What Every Engineer Needs to Know About Bitcoin

engineering-image-17A bitcoin (lowercase b), as a currency, has several flaws that will continue to limit its ability to replace money as we know it.  There are millions of words published on the subject, so I’ll leave it to the reader to assess arguments on both sides.  However, Bitcoin (upper case B) as a “protocol” for the transfer of value is an extremely important innovation that engineers must not ignore.  

The opportunities for the profession are sweeping and vast, but only if we take action and build this ecosystem ourselves – it is so powerful, that others will gladly do it for us.   I will try to explain this opportunity in this short 1125 word article, but please feel free to contact me with in-depth questions.

The Block Chain Protocol

The Bitcoin protocol is a brilliant innovation that cannot be un-invented cfl Jerseys wholesale – it is here to stay and it will appear in many forms long after it sheds the “bitcoin” moniker.   Formally called the Block Chain protocol,  Bitcoin was designed to solve an age old problem of double spending a currency, specifically, a virtual currency.   A currency created on a computer can be easily copied by a computer and thus negates the real productivity that a currency is supposed to represent.   The same is still true for money – paper currency is becoming increasingly complex so that it cannot be easily copied, etc.

Today, there are vast institutions from banks, corporations, a legal system, prison system, and unfathomable volumes of legislation (all imposing respective brokerage fees) acting on the behalf of sanctifying the dollar.  However, volatility in these very institutions is what threatens the value of the dollar and all currencies upon which the World depends for very basic needs.  How well is this working, really?

So, What’s the big deal?

The stakes are high.  To invent a new secure and resilient means to rapidly transmit value can in one fell swoop eliminate the friction of the massive institutions on our economy, while also decreasing the volatility and economic friction imposed on society.   This is the reason behind the media hype, congressional hearings, declarations of nations, billionaire press conferences, etc.  They are all scared to death of the disruptive potential of this little beast.  Unfortunately, bitcoin has fallen victim to many of the same deficiencies that it proposes to correct.  But these will likely be corrected in the next iterations.   

The Train Leaves The Station

The backbone of the Bitcoin protocol is called the Block Chain.  There are now hundreds if not thousands of Block Chains in existence independent of Bitcoin.  Consider the Block Chain like going down to the train station.  At some predetermined time, a train arrives and the doors open.  Everyone piles into the train Kamalei Correa Jerseys and after a predetermined amount of time, the doors close.  The corollary is that the doors cannot be opened for a predetermined amount of time and no changes, copies, or corruption can take place within that time stamp, no matter what.  Only when the train reaches the next location, the doors will open. Once the doors close for a second time, they never open again and a new block is formed.  Also, there is no way to retract this process, except by repeating it forward in flutie cfl Jersey a reverse transaction.     

The protocol has a few more features that I’ll leave to the reader to research including a public ledger where all transactions are open for everyone to see; and the train gets infinitely long with each new opening.  The transactions are opened and sealed cryptograpically and incentives are in place that compensates exchanges (the station masters) and well as those who solve a cryptographic puzzle that creates and maintains the integrity of the public ledger (miners).  

Smart Contracts

Everyone knows that money and contracts are intimately related.  In fact, money is a contract.  A contract is defined as a meeting of the minds.  As such, where the Block Chain protocol can efficiently transmit “currency”, so too can it transmit contracts.  In fact, it is so effective for articulating contracts that it’s potential to do so far eclipses its ability to replace the existing fiat currencies.  But again, money and contracts are so closely related that even this becomes a grey area – both can exist within the Block Chain.  This is hugely significant.     

So what’s in it for the Engineering ricky williams cfl Jersey profession? 

There is a special type of contract that engineering societies such as the NSPE should have a laser focus.  These are called Oracle Contracts.  For example, a client would retain a contractor to build a structure or machinery.  They would deposit funds into an escrow account managed by “smart contract” in a block chain.  This means that the computer will flip the switches instead of an accountant, banker, or attorney.  At certain points in contract and “oracle” – a third party vetting mechanism – will verify that the conditions or performance of the agreement have been met, then they would flip a switch that releases the funds to the contractor or back to the client (or through a predetermined decision tree), depending on objective observation.  

It’s All About Efficiency

This is efficient for the contractor because they don’t have to worry about getting paid as long as they meet the conditions of the contract. The client does not need to worry about getting ripped off because they are assured that the conditions of their agreement will be met.  The system is efficient because high integrity is rewarded and there Mike Ditka Youth Jerseys is little incentive to cheat which minimizes lawyers,  accountants, social dysfunction, and all manners of corruption in a public ledger that provides extraordinary analytics available for societal learning in the public domain. 

