bridge the gap to the big bad world of real data. They enable smart contracts to break free from their blockchain boundaries and interact with the world in many meaningful ways. 

The oracle problem isn’t going away. As more money flows through systems that depend on oracles, more hackers will put more effort into duping the oracle to pay out on a losing horse. Ongoing innovation in oracle technology will be needed to address these issues. As we move towards a more interconnected and decentralized future, oracles will play a pivotal role in expanding the capabilities of blockchain systems, and fostering the growth of decentralized applications across various industries.

So the next time you use a DeFi application, play a blockchain game, use a Crypto AI product or interact with any smart contract that seems to magically know what’s happening in the real world, remember to tip your hat to the humble blockchain oracle. They’re the ones making the magic happen behind the scenes.

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Starship’s reentry sonic boom in a political storm

A few days ago I watched the epic fifth flight test of Starship, the giant SpaceX rocket that, Elon Musk’s hopes, will one day take human colonists to Mars.

I watched the flight test live via X, including its most critical moment: the catch of the Super Heavy booster. Commentator Katherine Boyle called it “The Fall of the Century” and said that it “restored faith in the American Dream.”

Visible sonic boom as Starship returns to Earth (Credit: Liv Boeree/YouTube).

Liv Boeree has captured the last seconds of the return of the Super Heavy booster in this video. The video shows a visible (and audible!) reentry sonic boom.

This was a very ambitious and perhaps risky test. In fact, SpaceX made the final decision to try and catch the booster only minutes before the actual catch. Any number of small technical glitches could have turned success into failure. It’s difficult to escape the impression that the universe loves Elon Musk and wants us to advance rapidly on the road to the planets and the stars.

The stunning achievement of SpaceX has been hailed as a major spaceflight milestone and praised by space experts, public figures, and politicians from all over the world. With one very notable exception though: the President and Vice President (and presidential candidate) of the United States.

Boom over troubled waters

The waters that we can see in the video are calm. But Elon Musk’s giant rocket returned to the troubled waters of a political storm centered on Musk’s cultural and political positions.

“Musk mania in the media this month has reached a level of uncontrollable hysteria,” legal and political commentator Jonathan Turley posted to X.

Turley has written a scathing indictment of the pundits and politicians who are unleashing unhinged attacks on Elon Musk.

Turley reports that California Coastal Commission has rejected a request from the Air Force for additional launches from Vandenberg Air Force Base because they don’t like the political positions of Musk.

The incident was covered by The Los Angeles Times. The California Coastal Commission has an environmental mission, but there isn’t much about the environment in the LA Times story. Rather, the story reports one after another personal attack on Elon Musk by representatives of the Commission, such as:

“We’re dealing with a company, the head of which has aggressively injected himself into the presidential race… Just last week that person was talking about political retribution… Elon Musk is hopping about the country, spewing and tweeting political falsehoods…”

These remarks by several Commission officials, video recorded and ridiculed by Greg Gutfeld, seem to reflect personal animosity based on partisan politics rather than anything even remotely related to the environment.

Turley reports many other rabid attacks on Elon Musk by well-known public figures, some even calling for his arrest and deportation.

Where does all this hatred come from?

Free speech and Donald Trump

Elon Musk has become a major topic of discussion because he’s allowing more free speech on X and he’s vocally supporting Donald Trump.

“I describe Musk as arguably the single most important figure in this generation in defense of free speech,” says Turley. “The left will now kill jobs, cancel national security programs and gut the Constitution in its unrelenting campaign to get Musk. His very existence undermines the power of the anti-free speech movement. In a culture of groupthink, Musk is viewed as a type of free-thought contagion that must be eliminated.”

I totally agree with Turley (and Musk) on the paramount importance of free speech. Turley has written a book titled “The Indispensable Right: Free Speech in an Age of Rage” (2024).

Musk’s bet on Trump seems a dangerous one: if Trump doesn’t win the upcoming elections in the U.S., it seems inevitable that the government will be very hostile to Musk and all his companies and projects for the next four years.

At this moment, the upcoming elections in the U.S. seem a very tight race.

The polls slightly favor one of the two main candidates, and the betting markets slightly favor the other. Of course, this could change next week, or tomorrow, or anytime before the elections. I don’t rule out the possibility that one of the two main candidates could win in a landslide. Neither do I rule out the possibility that the winner could win with only a very small margin, so small that half of the U.S. population will dispute the results of the elections.

