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The Download: The Merge arrives, and China’s AI image censorship



The Download: The Merge arrives, and China’s AI image censorship

What’s happened: “The Merge”, a major upgrade to the Ethereum cryptocurrency platform, was finally completed early this morning after a six-year buildup. Ethereum now uses proof of stake, a way to approve new transactions that promises to cut the blockchain’s energy requirements by 99.9% and usher in a new era for the second-largest cryptocurrency. 

Why it matters: It would be hard to overstate how much industry excitement there has been around this shift. Many hope it can both rehabilitate the reputation of crypto for skeptics and improve the efficiency of Ethereum’s enormous ecosystem of businesses and developers, cutting fees and helping it to scale.

What’s next?: We won’t know right away whether the Merge lives up to its transformative promise. Power dynamics are still a concern, and some of the scaling efficiencies that supporters are most excited about may not arrive until well into 2023. But there’s no doubting the fact that one of crypto’s biggest players investing in a less destructive, more efficient ecosystem is, in itself, a huge achievement. Read the full story.

—Rebecca Ackermann

Read more:

  • Why Ethereum is switching to proof of stake and how it will work. The move has been many years in the making, but doesn’t come without risks. Read the full story.

  • Ethereum thinks it can change the world. It’s running out of time to prove it. The blockchain system has daunting technical problems to fix. But first, its disciples need to figure out how to govern themselves. Read the full story.

  • Ethereum’s foundation is pumping $30 million into “transformative” upgrades. The long-promised overhaul that will unlock what creator Vitalik Buterin calls the “world computer” needs a cash infusion. Read the full story

  • It’s okay to opt out of the crypto revolution. The industry is investing heavily in getting more people to buy in. That doesn’t mean you have to. Read the full story.

There’s no Tiananmen Square in the new Chinese image-making AI

With ERNIE-ViLG, a new AI developed by the Chinese tech company Baidu, you can generate images that capture the cultural specificity of China.

But there are many things—like Tiananmen Square, the country’s second-largest city square and a symbolic political center—that the AI refuses to show you. 

It’s not rare for similar AIs to limit users from generating certain types of content. Open AI’s DALL-E 2 prohibits sexual content, faces of public figures, or medical treatment images. But the case of ERNIE-ViLG underlines the question of where exactly the line between moderation and political censorship lies. Read the full story.

—Zeyi Yang

Read more:

  • The dark secret behind those cute AI-generated animal images. Google Brain revealed its own image-making AI, called Imagen, earlier this year. But don’t expect to see anything that isn’t wholesome. Read the full story.

  • This avocado armchair could be the future of AI. Last year, OpenAI extended GPT-3 with two new models that combine NLP with image recognition to give its AI a better understanding of everyday concepts. Read the full story.

The must-reads

I’ve combed the internet to find you today’s most fun/important/scary/fascinating stories about technology.

1 Social media’s biggest companies appeared before the US Senate

Past and present Meta, Twitter, TikTok and YouTube employees answered questions on social media’s impact on homeland security. (TechCrunch)

+ Retaining user attention is their algorithms’ primary purpose. (Protocol)

+ TikTok’s representative avoided committing to cutting off China’s access to US data. (Bloomberg $)

2 China wants to reduce its reliance on Western tech

Investing heavily in native firms is just one part of its multi-year plan. (FT $)

+ Cybercriminals are increasingly interested in Chinese citizens’ personal data. (Bloomberg $)

+ The FBI accused him of spying for China. It ruined his life. (MIT Technology Review)

3 California is suing Amazon

Accusing it of triggering price rises across the state. (WSJ $)

+ The two-year fight to stop Amazon from selling face recognition to the police. (MIT Technology Review)

4 Russia is waging a surveillance war on its own citizens 

Its authorities are increasingly targeting ordinary people, not known dissidents or journalists. (Slate $)

+ Russian troops are still fleeing northern Ukraine. (The Guardian

5 Dozens of AIs debated 100 years of climate negotiations in seconds

They’re evaluating which policies are most likely to be well-received globally. (New Scientist $)

+ Patagonia’s owner has given the company away to fight climate change. (The Guardian