For the vast majority of projects, products, or policies in the United States and the world, a licensed professional engineer and related scientific bodies are the ONLY qualified Oracles that can be deployed to vet an astonishing variety of Smart Contracts.

Smart Contracts can be written for almost any transaction, but it is inherently an intangible transaction since a “meeting of the minds” is the true nature of the value that they articulate.  The implications of an abundant intangible economy vs. a scarce tangible economy are vast.  Silicon Valley is pumping millions of dollars into virtual currency start-ups like Ripple Labs while companies such as Ethereum  promise to make smart contracts on public ledger block chains as easy to build as dragging and dropping puzzle pieces into a web page.  This is here today – it is not a theory.

Banks, insurance companies, and attorneys will be the first to adopt smart contracts because they stand the most to lose by not doing so.  Meanwhile, engineers in the US and indeed the World are relegated to the contractor sweatshops or smothered under the weight of towering hierarchies. Tragedies such as the Oso landslide and global warming remind us of the absence of engineering oracles advocating for society and our planet.  It is imperative, now, that engineers embrace Block Chain Protocol Technologies and the deployment of Smart Contracts to elevate the profession to the top of the proverbial food chain before there someone else does it for us.       

Correcting HOA Maintenance Dysfunction

HOA Horror stories

Here’s How The Problems Start

The board of directors of a homeowner’s association is entrusted by the residents to hire a contractor to perform a complicated reconstruction project. Unfortunately, condominium board members are not very good at writing contracts or issuing requests for proposal or collecting bids. When a contractor is selected, the scope of work is often poorly established. The expectations between the community and the contractor begin to diverge. Soon, a law firm is engaged my some residents to sue the contractor for damages. After a long battle, a settlement is awarded, but it is not enough to fix the problem after expenses are paid.

A Chain Reaction

Fortunately, the contractor in the suit was insured, but this does not cover the personal, professional, and opportunity hardship of defending against the suit. The insurance company also increases the premium for coverage for condo projects. Most good contractors say, “it’s just not worth the trouble.” As the pool of available contractors dries up and the price for reconstruction increases, many condos are forced into deferring maintenance in a distorted market.

Cascading Failures

After a while, a condominium springs a few leaks in their piping system. Each leak results in a relatively small water damage claim. When the insurance company notices several claims in the same building, they begin to fear that a mainline is about to rupture next, and threaten the condominium with cancellation of their policy unless the community replaces the entire system immediately. Now the insurance industry is in a double jeopardy: they force the contractor out of the market and they force the condo out of the market to basically avoid suing themselves.

The Dysfunction Deepens

Banks will not make construction loans to condominiums that are not insured. Likewise, they will not make mortgage loans to buildings that are not insured. The property values plummet and the owners are sent under water. Soon they begin to default on the mortgages that the banks already hold. More maintenance is deferred as owners move out and renters move in. Buildings fall apart and become unsafe. Banks pull out of the market to avoid defaulting on themselves. The wider community suffers.

Correcting HOA Maintenance Dysfunction

Community Engineering Services, PLLC is currently deploying The Value Game to the condominium reconstruction market with remarkable success. The Value Game is a new class of business methods that alters the incentive structure of a distorted market so that everyone acting in their own best interest is in fact acting in the best interest of the community.

Here Is How The Value Game Is Formed

The first thing is to identify the “shared asset” in whose best interest it is for everyone to preserve. In this case, the shared asset is the physical condominium building where preservation is the context about which a community interacts.

If we look at each of the players individually, we see some consistent patterns.

  • It is obviously in the best interest of the residents to have a safe and well-maintained home.
  • It is in the best interest of the contractors to have a successful and profitable interaction with the building.
  • It is in the best interest for the Insurance industry to reduce the risks that they underwrite.
  • It is in the interest of the financial industry to loan money into a viable, organized, and disciplined community.
  • It is in the best interest of the real estate industry to represent strong values and complete insurability of assets.
  • Finally, the broader neighborhood benefits from the presence of a viable condominium community.

Project Management is Incentives Management

It is actually in everyone’s best interest that the others are successful. Once incentives can be re-aligned, the project can be managed in a manner that reinforces the community instead of tearing it apart.

Social Capital has value:

Taken together, project risk is vastly reduced and social capital is vastly increased with a simple realignment of incentives and the proper communication channels appropriately open to all. Community Engineering Services, PLLC can orchestrate a tight project by managing the schedule, the design, contracts, risk, and quality; and therefore the cost.

 

 

Addressing Water System Failures Before They Happen

water failure

In the heyday of the real estate bubble, developers flipped tens of thousands of apartment structures into condominiums – with little regard for the condition of the potable water system. Many of these galvanized steel or early copper systems are rapidly approaching the end of their service life.  Unseen, a small leak can cause thousands of dollars of damage and a ruptured main riser can amount to millions of dollars in claims and severe hardship for the community of homeowners.