Credit: Tesfu Assefa

Possible political outcomes

Elon Musk has more than 200M followers on X. Probably half of them are bots and a very large fraction of the rest are casual followers who don’t pay attention to him or wouldn’t be influenced by what he says. But he can likely direct a few tens of thousands of votes to Trump, and this could be a decisive factor in some swing states.

There were indications that the FAA wouldn’t have authorized this flight test before the elections. Some commentators interpreted this an indication that the U.S. current administration didn’t want to risk a success of the flight test that would have given unwanted publicity to Musk before the election.

Then the FAA authorization came all of a sudden. I thought of a little conspiracy theory: perhaps the administration green-lighted the flight test hoping for a catastrophic failure that would, they hoped, reduce the public appeal of Elon Musk. But if so, their move backfired catastrophically! If anything, the spectacular sonic boom of Starship is likely to bring a few more votes to Trump.

Whatever the result of the elections, the U.S. will still be a very divided country afterward.

But spaceflight is an endless source of pride and hope that transcends petty partisan politics. I hope the next U.S. administration, whichever it is, will stay on the path followed by the Trump and Biden administrations.

NASA administrator Bill Nelson praised SpaceX after the booster catch, affirming the plan to go “to the South Pole region of the Moon and then on to Mars.”

This is the right spirit! And I hope the U.S. space program will have bipartisan support. This would show that, even today, honest politicians of different camps can work together and negotiate viable paths to the common good.

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AI Deepfake Tool ProKYC Cracks Crypto Exchange Authentication

Two AI tools were showcased last week: Elon Musk unveiled his vision of self-driving cars, space rockets and strange robots for every occasion, and hackers countered with their own tools for creating the new world order. 

Cybersecurity firm Cato Networks has uncovered ProKYC, an AI-powered deepfake tool sold on criminal forums that bypasses the Know Your Customer (KYC) checks on cryptocurrency exchanges. 

This AI software represents a new leap in fraudsters’ ability to create fake identities, potentially undermining a key security measure in centralized crypto exchanges. This comes after five years of close collaboration between crypto exchanges and the authorities. The exchanges have been forced to crack down on anonymity, after U.S. authorities jailed exchange bosses like Changpeng CZ Zhao (Binance) and Arthur Hayes (BitMex) for failing to follow Anti-Money Laundering (AML) regulations. These AI advances are therefore bad news for parties trying to fight terrorism funding (TF) and blacklisted countries like North Korea’s state-funded Lazarus hacker group.

How ProKYC’s deepfake AI KYC works

ProKYC uses advanced AI to generate two crucial elements:

1. Fake government-issued ID documents (e.g., passports)

2. Deepfake videos matching these fake IDs

A counterfeit passport for sale on the dark web (Creidt: CATO Networks)

In a demonstration, ProKYC created a fake Australian passport and an accompanying deepfake video. This synthetic identity successfully passed the KYC protocols of Bybit, one of the world’s largest cryptocurrency exchanges.

The tool casually offers a comprehensive package including:

  • Camera emulation
  • Virtual emulator
  • Facial animation
  • Fingerprint generation
  • Verification photo creation

A counterfeit driver’s license for sale on the dark web (Creidt: CATO Networks)

Priced at $629 for an annual subscription, ProKYC claims to work on major platforms beyond crypto exchanges, including payment processors like Stripe and Revolut.

The role of KYC in Crypto

While most crypto folks hate it and the doxxing that it brings, KYC processes serve several critical functions in the cryptocurrency ecosystem:

  1. Fraud Prevention: Verifying user identities reduces the risk of fraudulent activities.
  2. Anti-Money Laundering (AML): KYC helps track the sources of funds, making it harder for criminals to launder dirty money through crypto platforms.
  3. Regulatory Compliance: Most countries are mandated by the Financial Action Task Force (FATF) to require crypto exchanges to implement KYC measures. It’s part of operating legally. If these countries don’t comply, they can be graylisted or blacklisted, opening them up for sanctions. 
  4. Trust Building: Robust KYC processes enhance the credibility of exchanges for both users and regulators. It shows proper due diligence has been done by the exchanges, and users have less fear they will get shut down or abscond with users’ funds. 

Typical KYC procedures can be tiresome, but have improved over the years to become more intuitive. Now they usually involve submitting government-issued identification documents and often include facial recognition checks. 

ProKYC threatens to render these safeguards obsolete, and throw the current best practices out the window. This could have a catastrophic effect on the crypto sector, with regulators in the USA constantly seemingly seeking any reason to tie it down with heavy legislation such as the Crypto Travel Rule, and the covert Operation Choke Point 2.0.

