After its birth in 2009, Bitcoin ruled the cryptocurrency space as the only digital asset on the market.

But not for long.

After seeing BTC’s success, altcoins have appeared on the crypto market to introduce their own digital asset solutions.

But what are altcoins, what are their purpose, and what is the major difference between an alternative cryptocurrency and Bitcoin?

We will find out in this article!

What Are Altcoins?

Before deep-diving into our topic, let’s first define “altcoin.”

Altcoin, or alternative digital asset, is a term used to describe cryptocurrencies other than Bitcoin.

The reason for the name is pretty straightforward, as BTC is often viewed as the original cryptocurrency, while other digital assets provide alternative solutions to crypto users.

In addition to being the original cryptocurrency, Bitcoin has been dominating the digital asset industry. The BTC dominance index – the metric that measures Bitcoin’s share from the total crypto market cap – currently stands at 63.7%.

According to CoinMarketCap, there are nearly 5,400 cryptocurrencies on the market, and none of them have managed to take over Bitcoin’s leading position since the inception of the digital asset industry.

The Brief History of Altcoins

The history of Bitcoin started in 2009 when the mysterious Satoshi Nakamoto created the world’s first cryptocurrency.

But when did altcoins appear on the crypto market?

2011 marks the birth of altcoins when Namecoin (NMC) emerged as the first cryptocurrency ever created after Bitcoin.

Namecoin has an ambitious goal to replace the domain name system with a decentralized network, which allows users to register domains for a small fee, which is paid in cryptocurrency.

While Namecoin was the first digital asset after Bitcoin, its position as the second-largest cryptocurrency was soon taken by other altcoins.

One of them is Litecoin (LTC) – a cryptocurrency that is very similar to Bitcoin – that also launched in 2011.

Unlike Namecoin, LTC – which features a higher supply and transaction speed than Bitcoin – managed to stay among the top ten cryptocurrencies by market capitalization since its creation, standing at position seven at the time of writing this article.

In August 2013, Ripple (XRP) joined the ranks of cryptocurrencies, using the “OpenCoin” name at the time for its payment network.

Ripple has since partnered with numerous financial institutions and payment services – such as MoneyGram, American Express, and Santander – while featuring the world’s third-largest cryptocurrency by market cap.

Let’s jump ahead to one of the most important events in the history of altcoins: the birth of Ethereum in July 2015.

Ethereum is a decentralized platform where users can deploy smart contracts – self-executing agreements between two or more parties in the form of computer code – and run decentralized applications (DApps).

The platform also allows crypto projects to issue their own Ethereum-based altcoins via the ERC-20 token standard. As a result, the number of altcoins skyrocketed soon after Ethereum’s birth.

Furthermore, the ERC-20 standard was commonly used by many crypto projects that had launched Initial Coin Offerings (ICOs) for fundraising, allowing blockchain startups to issue their tokens and sell them to investors in exchange for major digital assets.

Since then, thousands of new altcoins have appeared on the market, providing the crypto industry with new use-cases and innovative solutions.

Altcoin vs. Bitcoin: What’s the Difference?

To see the difference between altcoins and Bitcoin, it’s important to take a deeper look at BTC first.

Bitcoin 101: The Basics

As per the original BTC whitepaper, Bitcoin operates as a peer-to-peer (P2P) electronic payment system where users can transact cryptocurrency in a decentralized way.

Since there is no central authority in the blockchain network, users can avoid censorship while taking charge of their finances.

Also, Bitcoin’s network is maintained by numerous miners from all over the world, which makes it more secure against hacker attacks than conventional systems that use central servers to operate.

Unlike the banking system, Bitcoin lacks third parties, which allows the blockchain network to feature low-cost and fast transactions.

As the maximum coin supply is capped at 21 million, investors often consider BTC as a decent store of value that has no to minimal correlation with general market assets.

Furthermore, BTC possesses one of the highest liquidity among cryptocurrencies as well as the lowest levels of volatility compared to non-stablecoin digital assets.Because of these reasons, Bitcoin is considered one of the lowest risk crypto assets for investors.

Due to the benefits mentioned above, Bitcoin has established a great reputation for itself as the world’s original cryptocurrency while featuring a decent infrastructure and a large community of active supporters.

Bitcoin’s Limitations

However, Bitcoin has some limitations, which prevent it from being used as the universal (and only) cryptocurrency in the digital asset space.

First, BTC’s use-cases are limited. Apart from sending and receiving crypto payments and holding the asset to hedge against general market risks, Bitcoin is rarely used for commercial purposes.

Also, the algorithm used to reach consensus in the Bitcoin network, Proof-of-Work (PoW), is highly energy-intensive as it requires miners to continuously operate their equipment to secure the blockchain.

While Bitcoin mining uses more energy in a year than Finland, due to the inefficiencies of the PoW consensus algorithm, the BTC network faces issues of limited scalability.

Compared to traditional payment networks like Visa and Mastercard that can process thousands of transfers per second, Bitcoin only has the capabilities to process a maximum of seven transactions per second (TPS).

As a result, there’s an increased risk of network congestion in the Bitcoin network – which often results in excessively high transaction fees and long processing times.

Altcoins to Empower Crypto With More Use-Cases

Due to Bitcoin’s limitations, altcoins have appeared on the market with the ambitious goal of empowering the crypto space with more use-cases.

To date, many successful altcoin projects have delivered value to crypto users.For example, Ethereum supercharged its blockchain platform with smart contracts and DApps to provide new functionality to cryptocurrencies.

As a result, Ethereum is one of the busiest blockchain networks, featuring nearly 900,000 transactions every day.

Due to Ethereum’s features, decentralized finance (DeFi) – a fast-growing movement in the crypto space to create decentralized alternatives to traditional finance solutions (e.g., lending, borrowing, insurance) – has become a reality.

Higher Risks but Increased Profitability

Investing in legitimate altcoins often comes with a higher potential for greater profits for investors.

However, compared to Bitcoin, altcoin investments usually bear increased risks; as such, Altcoins have much lower market capitalization than Bitcoin.

While major altcoins should be fine, the ones with lower market caps and limited liquidity could carry high risks of market manipulation (e.g., pump and dump schemes), volatility, and fraud.

Furthermore, some altcoin projects – especially a part of those that launched their token sales during the “ICO craze” of 2017-2018 – are dishonest about their goals or their products.

Unfortunately, several altcoin projects couldn’t deliver on their promises after their token sales ended. And even some of those that tried to do their best have failed to satisfy investor demands.

What Is Altcoin Mining and How Does It Differ From Bitcoin Mining?

As mentioned before, Bitcoin uses the Proof-of-Work consensus algorithm, which requires miners to leverage their computational power to maintain the BTC blockchain.

For this, they purchase special mining equipment, called application-specific integrated circuit (ASIC) miners.

However, as ASIC miners are often expensive for the ordinary Bitcoin user, some altcoins utilizing the PoW consensus model deployed alternative mining algorithms to BTC’s SHA-256 to combat the dominance of ASIC rigs.

As a result, these altcoins can be mined with lower-end mining equipment (e.g., GPUs, CPUs, smartphones) that require a smaller investment from the user’s end.

Also, many cryptocurrencies have utilized consensus algorithms alternative to Bitcoin’s Proof-of-Work to solve the energy-consumption and scaling issues of BTC’s blockchain network.

While there are still validators in the network (who are miners in BTC’s case), most of these algorithms do not require users to physically use their computational power to maintain the system. Instead, they reach consensus by other means.

For example, the Proof-of-Stake (PoS) algorithm requires validators to lock a part of their tokens for a specific time to verify transactions and add new blocks to the distributed ledger.

What Are the Pros and Cons of Altcoins?

Below, you can find a table that includes the pros and cons of altcoins.

Pros

1. Higher potential for greater ROI
2. Legitimate altcoin projects add new value and functions to cryptocurrencies
3. Many altcoins utilize more efficient consensus algorithms than Bitcoin
4. Some altcoins feature highly scalable blockchains (e.g. Permission.io)

Cons

1. Increased risks of volatility
2. Some dishonest altcoin projects are run by scammers, while others have failed to deliver on their promises
3. Altcoins with small market caps and limited liquidity face increased risks of market manipulation

What Are the Different Types of Altcoins?

Now that you know the essentials about altcoins, it’s time to see their different types.

Major Altcoins

Examples: Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH)

This category includes those altcoins that have managed to carve out large shares of the crypto market.

Major altcoins often feature higher liquidity, lower volatility, as well as big communities of active users, and an already established infrastructure.

Due to these reasons – after Bitcoin – major altcoins are considered to pose the lowest risk to investors among cryptocurrencies.

Stablecoins

Examples: Tether (USDT), DAI, Digix Gold (DGX)

As most cryptocurrencies possess higher volatility than general market assets, many have criticized the crypto asset class for the risks digital assets pose to individuals and businesses who utilize them for everyday transactions.

To solve this issue, many crypto projects have introduced their stablecoin solutions, a cryptocurrency that has its value pegged to one or a basket of assets.

The most common stablecoins are pegged to major fiat currencies like the USD or the EUR so they can maintain low levels of volatility while taking full advantage of blockchain technology’s benefits.

Altcoins that have value pegged to other general markets (such as gold or silver) also fall in the category of stablecoins.

Utility Tokens and Coins

Examples: Status (SNT), Augur (REP), Tezos (XTZ)

Most altcoins are categorized as utility tokens.

These digital assets grant specific rights to their users. These could be anything from providing access to their platforms and services to giving discounts or special perks. The main goal of crypto projects that use tokens or coins is to incentivize users to power their ecosystems. In exchange, users can redeem the tokens or coins they gain on the crypto’s native platform or trade them on an exchange.

Utility tokens are often Ethereum-based altcoins that have been often issued with the ERC-20 standard during Initial Coin Offerings (ICOs) or Initial Exchange Offerings (IEOs).

Security Tokens

Examples: Blockchain Capital (BCAP), 22x Fund (22X)

Unlike utility tokens, security tokens grant altcoin holders a fraction of the project’s ownership.

Some crypto projects even provide security tokens to their investors that represent digital shares of the company and pay dividends to the holders.

In the latter case, the value of the digital asset is tied directly to the valuation of the company. Therefore, if the valuation of the firm grows, so will the security token.

As most security tokens – which are often distributed via Security Token Offerings (STOs) – have to comply with strict regulations, the risk of fraud is limited.

However, security tokens are quite rare among altcoins, and they haven’t reached widespread adoption within the crypto community.

Where Can You Buy Altcoins?