Many Factors are involved

While it may be tempting to react to failure statistics, not all water systems are equal. Water chemistry varies substantially across the country, as do workmanship and materials quality – these variables may have a greater influence on mode and consequences of the failure than the age of the system itself.  The least appropriate action may be for the insurer to put the community in an emergency situation.  Poor or rushed Homeowners Associations (HOA) decisions can end up costing everyone far more than a properly replaced system that is well planned.

Insurers must first help the community to resolve to replace their potable water system.  Then, they must encourage the community to have a comprehensive piping condition assessment overseen by a qualified engineering representative. It is essential to determine the stability of the existing system without the threat of policy cancellation. Small leaks may be tolerable as long as the possibility of a large rupture is fairly remote – they are not necessarily related conditions.  Once these probabilities are known, then good decisions regarding a replacement system can be made.

Unfortunately, The HOA board is often left with a daunting task of selecting the right technology that both heals the pain and fits the budget. All pipe renewal solutions have different risks and vulnerabilities and many HOAs can fall for a slick contractor’s peddling inferior products. Potable water is a matter than requires rational analysis.

Piping Materials:

The three main classifications of piping renewal materials on the market include epoxy liner, copper re-pipe, or a variety of plastic products.  All have vulnerabilities and limitations so it is important for the insurer to take a deep hard look at the risks while the HOA can focus on the costs.

Epoxy Pipe Liner

Epoxy pipe liner is a continuous paint-like coating that is blown through an existing pipe system that has been cleaned by an abrasive sandblasting. Epoxy has the advantage of being relatively fast and minimally invasive. The problem with epoxy is there is no certain way to know the pipe is clean on the inside and no certain way to know if the cleaning process compromises the strength of the pipe.  Finally, if we were to test the epoxy, and adhesion is shown to be poor – then what?  There is no way to remove the epoxy and breaking the continuity of the coating breaks the protection. Our research has found that an epoxy failure can very likely happen at the exact place where the pipe is already at its weakest. This does little to mitigate the peril of the multi-million dollar rupture claim.  While we are confident that epoxy may be applied correctly, we are not confident the epoxy would be risk/cost competitive over a far superior re-pipe.

New Copper Re-pipe:

Copper is a very familiar to most people from its use in the penny.  The tarnish that forms on copper actually protects it from corrosion. Under the right conditions, a 50-year service life is a reasonable expectation if that tarnish coat is not disrupted. Copper plumbing has been extensively studied and many professional codes and standards apply to its use. Consequently, many copper failures can be traced directly back as failures to apply these standards; improper design, poor workmanship, aggressive water chemistry, or inferior materials, etc. All are known perils, which may be avoided or mitigated with the assistance of a good technical advisor representing the best interest of the owners.

Cross Linked Polyethylene (PEX)

PEX is a white or colored plastic that is fairly stiff but also quite flexible.  A slightly weaker form is commonly used in plastic milk jugs. PEX has been used in the US for 20-25 years, and has demonstrated an excellent track record in millions of installations.  PEX is easy to install, relatively low cost, and enjoys broad market acceptance.   PEX has two main problems – both of which are avoidable.  Lawsuits have been filed over failures due to ‘dezincification’ of low cost brass fittings.  It is extremely important to avoid some sources of fittings with high zinc composition in alloy.  Lawsuits have also been filed over the leaching of chemical compounds from types A and C PEX – the use of Type B PEX largely eliminates this problem.   Again, a good owner’s representative can help navigate this landscape. Many other plastic piping materials exist, but not without similar controversies.

New Polypropylene Pipe

A newcomer to the pipe materials selection is polypropylene – polypropylene is a common recyclable material with important uses in medical and food grade applications. Polypropylene is a very simple molecule of carbon and hydrogen – nothing bad goes in so nothing bad can leach out.  While new to the US, we have traced its use in Europe to at least 30 years back with a very low failure incident rate. Polypropylene has excellent thermal and acoustic properties and is widely considered the most environmentally friendly piping material available.  Some disadvantages include special fusing irons and specially trained installers are required.

Addressing Water System Failures Before They Happen

Water system renewal can be a confusing process – and certainly not a hands-off affair for the insurer.  A qualified owner’s representative to help navigate the landscape of technologies and contractors who sell them.  When the project is complete, the representative can help petition the underwriter, the financial industry, and the real estate market for adjustments that reflect the value of your renewed new system.   The technical representative can help eliminate engineering and construction risks without interfering with the normal dynamics of a wise and proactive homeowners association.