Governments want to regulate bitcoin – is that even possible?

All that glitters is not gold. Antana, CC BY-SA

The UK government has shown its intention to regulate bitcoin and other digital currencies, drawing them into the realms of financial regulation applied to banks and other financial services. But bitcoin is not a bank or a financial company based in the City. How would regulation apply to something that exists in the cloud?

George Osborne’s announcement in his pre-election budget contained three measures. First, to apply anti-money laundering regulation to digital currency exchanges, for which formal consultation will begin soon after the election. Second, for the British Standards Institution and the digital currency industry to work together to develop voluntary standards for consumer protection. And third, £10m funding for the Research Councils, Alan Turing Institute and Digital Catapult to partner with industry to research the opportunities and challenges posed by digital currencies.

Balancing innovation and regulation

The government faces the familiar problem of needing to provide a suitable environment for innovation to flourish, while also ensuring that firms working in the same industry performing similar functions are regulated in the same way. All of this needs to be done in such a way as to protect the consumer and, in this case, perhaps the wider financial system itself. Heavy-handed regulation risks stifling innovation and driving away potential digital currency-based businesses. After all, as a truly global currency that exists in the cloud, the physical location of a digital currency-based business is irrelevant.

Too little regulation may leave digital currencies vulnerable to criminality – and the effect of this criminality consumers and the economy. The digital currency industry already faces problems that include theft from digital currency exchanges, malware and attacks on third-party websites, as well as the potential to aid money laundering. For example, within a week of Osborne’s announcement, another bitcoin exchange, Paybase, ceased allowing withdrawals and its administrator disappeared.

The realms of the possible

The regulation of digital currency is important in order to mitigate these sorts of risks and prevent abuse that destroys trust in the system. It is essential if digital currencies are to develop a major role in the UK economy. However their nature presents serious regulatory challenges: there is no central issuer, no control over supply and demand and no central organisation to impose regulatory requirements upon.

This might suggest the very idea of bringing them within the regulator’s embrace is futile. However, the aspect in which digital currencies are accepted as payment for goods and services seems a point at which to apply anti-financial crime measures – for example, customer due diligence measures when high-value goods are purchased using digital currency. In this sense they come under the same regulatory umbrella as cash, as defined in the Money Laundering Regulations 2007.

Striking where the virtual becomes real

A further approach favoured by the government is to focus on the digital exchange services – the sites where digital currencies are exchanged for real-world dollars, pounds or euros. Two key anti-money laundering initiatives are customer due diligence and suspicious activity reporting.

Customer due diligence – where banks or financial services must require proof of their customer’s identity – is one of the most significant aspects of anti-money laundering regulation. Without this there is no paper trail leading back to the criminal, but this cannot be applied in all instances as it would be too much of a burden. So it will have to be applied where there is most risk, an approach that reflects the different aspects that warrant regulation, but which treats all companies within the sector equally by creating a level playing field.

Suspicious activity reports would be more difficult to implement, not least because at present there is limited legitimate use of digital currencies. The main use for digital cryptocurrencies has been for purchasing illegal goods and services from markets in the dark net, such as Silk Road. This makes it difficult for an exchange to identify a “suspicious transaction”.

Consumer protection measures could be brought in by the introduction of a US-style licensing system for digital currency exchanges. A side effect of this approach is that it may simply drive businesses overseas to evade regulation. Ultimately, digital currencies are not restricted by national borders and, in that sense, it is not important from where they operate.

Another challenge is how to apply sanctions in the event regulations are breached. Sanctions are important to deter crime, but without the information gained from applying measures such as customer due diligence there may not be sufficient information to trace someone to punish. In fact, the entire point of virtual currencies like bitcoin is that they’re anonymous.

Given the difficulties of effectively regulating digital currencies, any research into the field is to be welcomed, as it’s clear there are considerable challenges to overcome before digital currencies can become an integral part of the mainstream economy.

John Nash, Louis Nirenberg share math’s Abel Prize

Pair to split ‘Nobel of mathematics’ for work on partial differential equations

John Nash (left) and Louis Nirenberg (right) will receive the 2015 Abel Prize for their work on partial differential equations.

Nash: Courtesy of Princeton; Nirenberg: ©NYU Photo Bureau: Hollenshead

The 2015 Abel Prize, sometimes called the Nobel Prize of mathematics, will go to John F. Nash Jr. and Louis Nirenberg for work on partial differential equations, which are important in both pure math and describing natural phenomena.

Nash, of Princeton University and well-known as the subject of the book and movie A Beautiful Mind, shared the 1994 Nobel Prize in economics for work on game theory.