The easiest way to purchase altcoins is by utilizing a cryptocurrency exchange’s services.

On fiat-to-crypto exchanges, you can purchase BTC and a great share of major altcoins via bank transfers or credit cards.

On the other hand, if you want to buy altcoins with smaller market caps, you have to first exchange your fiat currency into a major crypto (preferably ETH or BTC).

Then you need to transfer your crypto to an altcoin exchange that supports the coin you want to purchase.

Below, you can see a simple step-by-step guide to make things easier for you.

Step 1: Register an Account at a Prominent Fiat-to-Crypto Exchange

The first step to buy altcoins is to register an account at a reputable crypto exchange where you can exchange fiat currency for digital assets.

Due to regulation, cryptocurrency exchanges – especially the ones that offer fiat-to-crypto trading – will ask for Know Your Customer (KYC) and Anti-Money Laundering (AML) documents.

After you have created your account at the exchange, submit the required documents to verify your identity and residence. Some services may also ask for further information, such as the source of your income.

After submitting your documents, the exchange will process and verify them, which usually takes a few days.

Step 2: Buy Crypto Using Fiat Currency

As soon as the exchange has verified your documents, you can start trading on the platform.

Before you purchase crypto, you have to first decide on the payment method you will use to fund your account.

The most convenient method to purchase crypto with fiat is by using a credit card as it usually takes a few seconds for your funds to appear in your exchange wallet.

On the flip side, buying crypto with a credit card is the most expensive method as exchange services charge a fee ranging from 3% to 5% for card transactions.

Furthermore, some crypto services use payment processors that place an additional charge (4-6%) on credit card transactions.

You can also choose to fund your exchange account via bank transfers. As there are no credit card companies or payment processors involved in the process, bank transfers are among the most cost-efficient methods to purchase crypto.

However, bank transfers could take several days to arrive, so this payment method is much slower than credit card payments.

The best way to speed up your transactions is to use a crypto exchange that supports local bank transfers (e.g., SEPA for EU countries or ACH for the US) as these usually take 1-2 working days to arrive at your account.

After selecting your preferred payment method and funding your account, head to the trading page on the exchange platform, choose your crypto-fiat currency pair (e.g., BTC/USD), set the number of coins you want to purchase and execute the transaction.

Step 3: Transfer Crypto to an Altcoin Exchange

After you have your crypto ready, the next step is to register an account and verify it at an altcoin exchange. The process should be identical or very similar to fiat-to-crypto exchanges.

When you are done, transfer your crypto from the first exchange to the altcoin exchange service.

Copy-pasting your wallet address or scanning the QR code of your wallet (when you are on mobile) is recommended when transferring your crypto.

Be sure to double and triple-check your wallet address before sending your coins to ensure that everything is correct.

After initiating the transaction, it usually takes a few minutes for altcoins to arrive while it could take up to 1-2 hours for your BTC to be credited to your exchange wallet.

Step 4: Trade Your Major Crypto to Altcoins

When your coins have been transferred to your wallet, it’s time to exchange them to your altcoin of choice.Head to the trading platform of the exchange and choose your preferred altcoin-major crypto pair.

After setting the number of coins you want to buy, execute the trade.

Don’t forget to withdraw your altcoins from the exchange to a secure wallet – where you own the private keys to your crypto wallet – to ensure the safety of your funds.

Summary

Bitcoin has established a reputation for itself as the world’s original cryptocurrency that could be used for decentralized payments and as a store of value.

On the other hand, altcoins fill the void that’s left by Bitcoin’s limitations, empowering the crypto industry with innovative use-cases.

Disclaimer: The content of this blog is for general informational purposes only and is not intended to provide specific advice or recommendations for any individual or on any investment product. It is only intended to provide education about the cryptocurrency industry. Nothing in this post constitutes investment advice or any recommendation that any cryptocurrency or investment strategy is suitable for any specific person. Do your own research thoroughly before making any investments of any kind.

You probably do not know what data you own, and you probably have no idea where most of your personal data is. If you want to know, read on—although as with most questions like this the answer is not always simple.

The Possibilities of Data Ownership

Let’s begin by discussing whether you should care about your personal data.

Right now, at the time that I’m writing this, there are only a few ways for individuals to control their data and use it productively. That’s right now, but as time marches forward, that will change.

Think of it like this:

Your personal data has value.

Skilled hackers make a handsome living from stealing and selling personal data. Credit score companies run their businesses off it. eCommerce and social media sites make billions by harvesting it to sell ads.

We at Permission.io are on the side of the angels. We enable permission.io members to earn from their data. They earn ASK coins by watching promotional videos and ads, playing games, and pursuing various other activities in exchange for allowing advertisers to use their personal profile data.

Digital IDs will make a key contribution to Web 3.0, the next generation of the Internet. They will engender a global business opportunity for people and organizations everywhere.

There are two sides to this opportunity:

1. On the one hand, cybercrime will become less and less prevalent because individuals and businesses will be able to operate in a trusted way, authenticating one another whenever they interact.
2. On the other hand, the ability of individuals to control and share their data will allow businesses and consumers to interact directly, on an equal basis, eliminating middlemen and thus reducing the cost of establishing and maintaining commercial relationships.

The Personal Data World

Given that your data clearly has value, you may be wondering what the full extent of your personal data is. Here’s a way to think about it. There are four categories of personal data:

1. Credential data. This is your identity and all the documents associated with it that act as credentials: birth certificate, social security number, passport, driving license, credit and debit cards, memberships and subscriptions, and so on.
2. Title data. This refers to data that proves ownership of something, whether it be land, a property, a car, or mobile phone. When you sell something you own you transfer its title to another owner. So this is data whose ownership can change.
3. Digital Possessions. This comprises photographs and videos you have taken and saved, plus ebooks, music, and videos you have bought. You can think of these as self-defining titles, as you could sell them if you felt inclined.
4. Your historical record. The fourth kind of data is your historical record, including such things as your educational record, your health record, your employment record, the history of everything you ever bought or sold, and even the web links that record which web pages you have visited. This data is valuable. In fact, it is your historical data, which both big tech exploits, that is responsible for their advertising income.

You probably realize that this personal data of yours is not all in one place.

Some of it is on your mobile phone, your tablet, and your PC. Some of it is held by government organizations, educational and health care organizations. Some is held by banks, insurance companies, and stores like Walmart and Target. Some is held by social network sites like Facebook and Linked In, or by e-commerce sites like Amazon. Most websites that you visit are storing some of your personal data.

Many of these organizations, particularly social networks and search engine businesses will claim that you are trading the use of your data for the services they provide, although they rarely provide any detail of what they are doing with your data.

For example, if you send a specimen of your saliva to a genetic analysis company that traces your ancestry, they won’t tell you that they may sell your data to pharmaceutical companies.

Worse than that, there are data brokers who gather your personal data from publicly available sources: court cases, marriage records, property records, etc. and combine it with other personal data they buy: browsing history, social media data, and anything else they can get their hands on, including data from retail stores and even the Department of Motor Vehicles.

The Legal Situation

You might wonder then, whether the businesses that exploit your data have a legal right to do so. Ultimately, the ownership of anything is determined by the law. When it comes to physical things, like condos, computers, or cars, the law was settled long ago and the details do not vary much, country to country.

However, the idea of data ownership is fairly new, and the legislators of the world have only taken an interest in recent years. Consequently, the situation varies, country to country and it’s far too early to think of the law as settled.

The first countries to frame data ownership laws were the countries of the EU, with the enactment of General Data Protection Regulation (GDPR). It’s likely that laws in many other countries will be based on these regulations, for two reasons:

1. The EU framed these laws to apply to businesses everywhere that have any customers who are EU citizens.
2. The fines for violating these laws can be very heavy—as high as 4% of the annual revenue of the offending business.

A consequence of this is that many large businesses outside the EU have put procedures in place for conforming with GDPR. It will thus make life easy from an implementation perspective for other countries to create similar legislation.

Because your data is fragmented and stored in many different places, at the moment, it is difficult for anyone to assemble their data all in one place. In theory, it would be possible for European citizens to do so because, by virtue of GDPR, they can demand copies of their data from organizations that hold it. However, even if someone did that there is currently no easy way for them to assemble all their personal data in a single place. This will become easier when digital IDs become more common.

Anyway, if you are wondering whether you own your personal data, if you are an EU citizen, the answer is “Yes, it’s the law”.

Elsewhere, if you live in a democratic country, the answer may be “not yet, officially”. But if EU citizens own their data, then surely you will soon enough.

Think of it this way: If you ask people to vote on whether they own their data, who would ever vote “no”?

Nevertheless, there will no doubt be some local variations in such law—and in less democratic countries, it’s impossible to predict how it will develop.

In the US, there are a variety of initiatives in favor of data ownership. It has become a political issue, but luckily both parties seem to be in favor of people owning their data. For example, Sen. John Kennedy (R-La.) introduced Social Media Data Privacy Legislation in 2019. At the same time, Democratic presidential hopeful Andrew Yang included data ownership as part of his presidential campaign.

In late 2019, California enacted the California Consumer Privacy Act (CCPA). This regulates the use of Californians’ personal data and is similar to GDPR. Other states will no doubt follow suit as time marches forward.

And if you look towards the developing world, where data ownership is rarely thought about, governments of countries large and small are rapidly issuing their citizens with Digital IDs, based on biometrics. The populations of these countries may not have accumulated much personal digital data, but with a Digital ID and a mobile phone, they possess the foundation for doing so.

Data Ownership: The Bottom Line

In summary, while we do not yet inhabit a world where people have command of their personal data, the wind is blowing very strongly in that direction.

1. The exploitation of personal data by big tech has become increasingly visible. Social media is alive with negative reactions to every excess that is reported.
2. At a governmental level, data ownership has become law in the EU and other countries including the US have started to follow suit.
3. Data ownership has become a political issue in the US, as it has become clear that personal data has value.
4. Almost all developing countries are providing biometric Digital IDs for their citizens, helping to provide the foundation for Web 3.0.
5. The blockchain provides the secure technology required for Digital IDs and data ownership.

At Permission, we are developing Digital ID capability for our members and helping them to earn from their personal data.

The outbreak of COVID-19 is creating hardship and tragedy for millions of people around the globe, and my deepest condolences are with everyone navigating such shaky waters. It’s impossible to quantify the myriad personal and business tragedies transpiring around the world, and they will inevitably affect our society as a whole long after this has passed. From our daily routines, to our relationship with work, to what we choose to do in our free time, COVID-19 has undoubtedly changed our world forever.

