Machine learning & neural networks:
The real future of SEO

Columnist Benjamin Spiegel takes a look at how machine learning and technologies like TensorFlow will change the way we think about SEO.

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The good old days of Search Engine Optimization (SEO)

I grew up in the good old days of Search Engine Optimization (SEO) when the keyword tag still meant something and you could make it to the top of SERPs by using the same keyword over and over in the website’s title or keyword tag. That was back when exact match results were the only ones returned from consumers’ searches, and crawlers like Google spent 99 percent of their time crawling and indexing instead of cataloging and evaluating the content’s actual quality and relevance. Those days are (thankfully) over.

Those good old days were followed (for good or ill) by years of SEO practitioners focused on chasing the constantly evolving algorithms, which, in my personal opinion, we have been doing all wrong. Most SEOs start out with something like Search Engine Land’s periodic table of SEO ranking factors or similar guides. We use tools like DeepCrawl and Screaming Frog to help chase down broken links and then ask tools like Moz and others to tell us where to place keywords in the title relative to the overall title length, or how our meta descriptions need to be X pixels less and our body copy has to have X outgoing links…

WE SERIOUSLY NEED TO STOP IT!

Although these are all great practices to follow, they are really corrective actions taken after something has already been done wrong, and none of these tactics will give brands position No. 1 for any high-value keywords. Instead, these should be considered from day one of the website build, implemented during site development, and not be an afterthought once the site is launched. We recently did a test against 150,000 different SERPS, and based on a simple scoring model, the majority of the top three results didn’t follow even half of the best practice rules commonly found in the ranking feature lists.

In this test, we extracted 83 features from each of the SERPS (page speed, content length, link scoring, content density, social signals and so on) and used different models in an attempt to reverse-engineer the algorithm. Even with 83 features, we did not get any meaningful results; we found that websites in the top of the SERPs were just as poorly optimized as those on page 2. This clearly shows us that while all those tactics are important for many reasons, even if you follow them exactly, it will not move your rank from 10 to 1.

So here comes the disappointing part of this article: I also have no idea how to get you a guaranteed position 1 — NOBODY does. But what I can tell you is that there is no simple way to recreate the algorithm, no easy script you can run, no simple linear regressions that can solve for it. We have seen No. 1 rankings that literally did everything wrong, and position 60 rankings that did everything right! Here’s the good news: About two years ago, we got a look under the hood and learned why it has become so much harder to “manipulate” rankings, and why no matter how large the test or sample, it is impossible to re-create the actual algorithm.

It was November 9, 2015, the day Google publicly released TensorFlow. TensorFlow is a (now) open-source software library for machine intelligence. It is, in fact, the library that powers most of Google’s technology like Gmail, Photos, Voice and RankBrain. TensorFlow originally was released as an evolution of Google’s internal neural network training framework “DistBelief” by the Google Brain team. On the simplest level, TensorFlow enables the large-scale and parallel manipulation of “Tensors,” multi-dimensional arrays that carry vectorized data. The latest releases of TensorFlow have improved the scalability with new features that add APIs and deployments onto all types of devices.

TensorFlow & SEO

So what do machine learning and TensorFlow have to do with SEO, algorithms and reaching that coveted No. 1 spot in the SERPs? As Google’s RankBrain gets smarter in understanding users and their intent, it’s also learning to better understand content, information and if that content will provide the right answer, not only to the query but also to the individual user. With the algorithm now truly understanding the query intent on a linguistic level, it can deliver new kinds of results that are correlated and weighted in a way that a human brain can’t even begin to predict. This dramatically changes two aspects of SEO: technical SEO and content SEO.

Technical SEO

As many have said before, the role of technical SEO in the context of fixing links, optimizing title tags and ensuring correct markup is no longer a valid SEO role, meaning there should be no brands out there hiring a practitioner just for that purpose. This nuts-and-bolts work should be done from the beginning of the website build and audited by the web dev team on an ongoing basis.