Nash and Nirenberg, of New York University, will split the approximately $760,000 prize for “striking and seminal contributions to the theory of nonlinear partial differential equations and its applications to geometric analysis,” the Norwegian Academy of

Newly discovered layer in Earth's mantle can affect surface dwellers too

No Earths were harmed in the making of this image Johan Swanepoel/Shutterstock

Sinking tectonic plates get jammed in a newly discovered layer of the Earth’s mantle – and could be causing earthquakes on the surface.

It was previously thought that Earth’s lower mantle, which begins at a depth of around 700 km and forms the major part of the mantle, is fairly uniform and varies only gradually as it goes deeper.

However, our new study points towards a layer in the mantle characterised by a strong increase in viscosity – a finding which has strong implications for our understanding of what’s going on deep down below our feet.

The deep unknown

The Earth’s mantle is the largest shell inside our planet. Ranging from about 50 km to 3000 km depth, it links the hot liquid outer core – with temperatures higher than 5,000K – to the Earth’s surface.

The movement of materials within the Earth’s mantle is thought to drive plate tectonic movements on the surface, ultimately leading to earthquakes and volcanoes. The mantle is also the Earth’s largest reservoir for many elements stored in mantle minerals. Throughout Earth’s history, substantial amounts of material have been exchanged between the deep mantle and the surface and atmosphere, affecting both the life and climate above ground.

Because mankind is incapable of directly probing the lower mantle – the deepest man-made hole is only around 12 km deep – many details of the global material recycling process are poorly understood.

We do know, however, that the main way materials are transferred from the Earth’s surface and atmosphere back into the deep mantle occurs when one tectonic plate slides under another and is pushed down below another into the mantle.

A strong increase in the viscosity leads to a stiff layer which catches sinking slabs Hauke Marquardt

A trap for sinking plates

So far most researchers assumed that these sinking plates either stall at the boundary between the upper and lower mantle at a depth of around 700 km or sink all the way through the lower mantle to the core-mantle boundary 3,000 km down.

But our new research, published in the latest online issue of Nature Geoscience, shows that many of these sinking slabs may in fact be trapped above a previously undiscovered impermeable layer of rock within the lower mantle.

We found that enormous pressures in the lower mantle, which range from 25 GPa (gigapascal) to 135 GPa, can lead to surprising behaviour of matter. To picture just how high this pressure is, balancing the Eiffel Tower in your hand would create pressures on the order of 10 GPa. These pressures lead to the formation of a stiff layer in the Earth’s mantle. Sinking plates may become trapped on top of this layer, which reaches its maximum stiffness at a depth below 1,500km.

Under pressure

We formed this conclusion after performing laboratory experiments on ferropericlase, a magnesium/iron oxide that is thought to be one of the main constituents of the Earth’s lower mantle. We compressed the ferropericlase to pressures of almost 100 GPa in a diamond-anvil cell, a high-pressure device which compresses a tiny sample the size of a human hair between the tips of two minuscule brilliant-cut diamonds.

A diamond-anvil cell compresses a tiny sample under high pressure between two minuscule diamonds. Image via Hauke Marquardt, Author provided

While under compression, the ferropericlase was probed with high-energy x-rays to investigate how it deforms under these high pressures. We found that the ability of the material to resist irreversible deformation increased by over three times under high pressures.

These results were used to model the change of viscosity with depth in Earth’s lower mantle. While previous estimates have indicated only gradual variations of viscosity with depth, we found a dramatic increase of viscosity throughout the upper 900 km of the lower mantle.

Such a strong increase in viscosity can stop the descent of slabs and, in doing so, strongly affect the deep Earth material cycle. These new findings are supported by 3-D imaging observations based on the analysis of seismic wave speeds travelling through the Earth that also indicate that the slabs stop sinking before they reach a depth of 1500 km.

Surface effects

If true, the existence of this stiff layer in the Earth’s mantle has wide-ranging implications for our understanding of the deep Earth material cycle. It could limit material mixing between the upper and lower parts of the lower mantle, meaning mantle regions with previously different geochemical signatures stay isolated in separate patches instead of mixing over geologic time.

What’s more, a stiff mid-mantle layer could also put stress on slabs much closer to the Earth’s surface, potentially acting as a trigger of deep earthquakes.

We are really just at the beginning of a deeper understanding of the inner workings of our planet, many of which ultimately affect our life on its surface.