The digitization of our lives is about to speed up dramatically, and these changes are the result of an acceleration of trends that have existed since “the world’s first popular internet browser” was released by Mosaic in 1993. You can find evidence of these trends in retail, eCommerce, education, internet infrastructure, and perhaps most importantly, the financial system that underpins our global economy. The last generation’s disruptions will be subtext under the chapters of this newfound acceleration.

References to the retail apocalypse are already commonplace. The US has more retail square footage than any other country in the world, measuring in at 23 square feet per capita, with European meccas like the UK, France, and Switzerland under a fractional 5 feet (1). What will happen when these stores reopen?

Or take the already ubiquitous world of online shopping. In two decades, eCommerce has grown approximately 17% per year, now representing $3.46 trillion in sales. That’s 16.4.% out of a global retail market of $21 trillion dollars (2). Buying habits have been forcefully changed, and it’s easy to estimate that at a minimum, eCommerce will double its previous growth rate. The market effects of a spike this steep are enormous. Shopping malls, small storefronts, and the landlords or banks that finance them will be shaken to their core. Assuming the free market is allowed to function, we will see a transition of labor, real estate, and financing as people optimize the use of those dislocated resources.

COVID-19 has upended education as well. The online education market is growing 9% per year and is currently at $187 billion globally (3). Since the closure of school facilities, I have seen my 9-year-old daughter continue to go to class each day while at home. Her school rapidly deployed Google Classroom, and her education hasn’t suffered whatsoever. It has been remarkable to watch her class of third graders participate in video calls with their teacher and deliver their homework entirely online.

Born out of 2008’s financial crisis, early Bitcoin was trading at a mere 6 cents per BTC. 10 years later and that figure is north of $9,000 (4). Hundreds of private currencies have crashed and burned in the years since due to a lack of legitimate utility, but the survivors will grow strong and combine with BTC to create a new financial system.

This acceleration of cryptocurrency adoption and the rise of distributed ledgers, decentralized applications, and digital identity technologies will result in a fundamental restructuring of our internet and will bring transparency and monetary value to previously nebulous sectors of our internet model, most tangibly in the world of user data.

Instead of an internet dominated by a few mega-companies owning and profiting from our personal data, Web 3.0 technologies will enable an opt-in, permission-based web economy that hands data ownership back to users. This will have vast implications in how data is collected and monetized and will support the growth of cryptocurrencies that enable value exchange. The undercurrents of revolt against data exploitation and profligate money printing are growing fast and with each passing year Web 2.0 and fiat government currencies become less justifiable.

And there has never been more evidence for the financial change needed than right now: the prior $2 trillion stimulus bill, and potential second $3 trillion stimulus bill coming, engulfs the $800 billion TARP bailout of 2008 in both scope and impact. With the Federal Reserve & Central Banks around the world committed to printing unlimited money, their actions continue to make the case for a private, digital, transparent, and, ultimately, trustworthy currency even stronger. A dollar isn’t worth much when the only limit of its supply is controlled by a tiny group of central banks and politicians.

Our financial system has evolved into a crony capitalist system where the biggest corporations and institutions can borrow cheap money, use it to purchase their own stocks, give a boost to their market value, and then avoid the consequences by getting bailed out when the system inevitably falters.

Retail and media were the most disrupted by the first two decades of the internet. The next wave of societal change will be driven by blockchain, cryptocurrency, and decentralized finance, which will disrupt our anachronistic financial system that relies on central banking and upgrade our internet to a more transparent, permission-based system — ultimately improving the lives of the 7 billion people who live on this planet.

—Charles Silver, CEOPermission.io

The world of marketing intelligence is changing.

The problems of data privacy and security have become such mainstream speak and such a mish-mash of concepts and proposed solutions that the facts themselves often become muddied.

It’s made worse as the technology seeking to solve these problems evolves at a breakneck pace, leaving few who truly manage to keep up with and understand the depth and implications of the growing field.

Today, we’re going to set the record straight and give you, the consumer, an in-depth look at the real issues and solutions to the “data rights” problem.

Privacy; everyone wants it.

It’s jargon in today’s technology dictionary that’s been stripped of its definition by anyone wanting to throw another buzzword into their value prop. While it’s certainly laudable that companies are concerned with protecting your data from prying eyes, the reality is that very little of your data is truly private in the Information Era of today.

Your phone apps log your location. Your ISP looks at what sites you visit. Your mortgage reveals your income and details about your financial life. Your electrical company measures how long you stay up at night. All of these factors create a data profile that companies use to track and target you, the consumer.

The first solution that many call for is further regulation. What most people don’t realize is that the government is interested in that profile of yours as well.

Certainly, the regulatory bodies will make a show of bringing Facebook and Google to answer for gathering data on you, but it isn’t going to deter what is arguably the most profitable model of their business because all of that data is actually really, really valuable to the government as well.

Look no further than reports from outlets like the New York Times, revealing how a single program associates you with every single photo you’ve ever been in across all of social media. With police using the program to scan every face on camera for suspected criminals, we’re already seeing the lines of privacy and safety blurred.

That’s right. This technology is already on the streets, powered by social media to identify and track citizens, even if they haven’t committed a crime.

And if you think the government is going to step in and regulate, realize that this AI-powered application is already used by over 600 law enforcement agencies. It’s a floodgate that’s been opened by individuals not aware of the full implications of what they offered and, sadly, your personal information becomes their bargaining chip.

Remember the saying:

If something is free, you’re the product.

It’s not just Facebook, Google, or various other applications you may use in your day-to-day activities. The growing trend of ‘unplugging’ from these services doesn’t change that DMVs, Power Companies, Map Services, ISPs, and countless others are all collecting these data points to bundle up and sell.

Fighting this, while functioning through normal everyday tasks, is almost completely futile given the sheer number of companies that are collecting information on you.

Instead, the conversation is shifting. Instead of companies profiting solely from the data you provide, consumers are calling for their fair share.

This is the core concept of data ownership.

If you are the owner of your data, then it is only right that you be compensated for the collection, sale, and/or transfer of that data.

Fighting this, while functioning through normal everyday tasks, is almost completely futile given the sheer number of companies that are collecting information on you.

Instead, the conversation is shifting. Instead of companies profiting solely from the data you provide, consumers are calling for their fair share.

Currently, it’s not so straightforward how consumers can take back ownership, or furthermore, be paid for, their data on an individual basis. But, that is changing. Blockchain technology is ushering in a new era and a new frontier for advertising that puts individuals back in control. Permission is trailblazing this new frontier with its blockchain and cryptocurrency (ASK).

Permission.io can be thought of as an “agent” for your time and data. Its platform makes it easy for you to own, control, and profit from your information by rewarding you for the revocable data you choose to share while engaging with the web as you normally do. From building your profile to being entertained to completing a successful shopping experience, the ASK cryptocurrency powers a trusted and fair transaction between you and the advertiser.

It’s through the advances of cryptocurrency and the increasing expectations of consumers to receive value in exchange for their data that the ASK ecosystem flourishes. Permission is building a future where you control who has permission to advertise to you and are compensated for the value you bring to that relationship.

Learn more about the ASK ecosystem and the platform Permission.io is building for the future by clicking here.

Permission announced today that it has signed an advisory agreement with RockTree LEX to provide strategic support as part of the company’s aggressive growth plans into Asia as they lead a new category of digital advertising called “Opt-in Value Exchange.”

301 – https://www.marketwatch.com/press-release/advertising-industry-being-disrupted-by-ask-permission-first-ad-blockchain-2020-02-21

The new batch of crypto assets brings the total number of projects listed on the registry to 54. It launched with 12 projects in November 2018.

301 – https://www.coindesk.com/messari-disclosures-registry-tops-50-cryptocurrencies-with-10-new-additions

A Permissioned World

Great endeavors throughout history, whether revolutions or businesses, can track their success based on their appeal to what is right. There is no doubt that the mass adoption of the world wide web and the explosion of opportunity that came with it inspired high hopes for a better world.

Sadly, many of the great enterprises of the dot-com era have abandoned that ideal and their moral compass. Once rooted in the freedom of information and ideas, their business models are now based on interruption, surveillance, data exploitation, fake bot activity, and a bewildering lack of transparency.

The public revelation of these behaviors has fostered an environment of mistrust in the very companies that most need to inspire honesty and loyalty.

In particular, internet advertising giants have honed their “free” products to take from you what can never be returned. They not only interrupt you and exploit your personal data but also seek to hijack your most precious resource: time.

IT IS TIME TO CHANGE THE MODEL.

Advertisers are as disappointed as you with the lack of trust on the major digital platforms. So we have created a Permission; an advertising environment where real users choose how to spend their time online and are valued and compensated.

At Permission, you own your data and your time, and you grant permission if you wish to share them. At Permission you receive value in exchange for granting that permission.

When advertisers know their potential audience actively chooses to watch their advertisements, they will abandon the attention-getting tactics that are part and parcel of the world of interruption marketing and begin to be a helpful part of users’ internet experience.

In the Permission Marketplace, we expect ads to be anticipated, personal, and relevant.

When the audience is rewarded for its time, advertising ceases to be adversarial. It becomes the first step in an effective and mutually beneficial relationship-building process. Permission facilitates transactions between those who want to engage.

The Permission Marketplace introduces both validated advertiser value and a consumer-friendly introduction to cryptocurrency. It is facilitated by the Permission token, a cryptocurrency that enables advertisers to pay Permission members directly and records its transactions on a dedicated blockchain.

PERMISSION IS TRANSPARENT, OPEN, AND SCALABLE. IN SHORT, IT CAN BE TRUSTED.

Our Mission

Our mission is to bring trust and transparency to a market that is craving it. We believe that building a bridge between advertisers and viewers is ethical and rational. Anyone who wishes to join us will swap the frustration of interruption for the right to earn from their data and their time.

We intend to make the world a better place. Join us on this journey.

By the end of WWII, the German economy was wrecked. Germany was split into four zones under the military rule of the Americans, British, French, and Russians. Hitler’s Reichsmark was still in circulation but had been rendered almost worthless by massive inflation in the latter stages of the war.

Because Reichsmark notes bore the swastika, the Western administration withdrew them from circulation, replacing them with Allied Occupation Marks, printed in the US.

Getting this temporary new currency to circulate was not easy — so difficult in fact that a barter economy soon evolved with cigarettes as the currency.

This unusual situation happened almost naturally. In Germany smokers’ ration cards had been issued from 1940 onwards, limiting smokers to a mere 40 cigarettes per month. Since most smokers have a more substantial appetite than that, a black-market for cigarettes soon flourished.

