Tech Brew Ride Home - Mon. 07/31 – Will Only Bitcoin Survive?

Episode Date: July 31, 2023

Brian Armstrong strongly hints that US regulators believe only Bitcoin is legal. A deep dive into what we can expect from this year’s iPhones. Is the US crackdown on tech to China having a real impact? And the artist that tried to take his art out of Stable Diffusion, only to have the community pull him back in. Sponsors: TryNom.com/ride CalderaLab.com code ride for 20% off Links: SEC asked Coinbase to halt trading in everything except bitcoin, CEO says (FT) The iPhone 15 Pro Will Have Thinner Bezels in Step Toward Apple’s Dream (Bloomberg) U.S. Hunts Chinese Malware That Could Disrupt American Military Operations (NYTimes) China’s Tech Distress Grows as U.S. Chip Sanctions Bite (WSJ) An Internet Veteran’s Guide to Not Being Scared of Technology (NYTimes) Greg Rutkowski Was Removed From Stable Diffusion, But AI Artists Brought Him Back (Decrypt) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home from Monday, July 31st, 2023. I'm Brian McHullough today. Brian Armstrong strongly hints that U.S. regulators believe only Bitcoin is legal. A deep dive into what we can expect from this year's iPhones is the U.S. crackdown on tech to China having a real impact. And the artist that tried to take his art out of stable diffusion, only to have the community pull him back in. Here's what you miss today in the world of tech. Brian Armstrong says the SEC asked Coinbase to halt trading all crypto except Bitcoin without explaining its interpretation of the law before it sued Coinbase recently. If true, this might

line up with some whispers we've heard that Gary Gensler and others in the federal government only consider Bitcoin to be the one thing in crypto that is not a security. Quoting the FT. Coinbase chief executive Brian Armstrong told the Financial Times that the SEC made the recommendation before launching legal action against the NASDAQ listed company last month for failing to register as a broker. The SEC's case identified 13 mostly lightly traded cryptocurrencies cryptocurrencies on Coinbase's platform as securities, asserting that by offering them to customers, the exchange fell under the regulator's remit. But the prior request for Coinbase to delist every one of the more than 200 tokens it offers, with the exception of flagship

token Bitcoin, indicates that the SEC under Chair Gary Gensler has pushed for wider authority over the crypto industry. They came back to us and they said, we believe every asset other than Bitcoin is a security, Armstrong said. And we said, well, how are you coming to that conclusion? Because that's not our interpretation of the law. And they said, we're not going to explain it to you. You need to delist every asset other than Bitcoin, end quote. If Coinbase had agreed, that could have set a precedent that would have left the vast majority of American crypto businesses operating outside the law unless they registered with the commission. We really didn't have a choice at that point, delisting every asset other than Bitcoin, which, by the way, is not what the law

says, would have essentially meant the end of the crypto industry in the U.S., Armstrong said. It kind of made it an easy choice. Let's go to court and find out what the court says, end quote. Gensler has previously said he believes most cryptocurrencies with the exception of Bitcoin are securities. However, the recommendation to Coinbase signals that the SEC has adopted this interpretation in its attempts to regulate the industry. Ether, the second largest cryptocurrency, which is fundamental to many industry projects, was absent from the regulator's case against the exchange. It also did not feature in the list of 12 crypto asset securities specified in the SEC's lawsuit against Binance, end quote. Mark Gurman, Apple Scoop Monday. German's newsletter over the weekend

featured a deep dive into Apple's plans for the new iPhones coming this fall, including an iPhone 15 pro with 1.5 millimeter bezels, a step towards a future assumed. borderless iPhone screen? Quote, Apple designers have long dreamed of an iPhone that is truly all-screen, with no borders around the display and no cutouts for cameras or sensors. With the iPhone 15 this fall, Apple will take another step toward that goal. This year, two of the biggest changes to the 15 line will get Apple closer to that dream iPhone.

The standard iPhone 15 models will trade in the notch for the dynamic island, while the pro-and-pro-max displays will be made with a new technology. low injection pressure over molding or LIPO as it's dubbed inside Apple. That new process will shrink the border size around the display to 1.5 millimeters from about 2.2 millimeters on current iPhones. LIPO was first used in the Apple Watch Series 7 to make that device's borders thinner and increase the size of the display. And Apple plans to eventually bring the feature to the iPad as well, I'm told. Beyond the new screens, the iPhone 15 and 15 Pro Lines will get a series of other new features, marking the biggest update since the device

added 5G capability three years ago. Let's start with the iPhone 15 and 15 plus. As has been expected, these phones will look similar to the current models, but add major camera improvements and the A16 chip from the iPhone 14 Pro line. They'll also swap out the current lightning connector for USBC. As I wrote in January, the pro models will get a new design replacing the shiny and fingerprint-prone stainless steel edges with something stronger, lighter, and more premium, titanium. Apple has long sought to bring titanium to the iPhone, and using the material with recent watches was a test for bringing that material to its highest volume device. As I indicated in May of last year, the iPhone 15 is moving to USBC. That will enable faster data transfer speeds for those who still sync

with a cable, but some customers will see the change as a costly headache. Major rear camera upgrades, including updated lenses and the ability to get a much wider range of optical zoom on the largest model. And with the regular iPhone 15 models getting last year's A-16 processor, the new pro phones are moving to a three-nanometer chip that is noticeably snappier. Apple had planned another major feature in this year's pro models, touch-sensitive buttons with haptic feedback for the volume controls, the mute ring switch, and the power button. Like track pads on max, the buttons wouldn't physically press in, allowing new software tricks and reducing the number of breakable components on the device.