Instead, the true technical SEOs of the future need to understand more than just HTML and XML; they need to understand how machine learning works, how TensorFlow handles data and weighs inputs, and how to understand and train models. There will always be crawling and discovery, but the main focus is now more analytical — truly data-driven, with the SEO practitioner more a mathematician and software developer than a web designer.

Content SEO

The last few years have seen a convergence of SEO content and content marketing. We know we must now create contextually relevant content that is authoritative, not just keyword-stuffed. Now it’s time to look at more than minimum/maximum character counts and keyword density. We have to start using machine learning models and linguistic analysis to weigh and score our content to ensure it truly answers the consumer question, instead of just telling a brand story.

Personally, I am excited about the new frontiers of SEO and the evolution of the field, and I invite anyone out there who’s in doubt to just look at the growth of voice and conversational search. It’s all powered by machine learning and technologies like TensorFlow. The time is now.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Why e-commerce SEO is NOT
a one-shot wonder

Columnist Trond Lyngbø explains that SEO is an ongoing process that requires continuous investment — not a one-time task to be checked off a list.

A “one-shot wonder” is someone who gets drunk after one shot

 — an extreme lightweight. In business parlance, the term refers to an organization that shines brightly for a short while… before fading away to nothing. As an e-commerce web shop deploying strategic SEO for your business growth, the last thing you want is to be known as a one-shot wonder. In fact, because SEO picks up steam gradually, but then becomes increasingly powerful and effective at drawing in new prospects and closing more sales, you should ensure that everything you do is sustainable and long-lived.

Unethical cut-and-run SEO providers try to lure in new clients with the promise of “quick and easy” top rankings on Google. They’ll encourage the use of tactics that work immediately to drive a quick burst of traffic, but have little if any lasting impact. The key difference that sets apart winning e-commerce sites from their competitors is that they select a quality SEO service provider, and then allocate a budget to provide follow-up action after the initial job is done.

Old habits die hard

If a client doesn’t have funds available for a retainer contract for ongoing consulting, or a plan and support system to follow up once a project is done, then they will almost certainly return back to their old habits — and gradually slide back to where they were before. It’s hard to overestimate the importance of continuously working with SEO. In another article, I highlighted the principles of successful web shop SEO:

• Use search and analytics data to guide strategy.
• Have a customer-focused website structure and information architecture.
• Base content creation upon search data.
• Solve critical problems early in the process.
• Follow SEO best practices for e-commerce webshops.

What I didn’t mention, though, is that this is a continuous and ongoing process… which can unravel if you stop working on it.

How your data-driven SEO strategy will evolve

Let’s imagine that you’ve implemented all these principles in your e-commerce SEO and are seeing an improvement in website traffic. If you stop working on your SEO, then you might overlook new opportunities to grow or miss a chance to fix what’s broken. When you continue to review your search and analytics data and use this to inform your ongoing SEO strategy, you’ll reap many benefits:

• You’ll quickly find out whether the search terms you picked to appeal to your audience and attract them to your web shop.
• You’ll identify the search terms that are more effective at bringing in buyers, and even stumble upon new ones that you can optimize your site for.
• You’ll know how effectively your website content addresses customer queries, needs, and problems.
• You can tell if your content and website architecture work to guide visitors to buy from your stores.
• You can pick up problem areas early and promptly take corrective action before you lose sales or hurt your brand.

Based on an analysis of your business performance on key metrics, you can then make some tweaks and additions to your SEO strategy to further boost your rankings, traffic, and sales.

Monitoring helps improve your strategy

As the effects of these changes kick in, you’ll have more visitors coming to your e-commerce website — which gives you a fresh opportunity to study their behavior and learn more about your audience. For example, if you notice that many people search for a “top-loading washing machine,” it probably means that they don’t have a lot of space. In this situation, the product pages or informational content you show them should communicate how a top-loading washing machine will save space without any compromise on cleaning efficiency. You can answer questions they may have about the product from the unique perspective of their needs because you took the time to analyze user intent based on their choice of search terms.