When the war ended, cigarettes were the most effective currency because they were already circulating, the supply was limited, and they were regularly burned — damping down inflation.

In June 1948, the Deutsche Mark was launched, with an airdrop of 40 DM to every resident of West Germany. At last, there was a reliable currency in circulation and it forced the black market into swift retreat.

While cigarettes could never be a sustainable currency, it worked surprisingly well for a few years among a population of over 30 million.

What Makes a Currency Viable?

By definition a currency is a medium of exchange — it must be exchangeable for goods. Until the dawn of the digital world, this severely limited what could serve as a currency.

It couldn’t be something that decayed easily, or could be forged easily, or was too large or too heavy and, above and beyond those practical details, people who used it needed to have faith in it. These conditions reduce the possibilities of what can serve as a currency considerably.

Historically, until the invention of printing, there are few examples of money that was not coins of one kind or another, made from iron, bronze, silver, or gold. The invention of the coin is lost in history as also, surprisingly is the invention of the account. There is evidence from 30,000 years ago of the use of tally sticks, as a primitive form of accounting.

You can think in terms of “exchange money” (coins for buying things) and “account money”, which is a store of value managed by some organization you trust.

In ancient Egypt, Babylon, India, and China, temples and palaces often included commodity warehouses that issued “certificates of deposit” as a claim on goods stored there.

Also, there is the idea of legal tender. A currency is a legal tender if, by law, you cannot refuse it as payment. Such currency is, of course, only legal within a given jurisdiction.

Finally, a currency needs to have a relatively stable value so that it can act as a store of value and a metric of value. Currencies that fluctuate in value fail because they are not reliable either as a store or a metric of value.

To summarize, ideally, a currency has the following characteristics:

1. It can be exchanged for goods or services, as the medium of exchange.
2. It can be used as a currency of account (if an appropriate mechanism exists).
3. It is proof against fraud.
4. It is highly portable.
5. It is legal tender.
6. It is a store and metric of value.

De Facto Currency

In the 16th century, the circulation of gold and silver coinage constituted a near-global currency. It was in use across the Eurasian landmass from Scandinavia to Korea.

It was viable because the coins were valuable of themselves. There was minimal coin value inflation, the coins could be tested for fraud, and they didn’t need government validation. The coins were portable (within reason) and on the trading routes, secure banks existed where large holdings could be deposited.

Consequently, merchants had faith in such coinage, and it was used extensively — and for many years, even after paper currency was introduced.

At various points in history, currencies have emerged and survived without the need for government imposition. And it looks like it may be happening again.

Cryptocurrencies may evolve into de facto currencies, and there may be nothing governments can do to prevent it, short of martial law.

Let’s consider it point by point:

1. Are cryptocurrencies an effective medium of exchange?

Demonstrably so. A number of them: Ether, Litecoin, Bitcoin Cash, Monero, and others are used as money, by a growing band of consumers and retailers (mostly eRetailers).

Their value can be readily known 24/7 by reference to crypto markets. In fact, they have a distinct advantage in this as the cost of exchange is very low.

Faith in these currencies as a medium of exchange is established.

2. Can they also be a currency of account?

In reality that is their strength. The crypto wallet and its contents are one.

As such, a crypto wallet is a bank account, a debit card, and currency all rolled into one.

They are a currency of account that requires no trusted third party to manage the account.

3. Are cryptocurrencies proof against fraud?

The record cries “YES”, and so does the mathematics that spawned them.

As far as anyone knows, they are impossible to forge. As with any other currency, it can be stolen.

But crypto is by no means as easy to steal as banknotes, which belong to whoever holds them.

4. Is cryptocurrency portable?

Yes — highly portable, more so that gold or silver. They are as portable as, say, a mobile phone or a banknote. If not more so.

5. Is cryptocurrency legal tender?

Not in the sense that people are obliged to accept it in payment. However, because of the existence of various fast exchange capabilities and crypto debit cards, it is as good as legal tender as you can easily exchange it for legal tender.

6. Can cryptocurrencies be used as a store and metric of value?

This is where, at the moment, many cryptocurrencies fail. Their value (as expressed in local currency) fluctuates far too wildly. They will not become practical currencies until such fluctuations tamp down.

We Have Thought Long and Hard About This Problem

At Permission, we looked at it this way: Most of the popular cryptocurrencies are alternatives to fiat currencies — they provide payment mechanisms.

Our currency, the Permission token (ticker: ASK), is a utility token. As such it is more like air miles or other such loyalty tokens, which derive their value from the commercial ecosystem in which they circulate.

So our currency may be different.

Time will tell.

In my last blog post, I discussed the value of personal data. I’ll return to that topic in a week or two’s time. Here, I’ll take a detailed look at the boundless and diverse world of advertising.

The Advertising Explosion

In 2006, Jay Walker-Smith, President of the marketing firm, Yankelovich, claimed that the average American was exposed to 5,000 ads per day, ten times as many as in the 1970s. According to Red Crow Marketing Inc., the current figure is somewhere in the range of 4,000 – 10,000.

At first glance, those figures seem to be a wild overestimate. But wait a minute, you were just exposed to two ads in the above paragraph and you probably never noticed. They were brand placement ads born of my need to declare my data sources.

Most of the ads you encounter in your typical day are of that ilk. Consider supermarkets’ shelves, for example. Supermarkets carry up to 46,000 products (according to the Food Marketing Institute) as a stroll through the supermarket is probably good for more than 1,000 brand exposures.

Let’s do some math. If we assume 4,000 ad exposures per day and a 16 hour day, then on average we will be exposed to an ad every 15 seconds. So half an hour in the supermarket could get you more than a quarter of your ad exposures for the day.

The Full Gamut of Ad Channels

Gotta catch ’em all:

1. TV. The TV is ubiquitous: at home, in the restaurant or bar, at the airport, on the airplane, and sometimes, even in the back of a cab. Cable TV broadcasts ads roughly 25% of the time, with a batting average of 48 ads per hour (according to MediaPost). To that, you can add the product placements in TV shows, or if you are watching sports, the virtual ads that overlay the TV images.
2. Radio. Expect to experience 20 ads an hour.
3. Billboards. There are somewhere between a half a million and three-quarters of a million billboards distributed out across America — although there’s none in Alaska, Hawaii, Maine, and Vermont, where the law has banished them.
4. Retail. Almost every shop window is an ad of a kind, and signage abounds. You can also throw display ads onto this category — in bars, at bus stops, at train stations, in buses, on trains, or in the metro.
5. At the cinema. The time the cinema says the movie starts is the time the 15–20 minutes of movie ads start, exposing you to about 70 annoying ads that are immune to a fast-forward button — and also movie trailers you might enjoy.
6. In the mail. About 48% of US mail is junk mail according to the USPS, giving an average of 848 pieces per household per annum, or 2.32 per day. Some of that junk mail is, of course, catalogs awash with ads.
7. Newspapers and magazines. You expect to see ads (and inserts) in newspapers and magazines. It’s been that way since Pontius was a Pilate, whether it’s American Angler or The New York Times. You’ll even find ads in Spiderman comics.
8. On PCs and laptops. With PCs, the main source of ads is email (and almost every other messaging app). Unsolicited junk email is roughly 90% of the total, although email filters can be more than 99% efficient so it’s not hard to keep under control. Of course, the web is awash with ads, display ads, pop-ups, ads on videos, and so on. Google estimates that roughly two-thirds of people’s searches are for products or services. Those are self-solicited although the rest are probably unwelcome. The use of ad blockers is prevalent and growing. It is currently estimated at about 40% of US PC users. One ad-blocking business, Bad Ad Johnny, estimates that the average internet user encounters 11,250 ads per month or 375 per day. About a third of those are likely to be encountered on social media.
9. On mobile devices. Smartphones furnish you the same collection of ads as the PC when you surf the web, but they also include apps with ads (pay for the app or we’ll plague you with ads), apps that are ads, and ads that know your location. They also enable spam telephone calls, as do landlines.
10. In video games. There are product placement ads in video games — of course, there are.
11. And everything else. So far, I’ve failed to mention planes towing ads through the sky, vehicles painted with adverts, wearable technology, ads on faxes (yes, they still exist), brands on your clothes and digital devices, messages on T-shirts, advertorial writing, and last but not least, shills and bots in chat rooms.

Did I miss anything?

Yes, I did. My bad. I failed to mention tattoo ads — renting out your skin — which was a thing about 10 years ago. The most successful walking talking billboards earned $220,000 or more, but sadly there was a scarcity of volunteer skin.

A Disturbance in the Force

There is a battle for human attention. Attention is a finite resource and advertisers can only capture so much of it. Red Crow Marketing Inc. estimates that the average person will only notice about 100 ads a day. If we experience 4,000 ads per day and absorb just 100, clearly 97.5% are wasted.

But 100 per day is not the figure we should be interested in. The figure that should interest us is the number of times per day that we seek the information an ad can provide, which is far lower.

Very few of the advertising channels listed above are permission-based — in the sense that you opt-in to receive the ads, rather than get interrupted by them. And that’s where the problem lies — and partly why we at Permission are pursuing a permission-based business model. The more aggressive the ads become, the more effort people expend in blocking them.

They throw junk mail away without opening it, tune out the radio ads, install email filters and ad blockers, record TV programs to fast forward past the ads, and so on.

There is something very wrong with this.

Effective permission-based networks like QVC on TV, Craigslist or Yelp on the web, or Groupon on mobile phones can and do exist — and they prosper. Permission-based ads work. And it should not be surprising.

Advertising is a natural aspect of consumption. Shoppers like to window shop, consumers like choice, and advertising opens up a door to the possibilities. We shouldn’t feel the urge to slam that door shut.

With the passage of GDPR, it has become an unstoppable force that is reshaping the ways that companies do business and how they interact with their customers. Yet in spite of its landmark importance, there is still confusion as to what exactly the consequences are for ordinary people.

So, let’s examine what your individual data rights are under GDPR.

You can summarize them with these words:

1. The right of consent
2. The right to access the data
3. The right to change data
4. The right to complain
5. The right to erasure
6. The right to portability

I’ll pick them off one by one, but remember that it is not a fine-detail description of the legal niceties — if you want that, follow the links. This article just explains each.

Individual Data Rights Under GDPR

1. The Right of Consent

Under GDPR, organizations cannot store an EU citizen’s data unless they give their unambiguous consent. There are some exclusions (see the Right to Erasure, later in this article). The precise words used in the regulations are: “freely given, specific, informed and unambiguous”.