The Broader Threat Landscape

The emergence of tools like ProKYC has far-reaching implications:

1. New Account Fraud (NAF): With ProKYC, people can create fake but verified accounts, and use them to commit various forms of fraud. These accounts can launder dirty money and be used as ‘mule accounts’ to make transfers around sanctions.

2. Financial Losses: According to AARP, new account fraud resulted in over $5.3 billion in losses in 2023, up from $3.9 billion in 2022. Tools like ProKYC could exacerbate this trend.

3. Challenge to Security Measures: The sophistication of ProKYC poses a significant challenge to existing security protocols, potentially necessitating the development of new, more robust verification methods.

4. Wider Financial Sector Impact: Tools like ProKYC currently target crypto exchanges, but similar tools could potentially be used to bypass KYC measures in traditional financial institutions.

Detection and Prevention Challenges

Identifying and thwarting fraud attempts using tools like ProKYC presents a complex challenge. Etay Maor, Chief Security Strategist at Cato Networks, points out the delicate balance required: “Creating biometric authentication systems that are super restrictive can result in many false-positive alerts. On the other hand, lax controls can result in fraud.”

Potential detection methods include:

  1. Manual Verification: Human oversight to identify unusually high-quality images or videos.
  2. AI-Powered Analysis: Developing AI systems to detect inconsistencies in facial movements or image quality that might be imperceptible to the human eye.
  3. Multi-Layered Authentication: Implementing additional verification steps beyond document and facial recognition checks.

The effectiveness of these methods remains to be seen, as the AI technology behind deepfakes continues to advance rapidly.

Industry Response: Binance founders’ CZ’s Warning

The threat posed by AI-generated deepfakes has drawn the attention of prominent figures in the cryptocurrency world. CZ Zhao, released last week from prison, has issued a stark warning about the proliferation of AI-generated deepfake videos promoting cryptocurrency scams on social media.

Zhao cautioned on X (formerly Twitter):

There are deepfake videos of me on other social media platforms. Please beware!

Changpeng Zhao, former CEO and co-founder of Binance

CZ’s warning comes at a time when several high-profile individuals, including political figures and business leaders, have been impersonated using deepfake technology to promote fraudulent crypto schemes.

The use of deepfakes in crypto scams typically follows a familiar pattern: scammers create videos of well-known figures seemingly endorsing get-rich-quick crypto schemes, luring unsuspecting victims into transferring funds to specific wallet addresses. The promised rewards, of course, never materialize.

Of course, anyone that’s been using Crypto Twitter or Crypto YouTube over the last 18 months will be well familiar with them by now. Usually they come with some kind of countdown mechanism to pressure viewers into making a FOMO-induced mistake. 

Legal and Regulatory Implications

The rise of tools like ProKYC poses significant challenges for regulators and law enforcement agencies. In the USA, identity fraud can carry severe penalties, including up to 15 years imprisonment. However, the borderless nature of cryptocurrency and the anonymity provided by advanced AI tools make enforcement particularly challenging.

Regulators may need to reassess current KYC requirements and work closely with cryptocurrency exchanges to develop more robust verification methods. This could potentially lead to stricter regulations and increased compliance costs for exchanges.

Credit: Tesfu Assefa

Can AI KYC Crackers Be Stopped? 

As AI technology continues to mutate, both crypto exchanges and users must remain vigilant and adaptable. For exchanges, this may mean investing in more sophisticated AI-driven security measures and potentially rethinking traditional KYC processes. Some possible strategies include:

  1. Behavioral Analysis: Monitoring user behavior patterns to detect anomalies that might indicate fraudulent activity
  2. Blockchain Analysis: Leveraging the transparent nature of blockchain technology to track and analyze transaction patterns.
  3. Continuous Authentication: Implementing ongoing verification processes throughout a user’s account lifecycle, rather than relying solely on initial KYC checks.

For users, awareness of these threats and a healthy skepticism towards too-good-to-be-true offers remain crucial. Education about the risks of deepfake scams and how to identify them will be increasingly important.

Collaboration between technology experts, security professionals, and regulators will be essential in developing robust defenses against these mushrooming threats. 
As the battle between security measures and fraudulent techniques continues, the integrity and legality of the cryptocurrency ecosystem – and even the legality of certain artificial intelligence methods – can come under closer scrutiny, especially as U.S. authorities are devising AI safety frameworks. Pro-anonymity crypto users might welcome this latest crypto malware, but the authorities won’t. ProKYC presents a new threat to crypto’s legality that must be treated with the utmost of urgency.

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