People may wonder about a lot of stuff before they decide to buy. If you can identify these problem areas, research their behavior and analyze the specific issues that bother them, you will increase your chances of closing a sale.

SEO helps integrate teams

If you’re an e-commerce manager or director in a company that also has local shops, you will have operations handled by both internal and external teams working across many disciplines. All these activities need to be integrated for the best results. But that involves plenty of interaction and discussion between teams. In most organizations, such communication doesn’t happen. That’s why it is so difficult to sustain early results. One of the benefits of having an SEO consultant handle follow-up activities is that you’ll make sure these teams actually work in concert.

Rome wasn’t built in a day! And likewise, a successful SEO strategy to turn around your e-commerce website cannot be implemented in one sitting, or in a short stretch. The best outcomes are seen when your SEO tactics are consistent, strategic and sustained. So be ready to budget for an SEO retainer contract that will safeguard your initial investment — and multiply it many times over.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Current Cryptocurrency Capital Influx Hints at Positive Bitcoin Price Evolution

No one wants to miss out on what cryptocurrency may be capable of achieving in the future.

  

Alan Zibluk – Markethive Founding Member

Bitcoin may be getting most of the headlines, but cryptocurrency as a whole is on a roll. Statistics from Coinmarketcap.com reveal that 82 out of the top 100 cryptocurrencies posted gains in a recent 24-hour period. Whether all cryptocurrencies are riding bitcoin’s coattails or investors are suddenly discovering altcoins is anybody’s guess.

  

The total cryptocurrency market capitalization (price per coin times amount of coins in circulation) stands at $42.6 trillion. That marks more than a $10 billion gain in 10 days.

Ripple Leads In Growth Rate

Among the currencies with a market capitalization in excess of $1 billion, Ripple has posted the top growth rate of 33.6% in a 24-hour period, yielding a $2.831 billion market cap. Litecoin comes in second with a 22.34% growth rate and $1.132 billion market cap. Ripple’s gain has been credited to a strategic partnership initiative, teaming with Asian and Australian banks in conjunction with its stated goal of acting as a PayPal-like mechanism for large interbank transfers. Litecoin, for its part, has benefited from Coinbase’s decision to support it, allowing users to buy, sell and store Litecoin using its platform and wallet. It became the third cryptocurrency, after bitcoin and Ethereum, to gain Coinbase’s full support.

What Drives Bitcoin?

Bitcoin, far and away the largest market cap in excess of $25 billion, posted a 5.81% 24-hour jump. Bitcoin’s price reached a new all-time high once again, at $1,567. Brian Kelly, a financial analyst at CNBC, has attributed the recent surge in bitcoin’s price to the rise in institutional investors within the bitcoin market. Other factors include the bitcoin community’s consensus not to support Bitcoin Unlimited, and an overall increase in global trading. Some analysts have attributed some of the bitcoin’s growth to that of the altcoins; altcoins are usually bought and sold with bitcoin, requiring traders to buy bitcoin.

Ethereum Has Its Own Story

Ethereum, which has the second highest market cap at just over $8 billion, has jumped 12.12% in the 24-hour period. Its price rise is due to a number of factors. Google searches for Ethereum have spiked to an all-time high, nearly doubling in just one week. Some countries appear to be using ETH a hedge against national currencies. Switzerland, where the Ethereum Foundation is based, showed the strongest interest, followed by Venezuela, which is suffering triple-digit inflation.

South Korea seems to have fallen in love with the currency. Its three largest exchanges handle twice the ETH/fiat volume of Coinbase’s GDAX and Kraken combined. South Korea is also big into fantasy sports, an area where ETH’s smart contracts can be used to make the game more transparent and reduce cheating.