Consent is not given if the organization requesting the data does not ask for it, or displays pre-ticked boxes that indicate consent. Those who haven’t explicitly opted in opt-in, have opted out. No matter what data they provided, the organization has no right to store it.

To make matters more awkward, consent must be given for each process applied to the data. So perhaps XZY Company stored my data so it could process my orders. That’s fine, but it cannot aggregate that data with other people’s data and start analyzing it unless I also agree to that. So it behooves companies to get all the permissions all at once.

GDPR also restricts the automated processing of personal data to analyze or predict an individual’s behavior. Specifically, the regulations restrict this activity if it will have a significant impact on an individual, such as in a hiring or credit decision. Many companies will have to adjust their business models around such restrictions.

And if you are hoping there’s a loophole for data already stored, there isn’t. If you never got permission, you now have to get it, both for storing the data and processing it.

Read More: Art. 7 GDPR

2. The Right to Access the Data

This is more complex and far-reaching than the word “access” implies.

First of all, the EU citizen has the right to ask whether an organization is holding and processing his or her data, whether they have had any interaction with them or not. Having discovered that this is the case, they have the same rights as if they had volunteered the information. They then have the following rights, as well as all the other rights described in this article:

1. Ability to access the data.
2. To know what data is held, and where it came from.
3. To know the purposes of the processing done on it.
4. To whom the data has been disclosed, including recipients in other countries or international organizations. If that is done, all the data rights have to be enforceable at the destination (see Art. 46 GDPR).
5. The time period the data will be stored, or if impossible to state precisely, the criteria used to determine that period.

Beyond that, individuals have the right to know of the existence of automated decision-making on their data, including profiling, and “meaningful information about the logic involved”, as well as the significance and the consequences of such processing for the data subject.

Or, to put it simply, if you are analyzing their data, you have to tell them exactly how and what the consequences will be for them.

Read More: Art. 15 GDPR

3. The Right to Change Data

The right to change data enables the individual to request that data, if incorrect, be corrected.

Additionally, companies will have to notify them of everyone to whom their data has been disclosed so they can get that copy of the data updated. Failure to comply with their request requires a company to explain the reason for not doing so, and it has an obligation to inform the user of their right to complain.

This could, of course, become complicated. The problem is dirty data. Nowadays, there is a considerable amount of dirty data, for a variety of reasons, including data entry errors by the data owner.

The problem is that incorrect data may have negative consequences for the data owner, for example, if it is part of a credit report.

Read More: Art. 16 GDPR

4. The Right to Complain

So, to whom will they complain? Individuals have the right to complain to a supervisory authority; there is at least one such authority in every EU country.

The situation will thus be a little difficult if your company hasn’t yet registered with an authority. The authority will provide guidance on what needs to happen. Their word will probably be final.

Read More: Art. 16 GDPR

5. The Right to Portability

Individuals have the right to request all personal data about them from an organization company holding their data. This must be transferred to them in a “machine-readable” format — so a CSV file will do.

For the EU citizen, this could be very useful if they wish to build a database of personal information. Just get all of it from every company or government department you gave it to. Nice!

Read More: Art. 20 GDPR

6. The Right to Erasure

The “right to erasure” has also been referred to as the “right to be forgotten”. This means that EU citizens can request the complete deletion of their data. The data must be deleted without “undue delay”.

So, my advice to EU citizens: If you want the data deleted, first go and collect it and put it into a personal database, then request deletion. However, there are exceptions you need to know about. You will not be able to get data deleted in the following situations:

1. Legal compliance. For example, banks in most jurisdictions are obliged to keep data for seven years, so your personal data will not be erased. Also, if you have a criminal record, don’t expect to get that expunged.
2. A “public interest”. For example in the area of public health, data archiving in respect of scientific, historical research or public interest or data supporting legal claims.
3. Paper data and microfiche data. GDPR only applies to digital information. Neither does it apply to technically impossible situations, such as when your data is held in a back-up file, but in that circumstance, no processing of your data is allowed. If it is restored, it must be deleted.

If a company makes your data public, and you wish “to be forgotten”, it is obligated to take reasonable steps to get other processors to erase the data. For example, when a website publishes an untrue story about an individual and later is required to erase it, it must request other websites that have republished the story to erase their copy of the story.

Of course, this only applies when it doesn’t conflict with freedom of expression laws. In short, you can’t suppress legitimate press.

Read More: Art. 17 GDPR

But What About the US?

US companies that are affected by GDPR are advised to consult with their insurance brokers to determine the impact of the regulations on their insurance programs. They need to discuss the coverage of GDPR violations and the logistics of insurance policies to pay into GDPR-regulated countries.

Yet for all of these data rights, they only apply to citizens of EU countries. So where does this leave the state of data privacy for US citizens?

On April 10th, Mark-have-I-said-I’m-sorry-enough-yet-Zuckerburg was facing a Senate Committee, pretending to sound responsible and issuing the occasional “mea culpa”. The senators, as one would expect, didn’t understand the technology side and spent most of their time trying to say something memorable.

Kudos went to Lindsey Graham (R-SC) for mentioning the word “monopoly”. This word strikes fear into the hearts of big company executives, and can make a social network CEO melt like that Nazi villain in Raiders Of The Lost Ark. But it didn’t.

Regulations Imminent!

Nevertheless: Personal data abused, elections interfered with, citizens outraged — no doubt we’ll soon see a convoy of regulations coming down the pike.

Politicians are filling the air with sound-bites that suggest imminent action and express noble goals (along party lines of course). One might get the impression that sometime soon, no single piece of personal data will ever be bruised or abused again. Dream on.

For one thing, the Facebook business model depends entirely on exploiting personal data, and no politician wants to be responsible for downing America’s sixth-largest company. So expect a poorly formulated “Privacy Bill of Rights” or “Bill of Privacy Rights” to emerge.

Subsequently, lobbyists will circle like vultures over roadkill until the traffic dies away, so they can dip their beaks into the impending legislation to “enhance” it. They will prevent any of the companies they represent (Facebook, Google, Twitter, et al) from losing a dime of revenue, and with a fair wind, they may actually turn it into a revenue opportunity.

That’s how it might have happened if the EU hadn’t ruined the game. Unfortunately for our beloved data pirates, the EU has set the bar for privacy legislation and it’s not a low one. American politicians may feel the urge to compete — but sadly they’re unfit.

Can America Beat the EU?

There’s a scant possibility that the US legislative system will get even halfway to where Europe is. They don’t have the players. The US legislative team has been performing abysmally of late — they haven’t won a trophy since the LA Dodgers last won the World Series.

But perhaps it doesn’t matter. Promising new teams are emerging from the newly formed crypto economy, and they may do the job on America’s behalf. They may even go further.

Crypto businesses that preside over personal data tend to give a damn about privacy. As new businesses that are de-facto-international, they’d be stupid to flout GDPR, so they don’t.

Some, like Permission, are going further than GDPR. Rather than explain the technology employed (it’s complicated), let me frame it in the terms I’ve used above to describe the EU’s personal data rights program.

We would like to enhance those handsome regulations in the following way:

1. The right to personal cryptographic control. You have the right to personal cryptographic control (by private key) of ALL your personal data and the right to provide permission for its usage at the item level.
2. The right to anonymity. You have the right to have your data anonymized when requested by others so that it does not include any personal data that identifies who you are (this may seem impossible to implement, but it isn’t because of the next right).
3. The right to zero-knowledge proof. You have the right to employ zero-knowledge proofs to provide credentials to preserve your anonymity.

Sound like a movement you could get behind? Join us at Permission.

The Story of Inflation and Hyperinflation

People don’t think much about currency; they just use it. They don’t notice a currency holding its value; they only notice when it doesn’t. Historically, the most frequent cause of a currency losing its value is: governments printing money.

To illustrate the effect, let’s consider a very simple example. There are 100 pencils for sale, and there is a demand for exactly 100 pencils. If there is $100 available to buy the pencils, the price will tend towards $1 per pencil. Increase the supply of dollars to $200, and the price moves towards $2. The supply of pencils and the demand for them did not change, but the supply of money did, and it pushed up the price.

In a big America-size economy with millions of people and millions of things to buy, the same thing happens. If the economy remains the same, but you increase the supply of money, the prices rise — which means that the value of the dollar falls.

If the change in value becomes noticeable, people will spend the dollars as fast as they can, because the value of the dollar is falling. If they don’t need to buy with their dollars, they will buy something that will keep its value (gold, silver, or whatever). The currency has become “debased”.

Such inflation occurs when a government prints money like it’s going out of style, and naturally, it does go out of style.

How Does the Fed Print Money?

In truth, it doesn’t print anything. You may picture the Federal Reserve commanding printing presses to spew out vast numbers of pristine 100 dollar bills. But that isn’t the mechanism “for money printing”. Paper dollars account for only about one-tenth of the dollar money supply.

The full dollar money supply includes sources of money that are rarely converted into dollar bills but could be: money in checking accounts, savings accounts, money orders, 24-hour money market funds, certificates of deposit, and so on.

When the Fed prints money, it does so by extending credit to (i.e., loaning money to) the banks and managing the interest rate they have to pay. The banks can then, if they so choose, lend that money to people or businesses and it will find its way into those various sources of money. That’s how the game is played.

Does This Mean the Fed Can Print as Much Money as It Pleases?

Not really. If you listen to the financial news once in a while, you’ll hear reports about the regular monthly meeting held by the Fed, what the Fed chose to do, and how the financial markets reacted.

If the Fed starts printing money in a big way, the markets will react negatively. The Fed prefers not to roil the markets unless it has no choice. If theFed wants to mess with the money supply it has to explain itself.

If the Fed Lends Money to the Banks, Do the Banks Have to Lend It Out?

No. In fact, they don’t have to accept the money at all. But lending is how banks make money. Typically, banks lend out more than they borrow from the Fed. They could lend out, say, ten times what they borrowed. This is called “fractional reserve banking.”

If the banks make good lending decisions and the borrowers payback, then everything is hunky-dory. Problems arise when banks make too many bad loans. That’s when banking collapses occur. That’s why banks are regulated.

So How Does That Compare to Cryptocurrencies?

Cryptocurrencies are not like that at all. Not even close.

With a cryptocurrency, there is no Fed. And there is no fractional reserve banking. Software controls the money supply and people never have a say in it.

With Bitcoin, for example, the money supply grows gradually — currently at about 3.85% per annum. It is slowing down. It will eventually come to a stop when 21,000,000 Bitcoin have been created.