6 Iranian hackers hijacked their victims’ printers to deliver ransom notes

The three men have been accused of targeting people in the US, UK and Iran. (Motherboard)

7 DARPA’s tiny plane could spy from almost anywhere

The unmanned vehicle could also carry small bombs. (WP $)

+ The Taliban have crashed a helicopter left behind by the US military. (Motherboard)

8 Listening to stars helps astronomers to assess what’s inside them

The spooky-sounding acoustic waves transmit a lot of data. (Economist $)

+ The James Webb Space Telescope has spotted newborn stars. (Space)

+ The next Space Force chief thinks the US needs a satellite constellation to combat China.  (Nikkei Asia)

9 We’ll never be able to flip and turn like a cat

But the best divers and gymnasts are the closest we can get. (The Atlantic $)

+ The best robotic jumpers are inspired by nature. (Quanta)

10 This robot is having a laugh

Even if it’s not terribly convincing. (The Guardian)

Quote of the day

“Tesla has yet to produce anything even remotely approaching a fully self-driving car.”

—Briggs Matsko, a Tesla owner, explains his rationale for suing the company over the “deceptive” way it marketed its driver-assistance systems, according to Reuters.

The big story

The Soviets turned the Volga River into a machine. Then the machine broke.

December 2021

About 2,300 miles long, the Volga—sometimes referred to as “Mother Volga”—is the longest river in Europe and the biggest by water flow. The history of the Big Volga project is, in a sense, the history of Soviet industrialization. It is also a history of rivalry with the US, which for decades raced the Soviets to build bigger, more impressive dams.

But the project tried to do too much. The river has become polluted, silted up, and overwhelmed by invasive species. Water flows at a tenth of the speed it did before the dams were constructed, and widespread toxic algal blooms are now common. 

And now that the Volga basin has been identified as one of the regions most at risk of climate change-induced drought, it’s not an exaggeration to say that Russia’s mother river is broken. Read the full story.

—Olga Dobrovidova

We can still have nice things

A place for comfort, fun and distraction in these weird times. (Got any ideas? Drop me a line or tweet ’em at me.)

+ Wait, they’re rebooting The Crow?!

+ Are you ready to embrace chaos cooking? Me neither.

+ Yes, you can pull off a leather jacket. Here’s how.

+ These small towns in Italy are incredibly beautiful, and perfect vacation inspiration.

+ Aww, Brendan Fraser is capturing the hearts of the internet.

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Bitcoin Long-Term Holder Supply Reaches An All-Time High Of 13.7M – ARK Invest Report



Bitcoin Long-Term Holder Supply Reaches An All-Time High Of 13.7M – ARK Invest Report
  • Ark Invest published its monthly Bitcoin report, detailing several bullish signs for the asset and the general market.
  • It notes that Bitcoin is in oversold condition, and the asset might have reached a strong bottom, pointing to Bitcoin’s short-term-holder cost basis crossing below the long-term-holder equivalent for the first time since late 2018.
  • Bitcoin’s long-term holder supply reached an all-time high of 13.7 million BTC, accounting for 71.5% of the outstanding supply.

Ark Invest has released its monthly Bitcoin report, and some of the statistics in the report indicate a bullish future for the asset. While Bitcoin did find resistance at its 200-week moving average of $23,500, there are signs that the cryptocurrency has found its bottom.

To support the theory that Bitcoin has reached a strong market bottom, Ark Invest says that the digital asset’s short-term-holder cost basis crossed below its long-term-holder cost basis for the first time since late 2018.

But perhaps most interestingly, Bitcoin’s long-term holder supply reached an all-time high of 13.7 million BTC, which accounts for 71.5% of the outstanding supply. The firm defines long-term holders as those who have held Bitcoin in their wallets for over 155 days. Year-over-year, this figure has increased by 2.19%.

Bitcoin long-term holder supplt
BTC Long-Term Holder Supply: Ark Invest

Ark Invest also points to the locked supply as another bullish sign. This statistic is currently at 14.18 million BTC, which is a 5.39% increase over the past year.

The firm also firmly believes that Bitcoin is oversold, pointing to the profitability delta being near 0. This suggests that most trading activity is seller-exhausted.