Don’t Forget Dash

Dash, number 5 with a $683.3 million market cap, jumped 6.77% in the 24-hour period. Featuring exceptional transaction speed, Dash continues to become more accessible to investors and consumers.

The cryptocurrency exchange Kraken recently announced the integration of Dash to its trading platform. BitCart, an Ireland-based discount gift card platform, recently allowed users up to a 20% discount for using Dash on Amazon purchases. Crypto-Woo, a payments plug-in, has integrated Dash, allowing users to pay for online purchases with Dash. CryptoBuyer, a Venezuela-based crypto exchange, has begun selling Dash, allowing consumers in the economically ravaged country to have another alternative to its imploding national currency.

Ethereum Classic, number six at $664.4 million, rose 8.97%.
NEM, at %521.7 million, jumped 9.5%.
Monero, number 8 at $371 million, rose 8.76%.

The top 14 cryptocurrencies all posted gains in the 24-hour period.  PIVX, which at $84.1 million has the 15th highest market, cap posted a 3.16% drop.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Cryptocurrency:
Top 5 Things You Should Know About Digital Cash

If you’ve had your ear to the fintech

streets over the last few years, you’ve probably heard the term Bitcoin tossed around as cash’s digital counterpart. What you may not know is how Bitcoin’s emergence in 2009 has spawned a race across the globe to be part of the emerging trend. What exactly is Bitcoin? Will it replace cash? What does it mean for your small business? Here’s a quick rundown to get you up to speed.

What is it?

Bitcoin is a type of cryptocurrency or a digital currency that uses encryption techniques to create units and secure the transaction. What’s unique about this invention is it decentralizes currency away from traditional banks, meaning people can complete financial transactions without any bank involvement or regulation. Bitcoin is the first form of cryptocurrency invented, and is still by far the largest within the market.

How do you use it?

To simplify it further, it’s basically a peer-to-peer sharing network. Members can initiate transactions through the network, however, no actual currency is created or transacted until both parties agree on the amount. Here’s how it works:

1.     Someone requests a transaction.
2.     The request is broadcast to the P2P network composed of computers or “nodes.”
3.     The network initiates a validation process to verify both users and the transaction amount.
4.     Once the transaction is validated, the cryptocurrency is created in the amount that was agreed upon in the validation process. If the amounts or the network credentials don’t add up, the transaction request is denied.

The cryptocurrency has no physical form and only exists within the network. Value is only assigned once the agreed terms are validated. Holders can then withdraw the value from a cryptocurrency ATM in exchange for the currency they’d like to use.

Is it legal?

The legality of cryptocurrency varies by country. Some have explicitly allowed it for trade, and others have totally banned it. For us, the United States Internal Revenue Service (IRS) ruled that bitcoin will be treated as property for tax purposes as opposed to currency. So, it’s legal to own and use for trade internationally, however, it will be subject to capital gains tax.

Are US shoppers using it?

Sure. Knowledge about Bitcoin has increased so significantly since 2014 that there are now 554 Bitcoin ATMs in the U.S. These are stations that Bitcoin owners can use to exchange for U.S. currency.

How will this impact my business?

While Bitcoin is gaining steam in the US and across the globe, it will likely be a few years before this impacts the small business sector. Since the IRS hasn’t identified cryptocurrency as a legal tender, it likely won’t surface as a mainstream payment option for another decade or so.

However, cryptocurrency has the legs to gain popularity within contract-based subsectors. If adopted at full-scale, organizations like banks and insurance companies could be replaced. Access, validation and other major functions can be performed by the technology itself, so bank and insurance underwriting would no longer be a limitation for people who are typically denied credit. Rules, contracts, and processes can be programmed within the peer-to-peer network and therefore transformed into automated processes.