The enhancement, code-named Bongo, was canceled after a slew of engineering problems. There was also concerns about the cost increase compared with regular buttons. In the end, the company decided to keep standard buttons for volume and power, but turn the mute ring switch into a so-called action button, like on the Apple Watch that users can customize via software. One other note on the next iPhone, I would look out for at least minor price increases across all four models outside of the U.S. I also wouldn't rule out a price increase in the U.S.,

at least for some of the pro models, given the move to titanium and the costlier camera system on the iPhone 15 Pro Max. For context, Apple charges $100 more for titanium watches than their stainless steel counterparts, end quote. Sources are telling the New York Times that the Biden administration is hunting for malware. It believes China hid inside critical infrastructure, mainly aimed to disrupt the military if a conflict between this country and China were to ensue. quote, the Biden administration is hunting for malicious computer code. It believes China has hidden deep inside the networks controlling power grids, communication systems, and water supplies that feed military bases in the United States and around the world, according to American military intelligence and national security officials.

The discovery of the malware has raised fears that Chinese hackers, probably working for the People's Liberation Army, have inserted code designed to disrupt U.S. military operations in the event of a conflict, including if Beijing moves against Taiwan in coming years. The malware, one congressional official said, was essentially a ticking time bomb that could give China the power to interrupt or slow American military deployments or resupply operations by cutting off power, water, and communications to U.S. military bases. But its impact could be far broader because that same infrastructure often supplies the houses and businesses of ordinary Americans, according to U.S. officials. The first public hints of the malware campaign began to emerge in late May when Microsoft said it had detected mysterious computer code in telecommunications. systems in Guam, the Pacific Island with a vast American air base and elsewhere in the United States. But that turned out to be only the narrow slice of the problem that Microsoft could see through its own networks. More than a dozen U.S. officials and industry experts said in interviews over the past two months that the Chinese effort goes far beyond telecommunication systems and predated

the May report by at least a year. They said the U.S. government's effort to hunt down the code and eradicate it has been underway for some time. Most spoke on the condition of the of anonymity to discuss confidential and in some cases classified assessments. They say the investigations so far show the Chinese effort appears more widespread in the United States and at American facilities abroad than they had initially realized. But officials acknowledge that they do not know the full extent of the code's presence in networks around the world, partly because it's so well hidden, end quote. Okay, but on the flip side of that, remember how the Biden administration has done a whole campaign of export controls in an effort to hobble the Chinese tech industry? How's that going?

Well, customs data seems to indicate that China's chip imports fell 22% year over year during the first half of 2023, and chip-making equipment imports fell 23%, suggesting U.S. export restrictions are working. Quoting the journal, Semiconductor imports to China are falling. Chinese companies say they are struggling to get key components and machinery, and chipsets that have been remodeled to make them less powerful so they fall within U.S. rules are now threatened by the possibility of additional restrictions. The distress signals show Washington's nine-month-old policy of denying Beijing access to the most advanced

semiconductors and the tools to make them is starting to bite, despite loopholes and workarounds keeping some key components flowing. The controls appear to be making it harder and costlier for China to gain certain inputs, said Emily Benson, a senior fellow specializing in trade and technology at the Center for Strategic and International Studies, a think tank. Leading chip manufacturing regions accounted for the lion's share of the decline in semiconductor imports. Taiwan, home to Taiwan semiconductor manufacturing, the world's largest chip maker, accounted for about 40% of the drop in China's chip imports during the first five months of the year. South Korea, home to Samsung, S.K. Heenix, and other chip giants accounted for almost one-third. The U.S. restrictions affect foreign companies

that use U.S. chip-making tools, which virtually all of them do. There are likely other factors that play behind drooping semiconductor imports, though. China's economy is slowing amid weaker global demand. Beijing has also invested heavily in domestic technology industries and a push for greater self-reliance, though that will take time to bear fruit. In the meantime, China lacks the ability to make the most advanced chips with key elements in their supply chain controlled by the U.S. and its allies, end quote. I was tempted to save this for the long reads later this week, but I wanted to highlight real quick this profile of Mike Maznick, who founded TechDirt back in 1998, and who is considered by lawmakers, CEOs, and activists as an essential guide for what's

happening in tech. You know, I quote from Mike all the time for his analysis, often of controversial issues. I tend to trust his insights and even his analysis and opinions. Quoting the times, by sheer longevity and a deep knowledge of tech history, Mr. Maznik has become something of a Silicon Valley Oracle. His message is to embrace change, even when painful, and to beware of knee-jerk legal protections with unintended consequences. It hasn't paid very well, but what Mr. Maznick doesn't have in wealth, he makes up for in influence. Lawmakers, activists, and executives consider him an essential guide for what's happening in the technology world and what to do next. Whenever tech policy news breaks,