The supply grows because (and only because) Bitcoin miners are paid in Bitcoin for mining blocks. The increase in the supply of Bitcoin is the payments made to miners.

Miners are also paid the transaction fees from each block. Eventually, when all the 21,000,000 Bitcoin have been created, the Bitcoin miners will make a living from transaction fees alone.

Other Cryptos

Different cryptos have different money supply growth rates. Most (like Litecoin and Ethereum) imitate Bitcoin and have a declining growth rate. Others, like Permission (ticker: ASK) and XRP (Ripple), have zero growth rates.

In each case, the blockchain ensures either that no new crypto can be created or enforces the rate at which the new crypto is created. The only currency in existence there is the cryptocurrency recorded on the blockchain.

Is It Possible to Have “Fractional-Reserve Banking” With a Cryptocurrency?

No. This needs to be well understood, because — aside from the automated nature of the crypto money supply — it is the critical difference between fiat currency and crypto.

With fractional-reserve banking, a bank borrows, say $1 million from the Fed. It then loans out, say, $10 million. $9 million are thus “created from nowhere”. Yes they are recorded in bank accounts, and they circulate around, and eventually, most of those dollars are paid back. So they exist, “sort of”.

But do you know what happens if the borrower cannot pay the bank back and instead goes bankrupt?

Those dollars disappear. They vanish as if they never existed.

That’s what happens in a banking crash. Too many loans go bad, and the bank itself goes bankrupt — unless the Fed lends it some money to stay afloat.

None of that can happen with a cryptocurrency, because the amount of currency created is always there on the blockchain. It may pass from one owner to another, but it is always right there.

Would It Be Different if the Dollar Was Backed by Gold?

The dollar was backed by Gold once. And so were other currencies. The Gold standard was first abandoned when the First World War broke out. The countries involved in the war could not afford the war, so they printed money to pay for it.

If your currency is backed by gold, it is exchangeable for gold. If you print money like a drunken sailor, people buy gold with it, your gold reserves are quickly exhausted and the currency collapses. So if you back a currency with gold, you just cannot afford to print money. With crypto it’s quite similar, you simply can’t print money.

Fiat and Crypto Are Staggeringly Different

People earn money, buy stuff with it, and squirrel it away under a mattress but understand very little about its nature. We hope to change that though, so provided below is a stepwise introduction to both money and cryptocurrency.

A Mild Dose of History

The alternative to money is barter, and when money fails — as it does in situations of hyperinflation (caused by moronic politicians believing you can print mountains of money without consequences) — barter takes over.

Then people have to find ways of swapping goods and services with each other and it’s complicated. The problem is that without money there is no unit of measure for value. You know this already.

You have an inner psychic mechanism that assigns value to things based on the currency you are familiar with: Dollars in the US, Balboas in Panama, Quetzals in Guatemala, and Dongs in Vietnam.

Cryptocurrency Exchange

Try changing countries. If you’ve ever done that, you’ll know it’s hard to adjust your sense of value because costs are different, taxation varies, trade barriers exist and different (cultural) values predominate.

Small tribal communities of hunter-gatherers can survive without money by sharing everything according to some established order, but this doesn’t scale well. Even in tribal societies that use barter, usually a “unit of value” emerges. This happens so naturally that some academics claim there are no pure barter economies.

The Measure of Value

The prime function of a currency, then, aside from payment is to provide a stable unit of value. Effective currencies are difficult to invent because people cheat. A good currency needs to be cheat-proof.

Many things have been tried as currencies, including:

1. Food (Salt, from which comes the word “salary”. Also cocoa beans, turmeric spice wrapped in coconut fibers. And incidentally, Parmigiano Reggiano and Parma Ham are still used as collateral at some Italian banks)
2. Cowries (she hoards seashells by the seashore)
3. Cigarettes
4. Coins — bronze, silver, and gold
5. Hard to forge paper portraits of presidents with numbers on them
6. Electronic records attached to a blockchain, using cryptography

And Now Something Different: What Is a Reserve Currency?

I do think some digital currency will end up being reserve currency of the world. I see a path where that’s going to happen.

I agree with Brain Armstrong (CEO of Coinbase) that a cryptocurrency will eventually become the world’s reserve currency. To think about what that means you need to know what a reserve currency is.

A reserve currency (sometimes called an anchor currency) is a currency is used in international transactions and hence a currency that is “global.”

There needs to be a unit of value to price internationally traded commodities (oil, copper, tin, wheat, cocoa, etc.). Right now, the US dollar is that unit.

The only other significant reserve currencies are the Euro, the Japanese Yen, and the British Pound. The dollar dominates (estimates suggest 62% of foreign reserves held in dollars, 20% held in Euros, with the Pound and the Yen at about 5%).

The human need to price things ensures that one reserve currency dominates. At the moment, it is the US Dollar. Before that, it was the Pound

Is There an Advantage to Being a Reserve Currency?

For a country, yes. Right now all nations (and most international businesses) hold copious quantities of dollars. The US gets to print them and other countries have to buy them. This enables the US to run a much bigger balance of payments deficit than any other country. A persistent balance of payments deficit in other countries soon impacts the value of their currency.

Since the end of WWII, the US has leveraged this to boost the US standard of living. The downside is that the US has built up substantial debt. In 1985, it ceased being a net creditor nation and became a net debtor nation — and the debt grew like bamboo in spring.

Everyone else was helping to finance the US standard of living.

Will it end badly?

Yes, it will, at some point. When those US dollars get homesick and fly back to the US, they will inflate the stateside supply of US dollars, which will, in turn, drive up prices. The natives will surely become restless.

What Is the Money Supply?

If you ask this question of most cryptocurrencies you get the same answer. The supply of the currency is determined by an algorithm. With some cryptocurrencies — the Permission Token and Ripple are examples — the money supply is fixed from the get-go. When that’s the case, the currency is said to be “pre-mined”.

So for crypto, either an algorithm determines the growth of the money supply, or it is fixed at birth. This is not the case with National currencies or “fiat currencies” as they are often called.

In case you didn’t know “fiat” is Latin for “let there be”. According to the Old Testament, the first recorded words of God were “fiat lux” (let there be light). The label “fiat money” is not a sarcastic term that emerged from the crypto community, but an Americanism dating back to circa 1870–75 pointing out that paper money has no intrinsic value.

This is the defining difference between cryptocurrencies and all other currencies. The money supply of a cryptocurrency is fixed and immutable. With all other currencies, including gold, the money supply is not fixed and immutable.

Some people have a deep faith in gold as a currency because the supply and its destruction (through loss and industrial use) are roughly the same and have been for a few centuries.

However, when the Spanish filched the Aztec and Inca gold, the supply of gold in Spain grew dramatically. There was gold-provoked inflation.

If new highly productive gold deposits were discovered at the bottom of the ocean or on a mineable asteroid or wherever it could happen again.

With crypto, the money supply is publicly displayed on a bullet-proof blockchain. It cannot be manipulated. The crypto money supply is thus easy to understand. With fiat currency, it is not, as we shall see.

What Are Notes and Coins?

When we speak of the fiat money supply there are four species; usually labeled M0, M1, M2, and M3. They live inside each other like Russian dolls.

The first of these, MO, is the easiest to understand; it is the coins and notes in circulation. This is what most people think of as money because you can touch and see it.

Most fiat money of this species. In the US such money accounts for about 8.3% of the dollars in circulation. It’s the same for most other currencies.

Curiously there is no equivalent of this kind of money with a cryptocurrency. This kind of money is “bearer money”. If you carry it, you own it. Nothing about notes or coins enable you to prove ownership.

Cryptocurrency is always held in a wallet and belongs to the wallet owner. Muggers cannot steal it from you.

Of course, hackers can steal it from you and fraudsters may find ingenious ways to lay their hands on it, but in either case, it will be because you took insufficient care of it — you allowed it to be vulnerable.

Paper notes and coins can be lost or destroyed. And that too is the product of carelessness.

Ragged, Worn, and Torn Notes

Paper notes wear out, provoking the mint to renew them with pristine replacements. To make money, you have to spend money. The perpetual printing activity costs about 5 cents (for $1 and $2 bills), about 10 cents (for $5, $10, $20, and $50 bills), and 12.3 cents for Benji’s.

It doesn’t sound expensive, but for every $1 bill it costs ¢1 to keep it in circulation and for a year, and as there are 11.7 billion such notes, were looking at over $110 million per annum just for $1 bills.

With cryptocurrency, there is no equivalent cost, and perhaps that is an advantage — or perhaps it is not. Paper money does not require electricity. It can be used when your battery dies.

Cryptocurrency is no longer new. To be honest it wasn’t new even a few years ago before cryptomania launched Bitcoin into the stratosphere.

Consequently, you might have thought that most of the cryptocurrency myths, misinformation, and flat-out wrong ideas that have orbited around crypto would have evaporated by now.

But no. Many still persist.

Perhaps this blog post will help to lay some of these myths to rest.

Myth 1: Crypto is not secure.

Blockchain technology has its tenth birthday this year in October if you measure its birth from the publication of Satoshi Nakamoto’s original paper. If you measure it from the release of the software, it occurs in January next year. Either way, the technology is nearly ten years old, is considered unbreakable (at least until quantum computers grow tall), and has never been successfully hacked.

The crypto-is-insecure lie is fake news formed from a chain of successful crypto-heists. Here are the most notable:

1. Mt. Gox Version 1.0: In 2011, a hacker using an unidentifiable user account made off with 25,000 Bitcoin, worth half a million in those days, and much more now. (Wallet security is much improved since those days.)
2. Silk Road, The Sequel: The feds closed the Silk Road in October 2013, and a doppelganger site appeared as if from nowhere. Sadly the security was not as good as the original. A hacker blew through it and cleaned it out to the tune of $2.7 million.
3. The Sheep Marketplace: The Sheep Marketplace opened at the same time as Silk-Road-the-Sequel, surviving a little longer before a marauding hacker got his hands on some ill-gotten gains. This was an epic heist, 96,000 Bitcoins worth about $56.4 million and the hacker had the cheek to manipulate user account balances so that it looked like nothing had happened.
4. Mt. Gox Version 2.0: After February 2014 when Mt. Gox finally shut its doors, 744,408 Bitcoin, worth $436 million) were missing. This hack had the added impact of crashing the price of Bitcoin.
5. The Pony Botnet: A botnet using trojan malware called Pony stole vast numbers of login credentials from 700,000 accounts, 85 of which had Bitcoin wallets. The hacker emptied them to the tune of $220,000.
6. The Demise of the DAO: The first smart contract on Ethereum was not so smart. It served the DAO (a Decentralized Autonomous Organization) and had a bug, The hacker who hacked it spirited away about $55 million. As a side effect, the Ether community forked the blockchain, but the crypto stayed stolen.