Insurance policies for flight delays will pay out immediately if an airline’s flight data reports a delayed plane. For example, musicians’ royalties can be automatically paid via the blockchain when people listen to their songs, without a record company being involved. People will no longer have to waste time claiming compensation. The amount of self-generated solar power can be calculated without checks by a utility company and credited to the user’s account

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Bitcoin's price breaks records, yet again

  
Bitcoin is still on a major upswing. 

The price of the cryptocurrency broke $1,500 this week — a huge milestone for bitcoin and other cryptocurrencies.  The $1,500 price put the total value of the cryptocurrency market above $40 billion, MarketWatch reported. Bitcoin started off 2017 trading just above $1,000, which was its first time reaching that mark in three years. Then in February, the digital currency exceeded its $1,165 record price set in 2014. Last week, bitcoin rose above $1,400, an all-time high. And now it's above $1,500 — at $1,534 on Saturday afternoon, to be exact. It could all come crashing down again — in early 2017, bitcoin's swing above $1,000 was short-lived. Or maybe $1,500 will be the going rate for one bitcoin from now on.

Cryptocurrency Prices Explode! Bitcoin at $1600, Ethereum at $100

  

Cryptocurrency prices appear to be unstoppable today,

Alan Zibluk – Markethive Founding Member

Digital Gold':
Cryptocurrencies Soar as Investors
Swap Dollars for Bitcoins

Cryptocurrencies are gaining in value because many see them as a new type of digital investment that has advantages over the US dollar or even gold, Economic Historian Dr. Garrick Hileman told Radio Sputnik.

  

The price of Bitcoin was soaring to new highs

during trading last week, amid an upsurge in demand. According to the CoinDesk Bitcoin Price Index (BPI), it broke through the $1,500 barrier for the first time on Thursday; trading on Saturday has reached $1,550 so far. Since reaching $1,000 at the turn of the year, the cryptocurrency has surged in recent months and added over 20 percent of value during April alone. The steep rise in price has led some analysts to wonder whether Bitcoin, which was invented in 2009 and broke the $100 barrier in 2013, is heading for a second wave of price growth as new money enters the market.

Cryptocurrencies expert Dr. Garrick Hileman, who is an Economic Historian at Cambridge University and the LSE, as well as a founder of the macroeconomic news website Macro Digest, told Radio Sputnik that all cryptocurrencies, not just bitcoin, are gaining in popularity. "Three years ago when Bitcoin crossed $1,000, there were still a lot of other cryptocurrencies but Bitcoin represented 90 percent of the total market capitalization of all cryptocurrencies. Today, it's just over 50 percent so there's a broader story going on beyond Bitcoin," Hileman said.

Bitcoin's steep price increase has caught the headlines but other blockchain platforms have been gaining price at an even higher rate. For example, the blockchain Ethereum, which offers native support for automated "smart contracts," is now worth $7 billion.While cryptocurrencies are being used for more and more tasks, such as cross-border payments or online transactions, financial speculation is still the source of most demand."Most people would agree that cryptocurrency today is still considered primarily a speculative instrument, a stored value. It's a bet on people needing cryptocurrency to do things like power the 'internet of things' economy and machine to machine transactions."

"We don't know how big that segment of the economy is going to be, but a lot of people think that something like Bitcoin or Ethereum or one of these other currencies could be the payment rail for a machine-to-machine economy," Hileman explained. The idea of bitcoin and other cryptocurrencies being used as a kind of digital gold, an alternative way of storing money outside of traditional banks and currencies, is also gaining in acceptance. Most recently, bitcoin and other virtual currencies received official recognition in Japan last month. "More and more people are waking up to cryptocurrency as an alternative to something like the US dollar as a traditional way to opt-out of your national currency."

  

Why Russia's Central Bank is Stacking Bullion Bricks Like There's No Tomorrow

However, investors in virtual currency should be aware that since there is no national or international regulation of bitcoin, buyers can be the victims of theft or fraud. In addition, the price is very volatile and could end up sky-high – or zero."These are incredibly volatile instruments, there's no government or central bank standing behind them to help try to regulate the exchange rate." 