One photon wrangles 3,000 atoms into quantum entanglement

A particle of light is all it takes to establish a quantum connection between nearly 3,000 atoms, scientists report in the March 26 Nature. The finding brings physicists a step closer to studying the macroscopic effects of quantum entanglement, which links the properties of microscopic particles.

MIT quantum physicist Vladan Vuletić and colleagues bounced photons between two mirrors in a space that contained about 3,100 rubidium atoms cooled to nearly absolute zero. Occasionally the polarization of a photon changed slightly, indicating that the photon had interacted with the atoms. Measurements revealed that each brief interaction coaxed at least 2,700 of the atoms to become entangled.

The researchers hope to use clusters of entangled atoms to build extraordinarily precise atomic clocks.

A healthy public domain generates millions in economic value -- not bad for 'free'

Usefulness and value extends far beyond the century in which they were created. British Library

It’s frequently claimed that copyright law should be made more restrictive and copyright terms extended in order to provide an incentive for content creators.

But with growing use of works put into the public domain or released under free and permissive licenses such as Creative Commons or the GPL and its derivatives, it’s possible to argue the opposite – that freely available works also generate value.

Public domain works – those that exist without restriction on use either because their copyright term has expired or because they fall outside of the scope of copyright protection – create significant economic benefits, according to research my colleagues and I have conducted, now published in a report for the UK government’s Intellectual Property Office.

We found a surprising amount of transformative reuse of public domain materials by commercial users – economic value that wouldn’t have been possible without access to a thriving public domain. We tried to identify precisely how and where economic value is generated from public domain works in order to establish where there’s scope for improvement.

Setting the copyright term

Literary and artistic works in the UK are protected under copyright for 70 years following the death of the author. At that point, copyright expires and anybody may copy the work and make it available to others. Consumers can then enjoy the benefit of accessing the work for a lower price, and in some cases for free. For example the Project Gutenberg releases digital versions of classic literary texts that are in the public domain. The British Library’s Mechanical Curator project digitises illustrations from printed books and makes them available on Flickr.

The public domain marque. anarres

Conversely, this means rights holders will no longer be able to restrict copying of their work and will potentially lose revenue. It’s for this reason that some rights holders have lobbied governments to extend the scope of copyright so that they can continue to extract revenue from a small number of old, popular works. The Disney Corporation is one example: Some works featuring Mickey Mouse would have fallen out of copyright in 2003 had US Congress not passed the Copyright Term Extension Act in 1998 (derided by some as the Mickey Mouse Protection Act), which extended the US copyright protection from 50 to 75 years (95 years for corporate works).

Protection or obstruction?

Some economic theorists argue that long or indefinitely renewable copyright protection is an optimal solution because it creates an incentive for rights holders to keep works available. However, even in-copyright works can disappear from the market because rights holders decide that it’s not worth the effort to print or publish the work.

Another, perhaps more important, problem is that it’s difficult to build upon works protected by copyright to create new products. It’s costly and time-consuming to seek permission to use a work, and sometimes the original creator (or those to whom the rights have passed) cannot be located or does not wish to allow a derivative use.

For example, David and Stephen Dewaele, the Belgian brothers behind 2ManyDJs, had to have 187 samples approved in order to release their 2002 album As Heard on Radio Soulwax Pt. 2. Rights owners rejected 62, 11 were untraceable, and 114 were cleared – a process that took the best part of three years.

Creative Commons licenses allow greater flexibility. Creative Commons

Creative Commons licenses were developed to help solve this problem. By stating terms for the attribution and use for a work but freeing it from copyright restrictions from the outset, a Creative Commons-licensed work reduces costs for those wishing to use it and allows them to make use of a work within the bounds of the licence.

Use and re-use

We interviewed UK media firms and found that those that had worked with public domain materials were not put off by the fact their source material could also be used by others. Many firms reported that they saw their contributions as part of an ecosystem in which the joint efforts of creators, fans and audiences enriched a narrative product not owned by a single contributor.

Using data from crowdfunding platform Kickstarter, we examined how products based on public domain works performed compared with entirely original products or those under copyright. We found that public domain-inspired works were more likely to succeed and raised more funding (56%) compared with untested, entirely original projects. We also found that a third of all crowdfunding pitches incorporated various sources of intellectual property and derived works into the final product.

Public domain and other works on Kickstarter Kristofer Erickson, Author provided

Finally, we looked at how the availability of public domain materials could add value to non-commercial products or services, which may in turn create a commercial benefit. For example Wikipedia relies on public domain and Creative Commons licensed images to illustrate its pages. By extrapolating from a sample of 1,700 biographical pages for notable authors, musical composers and lyricists, we arrived at an estimated value for public domain images across English language Wikipedia.