In every case, the crypto stayed stolen, but none of this can be blamed on a blockchain technology problem.

Myth 2. Cryptos are a scam, a shakedown — a Ponzi scheme, no less.

Ok, there have been many crypto-based fraudulent schemes. The most frequent and successful scam is the “Exit Scam”. It works like this:

1. Dream up a crypto idea that sounds feasible and claim it will print mountains of money for investors.
2. Create a website, complete with cool artwork, a well-written white paper, impressive-sounding advisers, and a product roadmap.
3. Launch ICO.
4. When ICO completes, take the money and run.

Here are some examples:

1. Pincoin Token: A team of 7 Vietnamese entrepreneurs promised constant returns to investors. They launched an ICO and reaped $660 million from about 32,000 suckers. They even paid out a little to the investors before they did a moonlight flit. They have not been heard of since.
2. Benebit: What do you think of this idea: let’s unify all customer loyalty programs? Brilliant, eh? Sorry, but it’s too late to invest. The ICO is over, and the company behind it has evaporated, along with an estimated $4 million — demonstrating a distinct lack of customer loyalty.
3. PonziCoin: This earns itself a mention; barefaced branding at its best. It billed itself as “the world’s first legitimate Ponzi scheme”. It was a prank website. It even included a public admission that it was a scam. Amazingly this didn’t stop morons from pouring money into it. It raised over $250,000. What was the founder supposed to do? Naturally, cash in hand, he made a sharp exit.

A March 2018 study by the Satis Group, estimated that of all the large recent ICOs, a solid 81% were “frauds”, 6% failed, 5% are clinically dead, and only 8% made it to market.

Wait a minute. If that’s the case, how is this a Myth?

Terminological inexactitude, dear reader. It should have read: ICOs are frequently a scam, a shakedown — a Ponzi scheme, no less.

That’s why the SEC has pretty much called a halt to US ICOs. The point is that ICOs, not fully functional cryptocurrencies, are dangerous investment vehicles.

Myth 3. Cryptos have no real value.

“Give me a break, Krugman,” he said, (imagining he was berating NYT columnist Paul Krugman) “dollars, euros, and quetzals have as little real value as Bitcoin or Ether. Their value is linked to diddly-squat.”

In contrast, there are more than a few cryptos that link to genuine gold. Here is a list of those currently being traded: AurumCoin, DigixGlobal, GoldMint, HelloGold, KaratBank, PureGold, Xaurum, AurusGold, and OneGram Coin.

There are also ten not-yet-fully-ICOed gold-based cryptos: GoldCrypto, Golden Currency, XGold Coin, GoldMineCoin, BaselBit, AgAu, Darico, Gold Bits Coin, Flashmoni, and Sudan Gold Coin.

The real difference between fiat currency and crypto is that the crypto supply is governed by contract, whereas the fiat supply is in the corruptible hands of human beings.

And, if you want gold-backed money, where else are you going to get it?

Myth 4. Cryptos are for criminals and denizens of the dark web.

There are some advantages to using cryptocurrency for some criminal activities. It’s normal for hackers that spread ransomware to demand payment in Bitcoin. The now-defunct Silk Road did business in Bitcoin, selling drugs, medical supplies, and contraband. It meant that the money didn’t have to travel through a bank account — and for the bad guys that’s the most useful feature of Bitcoin.

In truth, Bitcoin is dominated by legitimate use. It is held as a pure investment, and as a safe store of money. Decentralization and “pseudo-anonymity” are features criminals like, but so do people living in economically unstable environments. If you cannot trust local banks because of corruption, or if the country you live in is unstable (think Venezuela) it’s a good place to store your stash of cash.

In the US, if you put your money in the bank and it fails, then you are insured (by FDIC) only up to a loss of $250,000. If you want to hold a larger amount then Bitcoin works fine. Bitcoin also sees heavy use on crypto exchanges as a unit of value to measure other crypto.

There is far more criminal use of the dollar: for money laundering, for drug trafficking, for bank robbery, and so on, than occurs with Bitcoin or any other cryptocurrency.

Myth 5. The use of crypto is anonymous.

Not so much. A computer security professional I know recently told me that the NSA had copied and analyzed the Bitcoin blockchain and was able to tie back almost all the Bitcoin wallets that exist to their owners. I have no idea whether this is true, but it would not surprise me — because it’s possible.

The point is that Bitcoin is an open ledger so you can tie the wallet addresses to amounts of Bitcoin. If you can tie the wallet address to an individual, you’ve got full knowledge of their holding, and their trades. And most ways to get Bitcoin, through an exchange of any kind, involves you providing identifying details.

You can get into bitcoin in anonymous ways, by buying it on the street through Local Bitcoin traders. There are also three coins; Dash, Monero, and Zcash that allow anonymous trading, so you could achieve anonymity through them. But they are the exception. The majority of crypto transactions are on the record.

Contrast this with paper money, such as dollar notes. These are truly untraceable, and hence they are far better than crypto for bad guys with money to hide.

Myth 6: The government is coming for your crypto.

Excuse me please, but no government has the power to shut down a cryptocurrency; blockchains are international and decentralized. Add in the fact that wealthy investors (the good, the bad, and the ugly) use store some of there stash in Bitcoin or Ether — and such people have political influence — and it’s game over, almost.

A government can make crypto illegal. And that’s what some economically-unsophisticated countries have done. When they do, it drives the currency underground and shops are not able to accept it.

Here’s a list of the economically-unsophisticated: Algeria, Bolivia, Ecuador, Bangladesh, Macedonia, Nepal. That’s just 6 out of 195, which is not bad for crypto. (Perhaps I should include Vietnam and Indonesia; both allow crypto speculation, but banned payments using crypto.)

Banning crypto will backfire spectacularly, stifling a whole sunrise industry until the sorry government finally realizes you can’t stop a technology tide.

As for the US, America is not going to ban crypto. No chance. Wall St is deeply in love again. And it’s the first time since it flashed its eyes at derivatives.

Myth 7: With crypto, you will pay no taxes.

Not exactly. Of course, politicians fantasize about banning crypto, even though they realize it’s a numbskull scheme. They fear crypto will deliver a simple means of skipping all taxes and the public purse will suddenly be empty. (Who then would pay their wages?)

The good news is that their fears may be well-founded. Crypto will probably provide ways to anonymize your money. The bad news is that our beloved politicians will quickly shift the burden of taxation to things that can be taxed, like everything you buy and stuff you cannot hide (land, property, yacht, etc.).

This tax switch will be disruptive, but it is inevitable whether you approve or not.

At the moment, the tax situation surrounding crypto varies. In most countries (including the US) crypto is treated as a commodity on which you pay capital gains tax if you speculate successfully. Blockchains are a public record, so where there’s a record of you putting money in, there is a record of your ownership. The taxman can know, and you risk his wrath if you try to hide your profits.

Myth 8: Can’t buy me much, yeah, everybody tells me so.

Some crypto-skeptics still believe crypto will never amount to much, although there are fewer than there were — culled perhaps, by the astronomic rise in crypto last year and Wall St obvious passion for its new financial mistress. Ripple in particular silenced many crypto-atheists when it announced that upwards of a hundred banks were using the Ripple network.

The crypto-skepticism transferred itself to the tokens that are not in the payments business. There are hundreds if not thousands of these. Some focus on computer infrastructure (the crypto cloud), some on the ad market, some on gaming, some on gambling, some on retail, some on the supply chain, and many on the health sector. Btw, my health sector favorite is Dentacoin. It makes me laugh just thinking about this crypto tooth-fairy.

I’ve always hated dentists, why would I ever buy their crypto?

The reason none of this seething mass of crypto tokens has made the news yet is that it’s too early. It will happen. Give it a year or two, and there will be dozens, or hundreds — maybe even bajillions.

Myth 9: Cryptos are a fad that will fade.

This myth is exploded by what’s written above and already lies in pieces. However, let me amplify it a little. I work for a crypto company (Algebraix). We began writing code in July 2017. We now have an application in Beta, and the Permission token (ticker: ASK) will be operational when the beta test is complete. The marketing campaign to recruit users will probably begin about a year after we started coding. The current roadmap runs for several years from then.

Now take a look at the history of, say, Facebook. In the first year after the software launched (2004), it acquired 1 million users. In the second year 5.5 million. It was not until the end of 2008 that it had 100 million and pretty much everyone knew its name. And Facebook is an example of very rapid growth.

The day has only just dawned. The flowers have yet to open.

Myth 10: Crypto is bad for the environment.

There is nothing worse in the eyes of a millennial than being utterly ungreen. Climate skeptics they are not, especially those who consult the evidence.

Thus a tremor ran through the crypto community when the news broke that Bitcoin mining squanders the electricity of 90 million refrigerators every day, or about as much as Ireland. It is excessive, even if you note that Bitcoin has a market cap of $160 bn — because that’s only half the GNP of Ireland and significantly less than Ireland’s money supply ($257 bn).

So shame on you Bitcoin.

We could protest: “Not so fast, Buster. If Bitcoin mining didn’t make a profit, no-one would do it.”

And that is also true. However, it doesn’t alter the fact that Bitcoin mining chews up huge amounts of electricity — necessitating the burning of vast amounts of fossil fuel — pushing unconscionable tons of carbon dioxide into the atmosphere — needlessly heating up the planet — melting the ice on Greenland and Antarctica, and raising the sea level to the point where Venice is unsavable. And I quite like Venice.

The truth is that the energy consumption of fiat currency is just as egregious and that the energy consumption of gold mining is more than twice as much and don’t talk to me about the cost of all those cloud data centers.

But that’s not the whole story. The whole crypto world knows that Bitcoin mining is expensive. So many other coins have found cheaper ways to organize their blockchains — ways that are hundreds of times cheaper than Bitcoin mining. (I’ll write an article on this one day soon).

Ultimately, either those other cryptos will dominate, or Bitcoin will become less of an electricity glutton.

The Net Net

You can think of this as a living blog post if you like. If you encounter any cryptocurrency myths which we do not mention above and which we have not yet slain, why not contact us and let us know.

If you do we will dispatch one of our mythbusters to hunt it down and dispatch it.

People need to learn to take ownership of their data. Personal data is valuable. No one disputes that nowadays, although maybe many people do not really know what that means.

Ultimately it means that you will get paid for the use of your data. Here are a set of questions and answers which you can think of as a “get paid for your data” FAQ.