Bitcoin profitability delta
BTC Profitability Delta Nears 0: Ark Invest

The takeaway from these on-chain indicators, according to Ark Invest, is that Bitcoin’s price does not reflect its positivity. However, it does see several macroeconomic factors as being bearish influences on the market. In recent years, the crypto market has become more closely connected to other markets, and negative macroeconomic forces would undoubtedly have an effect on the asset class.

Mining Statistics Also Indicate Bullish Future

Ark Invest reports several other positive indicators that the market is doing well. One of these is the fact that miners are “no longer in capitulation mode,” pointing to new all-time highs of the hash rate. Bitcoin’s hash rate is currently 272.81 million TH/s. Another factor it shows as being a bullish sign is the net realized profit and loss, which suggests a capitulation proportional to prior cycle bottoms.

Bitcoin Long-Term Holder Supply Reaches An All-Time High Of 13.7M - ARK Invest Report 12

The market may be in the middle of a rut, but on-chain factors and general sentiment hint that it might not last for long. Investors will be keen to see a movement upwards, and Bitcoin and the crypto market have proven to be strong towards the end of the year on multiple occasions. Ark Invest and Cathie Wood have felt that way for some time.

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European Union Issues Fresh Sanctions Against Russia, Bans All Cross-Border Cryptocurrency Payments From Russian Accounts



European Union Issues Fresh Sanctions Against Russia, Bans All Cross-Border Cryptocurrency Payments From Russian Accounts
  • The European Union has issued a list of fresh sanctions imposed on Russia 
  • In the newly announced sanctions by the EU, the organisation is banning Russia from conducting cross-border payments in cryptocurrency.

The European Union has issued a new statement online, outlining a new set of restrictions imposed on Russia.

As per the new sanctions imposed, the European Union has now banned Russia from conducting cross-border payments in cryptocurrency.

The EU Issues New Sanctions Against Russia

The European Union has issued a new press statement on October 6, in which the organisation has imposed a ban on all crypto payments from Russian accounts. The new set of prohibitions includes banning all crypto assets and custody services irrespective of the amount stored in the users’ crypto wallets.

EU Bans All Crypto That Belongs to Russians

As part of its tightening of sanctions on Russia in the aftermath of what it deems to be fake secession referendums in four Ukrainian regions, the European Union has announced a comprehensive ban on offering crypto services to Ru…

— WizMoJo (@Softvaders) October 6, 2022

“The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet (previously up to €10,000 was allowed).” The statement later adds 

The new sanctions were introduced in light of the escalating war situation in Ukraine, with Russian troops recently announcing the annexation of four Ukrainian territories. 

“Additional individuals and entities have been sanctioned. This targets those involved in Russia’s occupation, illegal annexation, and sham “referenda” in the occupied territories/oblasts of Donetsk, Luhansk, Kherson, and Zaporizhzhia regions. It also includes individuals and entities working in the defence sector, such as high-ranking military officials, as well as companies supporting the Russian armed forces. The EU also continues to target actors who spread disinformation about the war. ” The statement further reads,

The EU’s statement further reiterates how its decision to impose a blanket ban on Russian cross-border crypto payments has been taken to “deprive the Kremlin’s military and industrial complex of key components and technologies and Russia’s economy of European services and expertise.” The newly announced sanctions also include banning the export of coal (used in Russian industrial plants), specific electronic components (used in the manufacturing of weapons), certain chemicals, and aviation sector materials to disable the Russian army’s strength and restrict the nation from accessing industrial and technological items.

“The sanctions also deprive the Russian army and its suppliers of further specific goods and equipment needed to wage its war on Ukrainian territory. The package also lays the basis for the required legal framework to implement the oil price cap envisaged by the G7. “

Russia has always expressed a keen interest in pursuing crypto-related payments to conduct cross-border settlements. According to a recent report issued by Kommersant, the Deputy Finance Minister of Russia, Alexei Moiseev, in collaboration with the Central Bank of Russia, had earlier agreed to draft a policy aimed at promoting cross-border crypto payments in the region.