Based on the costs of providing replacement images from commercial sources, we estimate that public domain material contributes £138m per year for the 1,983,609 English language Wikipedia pages. Having controlled for the notoriety of certain persons or subjects on Wikipedia it’s also apparent that pages with public domain images (rather than none) attract between 17-19% more visitors. Were Wikipedia a commercial website with advertising, the increased traffic would generate an additional £22.6m a year.

Digital creativity and innovation are vital components of today’s economy. Any policies that encourage growth in the creative industries should not only consider the value represented in the trade of copyrighted works, but also the range of public domain material that inspires or forms the basis of new products – and the importance of protecting and nurturing a thriving public domain.

How particle accelerator maths helped me fix my Wi-Fi

"The things I do for my housemates' downloading habit..." Maths by Sergey Nivens/www.shutterstock.com

Electromagnetic radiation – it might sound like something that you’d be better off avoiding, but electromagnetic waves of various kinds underpin our senses and how we interact with the world – from the light emissions through which your eyes perceive these words, to the microwaves that carry the Wi-Fi signal to your laptop or phone on which you’re reading it.

More or less every form of modern communication is carried by electromagnetic waves. They whisk through the antenna on your car, travel through walls whenever you need to make a phone call inside, yet also inexplicably reflect from seemingly nothing in the Earth’s upper atmosphere.

This happens because the atmosphere becomes a plasma at high altitudes – a state of matter where atoms split apart and electrons are no longer bound to their parent nuclei. Plasmas have interesting properties, as they react very strongly to electromagnetic fields. In this case usefully: at low enough frequencies it becomes possible to bounce radio signals around the world, extending their range.

It’s the interesting interactions between high-powered electromagnetic waves and plasmas that my research group and I study. The most intense electromagnetic waves in the world are found in the form of high-power laser pulses. The UK hosts some of the most powerful laser systems in rural Oxfordshire, and the same idea of using electromagnetic waves to accelerate particles is used at the Large Hadron Collider in CERN.

It’s all in the maths

We can accurately predict the interactions of intense electromagnetic waves and plasmas, as the underlying physical processes are governed by Maxwell’s equations – one of the triumphs of 19th century physics that united electric and magnetic fields and demonstrated that light is a form of electromagnetic wave.

Solving Maxwell’s equations by hand can be tortuous, but it transpires that a clever algorithm invented in the 1960s and rediscovered since makes the exercise relatively simple given a sufficiently powerful computer.

Armed with the knowledge of Maxwell’s equations and how to solve them, I recently turned my attention to a much simpler but more widespread problem, that of how to simulate and therefore improve the Wi-Fi reception in my flat. While “sufficiently powerful” in an academic sense often means supercomputers with tens of thousands of processors running in parallel, in this case, the sufficiently powerful computer required to run the program turned out to be a smartphone.

The black circle represents the router, and the ‘hotter’ the colour the stronger the signal strength.

For this trick you will need one Maxwell

The electromagnetic radiation emanating from the antenna in your wireless router is caused by a small current oscillating at 2.4GHz (2.4 billion times per second). In my model I introduced a current like this and allowed it to oscillate, and Maxwell’s equations dictated how the resulting electromagnetic waves flow. By mapping in the actual locations of the walls in my flat, I was able to produce a map of the Wi-Fi signal strength which varied as I moved the virtual router.

The first lesson is clear, if obvious: Wi-Fi signals travels much more easily through free space than walls, so the ideal router position has line-of-sight to where you’ll be using it.

The waves spread and fill the flat, then settle into a ‘standing wave’.

Sometimes it appears that the waves have stopped changing, and instead flicker in the same places. This is the phenomenon of a standing wave, where Wi-Fi reflections overlap and cancel each other out. These dark spots on the map (or “not spots”) indicate a low Wi-Fi signal, and are separated by several centimetres. Recently, a fellow enthusiast managed to map this phenomenon in three dimensions, as explained in this video.

So the second lesson is less obvious and more interesting: if reception is poor in a particular position, even a slight change of the router’s position may produce significant improvement in signal strength, as any signal dark spots will also move.

101 uses for electromagnetic waves

After publishing my findings I was struck by the number of people eager to perform simulations of their own. Ever eager to spread the gospel of electromagnetism, I bundled the simulation into an Android app to provide others with a simulated electromagnetic wave-based solution to a common modern problem: where’s the best place for my Wi-Fi router?

Assuming few would be interested, I was surprised when news spread via social media and the several thousand copies of the app sold over the course of a few hours.