Get Paid for Your Data FAQ

I keep reading blog posts that say I own my data. Well, maybe I do, but what does that actually mean?

It means that, if you want, you can reclaim your personal data from all the businesses that have some of it, like credit scoring companies such as Equifax or social networks like LinkedIn. The Europeans just brought in legislation (called GDPR) that forces companies to enable you to physically take your data back, if you want. So now, you can take ownership of your data.

Why would I want to do that? Maybe I’m happy as things are.

Think of it like this: you made some kind of deal with every one of those companies that hold your data which allowed them to use your data in exchange for some kind of service. So the question is: do you still think it’s a good deal?

Do you know of any better deals?

It’s probably better to think in terms of different deals. So, for example, Datawallet provides you with a different deal. BAT provides you with a different deal. Permission provides you with a different deal. The birth of new businesses that have a different attitude to personal data is encouraging; they are the conduits of a revolution. But they are not the revolution itself.

So what are these companies doing with personal data?

Datawallet allows you to pool your personal data with that of others and have companies pay to analyze it. BAT has an entirely different approach to the ad market. With its own browser, it organizes publishers, advertisers, and users to eliminate ad-brokers and share the ad revenues between publishers and users.

Permission is also in the ad-market and the media market, directly linking users to advertisers.

Permission members can share their data anonymously with companies that they are interested in, and get paid directly for interacting with those companies’ ads.

You talked about a revolution earlier. What do you mean?

Revolutions occur when people change their attitudes. The American Revolution occurred because the colonists thought being ruled by a king on a different continent didn’t make sense. The French Revolution occurred because the French no longer accepted the idea of being ruled by a monarchy. They changed their attitude.

It’s the same with data ownership. People no longer accept that today’s tech monoliths should assume all power over their personal data. Change becomes inevitable as soon as most people decide that they own their own data.

And when they do, what happens then?

Then businesses like Permission and the others we mentioned emerge and enable people to profit from the ownership of their data.

So, how does Permission.io work?

It’s a market that has on one side people who are willing to share their profile data for targeting purposes with advertisers who want people to watch their content. What makes it completely different is that the advertisers pay the consumer for watching the ads rather than paying Google or Facebook for pushing the ads in front of your face.

So it stores my data. How do I know that Permission.io is not sharing my data with other businesses?

Because you store your data under your own private key and give permission to advertisers to “rent it”. All data is anonymous.

What do I have to do to get paid for my data with Permission.io?

The easiest way is to install the Permission Browser Extension. Then continue to browse the internet as you normally would. When there’s an ad relevant to your online activity, you’ll be asked if you want to watch it in return for payment.

OK. So I get paid to watch ads. But I hate most ads, I avoid them like the plague.

And you would avoid ads you don’t like on our platform, too. But if you think about it, there are ads you do like. Think about the Super Bowl ads. Think about movie trailers and TV trailers, and music promotions. Maybe you like games. Maybe you like certain kinds of cars.

All advertisers post their ads to YouTube — of course, they do. Some of them get millions of views. In 2017 a Samsung India Service SVC ad got more than 150 million views. It was the most-watched video of 2017.

So why wouldn’t I just watch ads on YouTube?

Because YouTube won’t pay you. Permission will. It pays you in the Permission Coin (ticker: ASK).

I’d prefer to be paid in dollars.

Perhaps, but it’s not so different. The platform gives you a crypto wallet. You can transfer the ASK in your wallet to dollars or other currencies. But it’s a media platform too. You can pay in ASK to watch movies or listen to music as well. It’s not just ads.

What’s to stop me just sitting there all day watching ads and making a living from it?

You only get presented the ads from the advertisers that target you. Advertisers will probably avoid targeting people who watch every ad. So you would not get enough ads for you to earn a living in that way.

So is it more like a pocket money thing?

Well right now, yes. But later the company plans to reward referrers and recommenders. And independent content providers will also be encouraged to market their content on the platform. So it may prove possible to earn a living from it if you’re the right kind of person. Think of Permission as a media ecosystem.

What will happen to Facebook and other ad platforms if companies like Permission.io succeed?

We expect they will continue pretty much as they are for quite a while, but gradually they will find themselves in direct competition with blockchain-based businesses. And if they don’t stop exploiting people’s data, their business revenues will begin to vanish as more and more people adopt alternatives.

The Net Net

We hope you enjoyed this informal FAQ. Think of it as a living blog post. If you have any other questions about how to get paid for your data, write to us and we’ll add your question in here.

Personal data has value. Facebook and Google harvest billions from it through advertising. Talented hackers make a handsome living from stealing and selling it. The profits of credit score companies ride on the back of it.

And, unless you are very young or very unusual, you have terabytes of it on your devices or floating around in the cloud.

But how much your data actually worth? To get some idea, let’s examine the value of some of the personal data for the average US Joe or Jane.

Your Data Value as an Advertising Target

Consider the price advertisers pay to try to catch your eye. Facebook, Google, and other digital ad brokers use your data for targeting. They capture your behavior and your consumer profile (your preferences, lifestyle, stage of life, and various other attributes).

Facebook prospers from the fact that it knows a great deal about its users — its average US user spends about 40 minutes a day on the site, enhancing that knowledge. Facebook regularly runs batteries of statistical algorithms to match users with the products advertisers wish to promote.

In 2017, the average cost per click for an online Facebook ad was $1.72 — a premium price that stems from the mountainous variety of data it can dissect and evaluate.

Google, the other giant of the digital domain, cannot match Facebook in this area, but more than compensates for it with Google Adwords, which, with an 80% share of the US market, dominates search advertising.

According to Wordstream, in 2017, the average cost per Google AdWords click was $2.32. Naturally, some clicks cost much more than that. The price is fixed by auction, so it varies with demand. The price for adwords for legal services, for example, can rise above $50 per click. Nice work if you can get it.

If we take the total US revenues from digital advertising in 2017, about $83 billion, and divide it by the population of US Internet users (roughly 287 million) you get the digital ad revenue per average Joe or Jane.

It works out to be $289.19 per annum.

This is an average, so if you do many product searches or frequently click on website ads, your total will be higher — especially if you often seek legal services.

Your Data Value to Hackers

Another way to look at the value of personal data is from the thief’s perspective. Data thieves usually steal personal data so they can sell it on the Dark Web to other thieves. If it wasn’t worth much they wouldn’t bother.

The bare details of a credit card (name, card number, expiry date) are not worth much. But if you add in the owner’s address and email, then it’s worth somewhere between $20-$25.

That has a similar market value to a driver’s license. So one debit card, two credit cards, and a driver’s license, plus your email and physical address command a price of $100 (more details here).

Passwords can be valuable. Your Netflix password (if you have one) is worth about $3.00. Your Spotify password comes in at about $2.80. A password that walks you into a bank account with a balance in the region of $2,000 commands a price of $100. For a balance of $15,000 or more, think in terms of $1,000.

A complete medical record can fetch the same $1,000 price, although, like the bank account, the value depends on what it contains. Such details can be sold to insurance companies or even used for blackmail, but the less it contains, the less value it will command.

It’s difficult to estimate an average value for passwords and personal credentials. But if you include a collection of passwords for a bank account, a savings account, add in a few credit or debit cards, a driving license, and a passport and assume just an average medical record, we are probably looking at $300, minimum.

Your Data Value as a Credit Score

In 2016, Equifax made a healthy gross profit on revenues of just over $3.1 billion — the year before it managed to compromise the personal financial data of 147 million Americans.

Credit scoring is a profitable business, as both Experian (annual revenues of $4.55 bn) and TransUnion (annual revenues of $1.7 bn) can attest.

Roughly a quarter of those global revenues flow from the tens of thousands of companies that are interested in the creditworthiness of about 235 million Americans. The data that Equifax, Experian and TransUnion present to those companies is your personal financial data, gathered, aggregated, and analyzed without so much as a “by you leave”.

Do the math and you’ll discover that they make about $10 per annum from the average Joe or Jane.

Let’s Examine the Personal Data Inventory

What is the inventory of your personal data?

It is probably more extensive than you think. It consists of basic contact details (name, address, telephone, email) and official credentials that prove who you are, such as a birth certificate, driver’s license, passport, social security number, and so on.

To this, we can add personal interests, hobbies, and preferences; data that will interest advertisers and retailers. There’s financial information; bank accounts, debit and credit cards, investments and insurances, and nowadays, crypto wallets.

There is also personal history, such as previous addresses, phone numbers, educational records, transcripts, employment records, certifications, and criminal records.

And let’s not forget your personal history of buying and selling things.

There is your health data: current records, medical events, doctors’ reports, lab results, current pharmaceuticals taken (if any).

We can also include any memberships of associations or groups of any kind, such as sports clubs, retail warehouses, air miles programs, political affiliations, and so on.

We also need to include all the digital permissions you manage: login details that provide access to websites, software applications, or digital services such as Netflix, Amazon Prime, and so on.

To this, we can add ownership data, deeds, titles, provenance, appraisals, and other documents that relate to physical possessions such as a house, car, antiques, etc.

Then there are your actual digital possessions: emails sent and received, text files, videos, music, sound recordings, and any other data files.

Last, but by no means least, are your personal digital tracks — the full history of your digital activities.

Federico Zannier’s Experiment

To get a handle on the value of your digital tracks, consider an interesting experiment conducted by Federico Zannier, an alumnus of New York University and an experienced IT consultant.

Zannier decided to sell his personal digital tracks for $2 per day over one month using Kickstarter.

The data included was: the text of every web page he visited, regular screenshots of his PC activity with timestamps, a folder of webcam photos taken every 30 seconds, a log of all PC application activity (open and close times), browser activity including searches, personal geolocation, and PC mouse movements.

Federico guessed he’d earn about $500 from his one-month data sale, but exceeded that target more than fivefold. He raked in $2,733!

As with all other categories of data we have already discussed, different people would definitely command different prices for their digital tracks. The digital tracks of an A list celebrity would surely command a higher price than Federico’s and those of the average Joe or Jane, far less.

Nevertheless, they are probably worth about $1,000, per annum.

In Summary

To determine an accurate average value for US personal data would demand much more research than we have done here.

Nevertheless, given the data we have discussed and the extensive nature of an individual’s data resource, it is likely that, on average, the personal data of a US resident is worth somewhere in the region of $2,000 — $3,000 per year.

The question is: How to monetize it?

Hint: You might like to volunteer to sign up at Permission.io, create an account, install the Permission Browser Extension, and earn from your data that way.