"If cryptocurrency is really a new type of digital asset, if it's a new digital gold then it's really hard to know what the price ceiling is. All the gold today is worth roughly about $7 trillion, all the cryptocurrency in the world today is worth about $45 billion so it's a small fraction of gold." "Yet, cryptocurrencies like bitcoin offer a number of advantages over gold. They are a lot easier to store, in some ways they are certainly easier to send to someone else around the world, they may be even more convenient to acquire. So, if cryptocurrency is becoming a new kind of digital gold, a new commodity, then really the sky could be the limit on the price."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Billionaire bitcoin enthusiast Tim Draper is backing a new cryptocurrency for the first time

• Draper was an early supporter of bitcoin and its underlying blockchain financial ledger technology.
• He told Reuters in an interview he will for the first time participate in a so-called "initial coin offering" of Tezos slated later this month.
• Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies.

Venture capitalist Draper wins US Marshals bitcoin auction.

Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed until now: Buying a new digital currency offered by a technology start-up.Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called "initial coin offering" (ICO) of Tezos slated later this month.

Tezos, a new blockchain platform launched by a husband-and-wife team with extensive Wall Street and hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc., the creator of Tezos, but did not disclose details. Draper, who scored big as an early backer of Skype and Baidu, becomes the first prominent venture capitalist to openly embrace initial coin offerings. This would be a significant stamp of approval for this new financing model Blockchain start-ups. Some investors have expressed concern about the lack of regulatory oversight for ICOs.

                                         Bitcoin on the rise

Over the last year, blockchain start-ups have been raising cash by creating and selling their own currencies or tokens in unregulated offerings that bypass banks or venture capital firms as intermediaries. Interest in these deals has been stoked by the runaway performance of the original cyber currency, bitcoin, which has surged more than 67 percent in the last six weeks to hit a record high. "The best thing I can do is lead by example," said Draper, on his plan to participate in Tezos' token offering.

"Over time, I actually feel that some of these tokens are going to improve the world, and I want to make sure those tokens get promoted as well. I think Tezos is one of those tokens." Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies. But Draper said the contract terms with his investors allow investing in pretty much any vehicle. "I think most investor contracts did not anticipate something like an ICO," said Draper. "But we did anticipate that certain things are going to happen and finance is going to be transformed."

Draper said his firm has specifically carved out money for non-traditional investments. Tezos is similar to bitcoin and other blockchain platforms, but its design allows for decentralized and automated upgrades. Most software platforms provide for automated updates, but blockchains remain notable exceptions because update procedures are typically centralized. Tezos touts itself as the first blockchain platform to overcome that hurdle.

Tezos was created over a span of three years by Kathleen and Arthur Breitman. Arthur Breitman had worked at the high-frequency trading desk at Goldman Sachs and was an Options Market maker at Morgan Stanley, while Kathleen Breitman is a former management associate at Bridgewater Associates, the world's largest hedge fund. Unlike previous ICOs, Kathleen Breitman said, Tezos' deal would not be capped by a set number of tokens to be created. "What we're going to do is allow as many people who want to buy into the crowd sale over a two-week period," she said.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Bitcoin Is Advancing Rapidly Like In Early Days Of Internet

Alan Zibluk – Markethive Founding Member

Jim Harper is a vice president at the Competitive Enterprise Institute. A former counsel to committees in both the US House of Representatives and the US Senate, he served as Global Policy Counsel for the Bitcoin Foundation in 2014. In this opinion piece, Harper discusses the longstanding developer conflicts that have come to define bitcoin's governance, arguing that just because there haven't been any results yet, doesn't mean there won't be.

  
Two years ago today, politics invaded the world of bitcoin development.

It's been non-stop controversy ever since. But Gavin Andresen's essay series, "Time to Roll Out Bigger Blocks," didn't introduce politics to bitcoin. And the cure for what ails its highly controversial development ecosystem isn't getting rid of politics. Bitcoin actually needs more and better politics. How bitcoin politics are practiced is up to the community, which might take some lessons from principles of good government.