Sales have gradually dwindled but the message remains clear: not only are electromagnetic waves fascinating, mathematically elegant and supremely useful, they can make your life easier, your internet connection stronger, and even make you a bit of money too.

A crash with no obvious cause: we must wait for answers from Germanwings black box

Recovering the lost aircraft will be hampered by the terrain, snow and weather. EPA/Sebastien Nogier

An investigation has begun into the unexplained crash of Flight 4U9525, of budget airline Germanwings, which crashed into the Alps in southeastern France en route from Barcelona to Dusseldorf with the loss of all 150 passengers and crew.

The aircraft descended from cruising height of 38,000ft to around 6,000ft in eight minutes before air traffic control lost contact just before 11am. According to witnesses who saw the aircraft descend, there was no sign of smoke or in-flight explosion, and weather at the time was good. The black box flight recorder has been found, and will reveal more in time.

Such incidents are actually quite rare in statistical terms. Flight 4U9525 appears to have involved a major malfunction of some kind as the aircraft was cruising, while the majority of accidents occur during take-off or landing. In fact most air accidents that involve fatalities also result in a large proportion of the passengers surviving because they occur nearer the ground, a fact that is not generally appreciated but sadly also not the case here.

The abrupt end of the aircraft’s flight path over the Alps. EPA/ZIPI

The aircraft: Airbus A320

The aircraft, an Airbus A320, is a model that is in great demand from all parts of the world, and its reputation for safety and reliability is unequalled. It is one of a smaller, single-aisled family that comprise the A318, A319, A320 and A321, and has been in production since the late 1980s, and sales of the updated models show little sign of decline.

The A320 family has an accident rate of 0.14 fatal crashes per million departures, which is considered excellent. The total number of accident fatalities is below 1,500, which good considering its two decade service history and that more than 6,000 are in daily use.

There have been some memorable A320 accidents; in June 1988 an Air France airliner crash landed in high trees while performing a fly-by-wire landing at the Mulhouse air display in France. Three of the 136 passengers on board died, and airliners are no longer permitted to perform at airshows with passengers on board.

In January 2009, in a remarkable piece of airmanship a US Airways A320 taking off from La Guardia in New York had a double engine failure from birdstrikes and subsequently glided to a perfect ditching in the River Hudson. Of the 155 people on board there was only a single serious injury.

In this case it’s been reported that the particular aircraft involved was 24 years old, with the aircraft having previously been in service with German national airline Lufthansa before being transferred to Germanwings, a Lufthansa subsidiary. While this may surprise some, there’s little doubt that its full service records will show it was airworthy before its final departure, and that all necessary servicing had been completed in the years since manufacture. European airspace and flights are heavily audited by the European Aviation Safety Agency and are considered very safe. Lufthansa operates 100 A320s, Germanwings 60.

The A320 family were among the first so-called “fly-by-wire” airliners, a great innovation when they first flew. In simple terms, the cables and pulleys connecting the moveable flight control surfaces (elevators, rudder and ailerons) to the pilots' controls are replaced by electronic connections. These permit lighter pressure, swifter response, and better handling than previous manual systems, and do away with the image of “wrestling with the stick”. It’s now accepted that fly-by-wire technology, once the preserve of military aircraft, are perfectly safe for commercial use.

In-flight emergency

With regard to airborne emergencies it goes without saying that there are procedures for all eventualities, and that these are practised by aircrews on a very regular basis. In all cases, teaching on the impact of human factors dictates that one pilot physically flies the aircraft while another attempts to isolate or solve the problem using checklist procedures, and will advise the cabin crew and the air traffic authorities that an emergency exists.

So it’s puzzling to investigators that Flight 4U9525 issued no “mayday” distress call, as confirmed by France’s aviation authority despite earlier contradictory reports. This is unusual: if the situation was so catastrophic that it led to an immediate and rapid descent, for whatever reason, then possibly the aircraft or its communications systems had become disabled in some way. If it was cabin depressurisation that caused such a descent, each pilot has about 15 minutes of independent oxygen supply (the passengers have no more than 12 minutes' worth).

It’s tragic that even at the low altitude of around 6,000ft that the aircraft was unable to avoid colliding into the lower slopes of the Alps, and that all on board perished. What remains certain is that the air accident investigators will piece together Flight 4U9525’s final moments to assemble a true picture of what happened in the run up to the crash in an effort to prevent its re-occurrence. Sad though these events are, commercial air travel remains the safest form of travel in the 21st century, and is likely to remain so.