Image: Christian Lue/Unsplash

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September 2022 Global Tech Policy Bulletin: From Turmoil in Iran to Biden’s Big Tech Impasse



September 2022 Global Tech Policy Bulletin: From Turmoil in Iran to Biden’s Big Tech Impasse

Hello and welcome back to Citizen Tech, InformationWeek’s monthly policy roundup. This month, we’re looking at President Biden’s continued impasse with the Republicans over how to regulate web content; cryptocurrency platform Ethereum going green; European Parliament asking at what point AI violates human rights; Big Tech’s battles in Brussels; Elon Musk’s attempt to give the Iranian people internet in defiance of their government; and more.

Biden, Congress, and Tech Policing

The fight over Big Tech in Congress continued this month with a tap of the spurs from the White House. On Sep. 8, President Biden met in a “listening session” with advisors and tech executives, notably from Sonos and Mozilla, to discuss the endless problems of the tech sector: misinformation and disinformation, extremist and violent content, youth mental health, privacy, competition, and lack of transparency, among others.

POLITICO has linked this session with the recent scuffle over Section 230 of the Communications Decency Act, which implies that online platforms bear no responsibility for the user content they host. Biden wants Congress to strike the section entirely, allowing the government to police content for things like misinformation and algorithmic racial discrimination. But Republicans see this as a cynical political maneuver, a wink and a nod to Silicon Valley to push conservatives off the internet altogether.

It will be up to midterm voters to break this impasse. In the meantime, it’s interesting to note that neither Google nor Meta was invited to the “listening session.” Whatever the validity of GOP suspicions, this was hardly a Big Tech conspiracy. It almost looked like the opposite.

Iran Abroad…

American authorities have issued arrest warrants for three Iranian nationals on charges of cyber-fraud and extortion (per the New York Times). The three allegedly launched malware attacks against hundreds of networks worldwide, particularly in the US and other countries hostile to Iran. The damage was serious: a children’s hospital and a domestic violence shelter figured among their victims, along with the expected government and business websites.

There’s more than a whiff of sabotage and spycraft about this case, which the Department of Justice’s statement to the Times did not obscure. All the accused work at companies connected to Iran’s Revolutionary Guards.

…And Iran at Home

The cyber-extortion plot seems to have started around 2020; it’s by clever timing or dumb luck that the American warrants should be issued just at the moment of Iran’s domestic crisis. The police murder of Mahsa Amini has sparked what looks more and more like a revolution, with scores of unarmed protesters slain. The Islamic Republic is in trouble. Authorities have blocked the internet in volatile regions, including greater Teheran and Iranian Kurdistan, since the 22nd. This was partly in response to a flood of anti-regime TikTok videos and other social media posts, often of young Iranian women cutting their unveiled hair as a gesture of defiance.

We talk so much about the importance of the internet to our daily lives that it’s worth imagining, if only as an exercise, what its complete shutdown would look like.

As to be expected, the White House condemned the Iranian government’s repression. Secretary of State Anthony Blinken announced on the 23rd that the Departments of State and the Treasury would issue a general license to allow American companies to offer web browsing, social media, video sharing, automated translation, and other services to users in Iran. Such services were previously banned under the Iranian Transactions and Sanctions Regulations.

But tech diplomacy only goes so far for a people without internet. That’s as true for states as it is for would-be, one-man states, like the Republic of Elon Musk. As PC Magazine reported, just after Blinken’s announcement, Musk ordered SpaceX’s Starlink satellite internet service to activate in Iran. Theoretically, this would mean good quality broadband beyond the control of the Iranian government. The Iranians responded the next day that they had blocked Musk’s satellite’s. That seems to have been a bluff, but whether they manage to disrupt Starlink or not, PC notes that a Starlink home satellite costs about $600.

A flash in the pan, in other words. This isn’t Musk’s first intervention in a foreign conflict: he offered Starlink services to Ukraine during the first few weeks of the invasion, and his stalled takeover of Twitter is a matter of geopolitical concern, as Citizen Tech has reported before. What gets lost in the noise of the news is how remarkable this is: a high-tech Caesar, jostling with sovereign states.