When Andresen 'went public' with his arguments for bigger blocks, that was the result of political failings on all sides that long predated his writing. Put simply, there are many competing visions for bitcoin's optimal uses, its future, the risks it faces and how to manage them. While minor improvements to the code continue, nobody so far has been a good enough politician to get their broader vision for bitcoin widely adopted. So, what gets people to abide by difficult group decisions, even when the decisions go against them?

Lessons from government

The US Constitution requires 'due process' in both the Fifth Amendment and the Fourteenth Amendment. That means that US citizens and residents are supposed to get fairness of two types from their governments:

1. Systems designed to produce correct answers
2. The right to participate in decisions that affect them.

Elections operate along the same lines, giving everyone, including the losers, a say in who will operate the government. Bitcoin is meant, in part, to help people escape the grasps of hugely fallible governments, of course. But, you might ask, isn't bitcoin an apolitical system that resists governance? Governance and government are not the same. Every human system, including bitcoin, has governance. Bitcoin governance is whatever influences or directs the community's decision-making and the software's many encoded policies.

Bitcoin is also inherently political. Politics is essentially human relations at scale. When politics are practiced well, we don't notice it. It's politics done poorly, or running against our interests, that we speak ill of, along with the politicians who practice it. With a few noisy exceptions on the social media margins, everyone involved in bitcoin protocol and software development is a good faith actor. So, why are their efforts to move forward drawing heaps of derision and failing to advance their visions? It may be the failure to respond to the demand for due process.

Theory of open-source

Bitcoin is a category buster, so let's talk about the due process in terms of economics. In theory, markets work because a large number of buyers and sellers have perfect information, products are homogeneous, transaction costs are low or non-existent and everyone is rational. In practice, buyers and sellers are under-informed, transaction costs are often high and the decision-making of humans is driven away from correct choices by psychological, social, cognitive and emotional factors.

There's a 'perfect markets' theory for open-source software development, too, and it especially fails with respect to bitcoin. It holds that developers will perfectly perceive the needs of the community and respond to them, that miners will clearly recognize their economic interests and act in accordance with them, that bitcoin users will all oversee this process well, guiding the other sectors of the bitcoin ecosystem toward its highest and best use. It turns out that everyone isn't an expert in coding, in economics and in perceiving their own interests in an uncertain cryptocurrency future.

Miners and users don't follow the 'perfect governance' script very well themselves, but bitcoin development seems to diverge from theory the most. Developers, it turns out, are humans, who have limited time, information and capacity for cognition. Nobody could incorporate the information necessary to advance the bitcoin project consistent with all the goals held for it across the ecosystem. These fascinating 'developer-humans' exhibit human behaviors like trusting people they know and discounting information from people they don't know.

That's no basis for criticizing any developer, of course, but the leading development team, Bitcoin 'Core' sometimes seems to speak with a unified voice, and sometimes seems to vanish behind the theory that open-source development is just uncoordinated people from which coding decisions emerge.

The solution

In a system with worldwide usage and strong network effects, that makes a lot of people feel they are being denied due process. A lot of people feel they aren't getting a say in a project they feel passionate about. It's easy, despite the fact of good faith all around, to fall into thinking that the process is not designed to produce a correct outcome.

As a congressional staffer in the 1990s, I participated in a meeting where some academics suggested what the future of telecommunications regulation would look like. "Bits – everything will be bits," they said. The direction of communications technology was obvious already, and perpetuating its regulation was not my preferred goal. But, the meeting was bemusing because in Congress, knowing the right answer is 10% of the problem or less. Getting people convinced of the right answer is the other 90%. There are many right answers for bitcoin's future. Perhaps, if there were more bitcoin politics, more people could be brought on board with one or more of them.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member