I always want to see what Mike's take is going to be, said Senator Ron Wyden, Democrat of Oregon, in a statement. Mark Zuckerberg, the head of meta, has called him insightful and reasonable. The tech entrepreneur, Anil Dash, said he shows up. up and ships every day and has been filing constantly for decades on a beat that is thankless, end quote. Here's further example of Mike's influence, according to this piece. Quote, when they talked by phone, Mr. Zuckerberg asked Mr. Maznick what Facebook was doing wrong. Given his distaste for powerful tech companies that exercise too much control over people's internet experience, Mr. Maznick suggested that Mr. Zuckerberg considered decentralizing.

He talked about a concept he has been pushing called protocols, not platforms, software that it is interoperable like email so people from different services can interact. Outside developers can build on it as well. This would open up a market for different content filters and algorithms that users could choose from, giving them more control over what they did and didn't see. It would make people like Mr. Zuckerberg less powerful because his company would be allowing third parties to be the arbiters of online speech, but it could also deflect the complaints they got about harmful speech and censorship.

The idea had resonated with Jack Dorsey, the Twitter co-founder who credited Mr. Maznick, has an inspiration for the creation of Blue Sky, a Twitter clone that embraced that approach. Mr. Maznick spent more than an hour on the phone with Mr. Zuckerberg, but wasn't sure if he was really listening until last month when Mr. Zuckerberg launched his own Twitter clone threads. The news release emphasized that the plan was to make it a protocol interoperable with other apps, including Mastodon. Mr. Maznick celebrated with a long blog post, end quote. Finally today, a digital artist was frustrated that a lot of AI seemed to be producing results

that looked a lot like his artwork. So he opted out of the stable diffusion training set, and that didn't work because the AI community made a model copying his style. Which is notable because you know how a lot of folks are talking about an explosion of open source AI? Well, things like this would raise a ton of questions around open source models and their ability to be used without getting tied up in all sorts of legal problems. Quoting to Crypt. Digital artist Greg Rutkowski wants nothing to do with art. created using artificial intelligence, but AI creators won't leave him alone. Known for his vivid, surreal style, Rukowski is immensely popular among enthusiasts of AI-generated

art. In fact, his name became the most invoked keyword used by AI artists looking to mimic a specific artistic style. But he wanted nothing to do with the technology. After vocally opposing the AI art trend, Stability AI, creators of the popular AI image generator stable diffusion, responded by removing his work from their data set. But the community now has created a tool to mimic Routkowski's style against his wishes. And since Stable Diffusion is open source, there's nothing he or Stability AI can do about it. Rukkowski rose to prominence within the AI art scene largely due to the rampant use of his name in art prompts. Keywords like Gray Rukowski, Alphonse Mucca, or trending on Art Station, became synonymous with the easy generation of high-quality AI art generation,

when Stable Diffusion versions 1.4 and 1.5 were gaining steam. His style has been requested over 400,000 times, even surpassing legends like Picasso and Da Vinci, all without his consent. The result? A digital quagmire where Rutkowski himself struggled to differentiate between AI-generated pieces and his genuine works. Despite being the hottest name in the game, Rutkowski became one of AI arts fiercest critics. In response to feedback from him and other digital artists, a major change was introduced with the release of Stable Diffusion 2.0.

Stability AI chose to remove the ability of emulating the style of specific artists, causing some discontent among users. The update was declared Nerfed, as it no longer allowed generation of images in Rutkowski's unique style. It also had problems reproducing human anatomy, and it required a whole new and more difficult technique for prompting. The move made the updated model highly unpopular and cemented Stable Diffusion Version 1.5

as the king of open-source text-to-image generators. Enter the Lora. A small, very specific model trained to emulate specific things like art styles, faces, stances, or color grating. With Stability AI omitting Rukowski's style in version 2.0, the art community saw a void and sought to fill it. The result, a Laura trained to recreate Rukowski's style, now freely available on Sivit AI. Lycon, the genius behind the first customized SDXL model justified the move.

Since this artist's name was one of the most used in 1.5 prompts and now it's gone, I thought it was a good idea to train Allora. He wrote on Civit AI. The move wasn't without controversy. There was some debate in Civit AI and Reddit, with users arguing for both sides of the coin. It's kind of messed up to make Allura of someone that specifically asked people not to train on their art, one wrote. Legal doesn't always mean ethical. Others cite it with Lycon, alluding to the fact that Rutkowski's art has already been in circulation in SD1.5 for years.

Others simply responded to the whole thing with humor. While Lyon maintains he'll readily concede to Rutkowski, He said he believes he is acting on behalf of the greater good. If he contacts me asking for removal, I'll remove this, Lyon said. At the moment, I believe that having an accurate, immortal depiction of his style is in everyone's best interest, end quote. Nothing for you today. Talk to you tomorrow.