War Bulletin No. 8

Russia needs chips. Documents leaked to POLITICO show the Kremlin scrambling for materiel — not just missiles, of which the Russians are running low, but “semiconductors, transformers, connectors, casings, transistors, insulators” and other tech products, mostly produced by countries like Taiwan, the US, and Japan. The documents contained itemized “shopping lists,” organized by importance to the Russian war effort. Top of the list are chips.

International sanctions (including updated restrictions by the White House) have squeezed Russian tech supply, although a researcher at the Flemish Peace Institute (a Belgian government think tank) warns against overrating them. He told POLITICO that a gray market of online retailers and third party fronts has circumvented bans before.

But clearly, the Russians can’t rely on those channels. As early as May, Gina Raimondo of the Department of Commerce claimed that the Russian army had resorted to stripping chips out of kitchen appliances like dishwashers to press them into service as materiel, according to the Washington Post. It looks like she was right: good news for the Ukrainian army.

EU May Ban Facial Recognition

A majority of the European Parliament now supports an EU-wide ban on facial recognition technology. The center-left Socialists & Democrats parliamentary group and the left-ecologist Greens had called for such a ban for years; what made the difference this month was the decision by Renew, the centrist group whose members include La République En Marche, Emmanuel Macron’s party.

“We’re going to ban what we believe is not according to our values,” Dragoș Tudorache MEP (Romania, PLUS) told POLITICO. “As Europeans, we believe that we need to be free of the risks of mass surveillance.”

We mentioned Emmanuel Macron just now to highlight the key irony of this shifting mood. EU member governments, including France, are nervous about this. They see it as an impediment to law enforcement. Facial recognition AI is part of the anti-terrorism toolkit; the 2015 Bataclan terrorist attack in Paris is still fresh in the memory of French security forces, and unrest in Europe’s southern and eastern frontiers has governments nervous.

Nevertheless, the new anti-recognition majority in Strasbourg suggests that values may trump security concerns. A renewed dedication to human rights and republican values in response to the Ukraine War may be one cause; keeping up with American Big Tech may be another.

Vestager-1, Google-0

Moving from Strasbourg to Brussels, the European Commission won an important victory in the Court of Justice of the European Union against Google over competition law, a subject dear to Commission Vice President Margrethe Vestager. The Commission states Google is manipulating its Android phones to use the Google search engine and Google apps to the exclusion of others.

“Certain aspects of Google’s strategy for adapting its business model… constituted an abuse of a dominant position,” said the ruling. It was “an overall strategy by Google to cement its dominant position on the online general search market at a time when the importance of the mobile internet was growing significantly.”

This summer we reported on the hot autumn the European Commission faced as Big Tech firms like Google and Intel assembled their European legal teams. So far, it hasn’t looked good: Intel embarrassed the Commission in June (as Reuters reported), as did Qualcomm a month ago.

Ethereum Goes Green?

Sep. 15, the cryptocurrency platform Ethereum completed its promised “Merge,” a massive software update intended to cut 99% of the platform’s carbon emissions and protect against cyber attacks. At the heart of the Merge was a transition to proof-of-stake verification from proof-of-work, a process too complicated for even the Times’ crypto reporters to lay out succinctly. We needn’t bother here: suffice it to say that this architecture transition was incredibly risky, but seems to have worked more or less without a hitch.

The question is whether this virtuous strategic shift will soften the Biden administration’s unfriendly stance toward crypto. In August, for instance, Gary Gensler of the SEC warned the crypto sector that securities are securities, to be regulated like any capital market. The fact that a platform dealing in such securities is no longer contributing carbon dioxide to the environment will likely not change his opinion.

But who knows? Ethereum’s founder, boy wonder Vitalik Buterin, told Wired that the Merge was a key step toward legitimizing his company (and implicitly, his industry) to governments and other institutions. “Ethereum is not a proof of work network anymore, and that makes people who had… concerns, a lot more willing to use it now.”

We’ll see, Mr. Buterin.

What to Read Next: 

August 2022 Global Tech Policy Bulletin

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Black Hat at 25: Why Cybersecurity Is Going to Get Worse Before It Gets Better

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