TIME Innovation

Five Best Ideas of the Day: December 16

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Micropayments and digital currencies will ignite an explosion of disruptive innovation.

By Walter Isaacson in LinkedIn

2. Latin America is taking the lead with progressive food policies — and putting public health above the interests of the food industry.

By Andy Bellatti in Civil Eats

3. To preserve biodiversity and lift up communities facing hunger in sub-Saharan Africa, indigenous plants might provide a solution.

By Amy Maxmen in Newsweek

4. Teacher preparation programs seek change with a pinpoint innovation approach. It’s time for a broad scale transformation of teaching.

By Kaylan Connally in EdCentral

5. Making clean plastics from biofuel waste could free up valuable farmland for food crops.

By Matt Safford in Smithsonian

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Companies

You Can Now Buy Xbox Games With Bitcoin

Utah Software Engineer Mints Physical Bitcoins
A pile of Bitcoins are shown here after Software engineer Mike Caldwell minted them in his shop on April 26, 2013 in Sandy, Utah. George Frey—Getty Images

One small step for Microsoft, one giant leap for Bitcoin

Microsoft quietly updated its payment options to include Bitcoin, making it one of the largest companies yet to accept the digital currency.

“You can now use Bitcoin to add money to your Microsoft account,” Microsoft wrote in an update to its payment policy. Bitcoins can then be used to purchase digital content like Windows Phone apps and Xbox games and music.

Only a handful of businesses currently accept Bitcoins as payment option, most notably PayPal and a smattering of oddball brick and mortar stores. Microsoft is the first major tech company, ahead of Apple and Google, to accept the digital currency.

MONEY Bitcoin

The Government Is Auctioning Off $18.5 Million in Black Market Bitcoins

stack of bitcoins
Thomas Trutschel—Alamy

The auction consists of 50,000 bitcoins seized during an investigation of the online black market known as the Silk Road.

What to do with a trove of illegally-gotten digital currency? For the U.S. government, the answer is to sell it to the highest bidder.

On Thursday, the U.S. Marshals Service is auctioning off 50,000 bitcoins recovered during the prosecution of Ross William Ulbricht, founder of an online black market known as the Silk Road. According to CoinDesk’s bitcoin price index, the total value of the coins is $18,563,500 at press time. The auction began at 8 a.m. and will continue until 2 p.m. The winner will be notified on Friday, December 5.

This is not the first time the Marshals Service has auctioned off ill-gotten bitcoins. Authorities recovered a total of 173,991 bitcoins from Ulbricht and the Silk Road, worth about $22 million at the time of their seizure. However, the price of bitcoin has since tripled (and at one point increased nearly tenfold before falling back down), leaving the government with an even more valuable asset. A previous auction held in June sold off 29,656 bitcoins, then valued at $17 million. All of those coins were won by venture capitalist Tim Draper, who is also participating in Thursday’s auction.

While bitcoins are available for purchase on various online exchanges, the federal auctions have proven very attractive to bitcoin investors. As Bloomberg explains, it is rare to be able to purchase a large amount of bitcoins at once because even relatively small purchases of a few hundred bitcoins can affect market prices. Participants in the government’s sales are also hoping to get a something of a bulk rate discount: Reuters reports that Steven Englander, global head of G10 FX strategy at Citibank, predicted that bidders “will likely lowball their bids relative to the current market price” in the hopes of getting “a post-Black Friday bargain.”

Bitcoin’s price has fallen in recent months, leaving authorities with a potentially depreciating asset. A Marshals Service spokeswoman told Reuters that authorities are staggering their sale of bitcoins because they “didn’t want to flood the market” with too much digital currency. The remaining 94,341 bitcoins in federal possession are currently worth about $35 million.

The entire practice of selling the proceeds of a crime on the open market may strike some as strange, but that is common practice for the U.S. Marshals Service. The USMS frequently sells ill-gotten cars, jewelry, and other proceeds of criminal activity to help compensate victims, fund law enforcement, and support various community programs. According to USMS data, the Marshals Service has distributed $6.4 billion since 1984, including $200 million distributed to victims and claimants in 2013, and currently holds assets worth $2 billion.

 

MONEY retirement planning

This Simple Strategy Can Help You Build a Successful Retirement Plan

Fox and hedgehog
Bob Elsdale—Getty Images

Should you be smart as a fox or wise as a hedgehog in your retirement planning?

No, it’s not a trick question. Nor a trivial one. Indeed, knowing whether you act more like a fox or a hedgehog can help you improve your approach to retirement planning, making for a more enjoyable pre- and post-career life.

The fox vs. hedgehog debate goes back to a statement attributed to the ancient Greek poet Archilochus: “The fox knows many things, but the hedgehog knows one big thing.” Alluding to that line, the philosopher Isaiah Berlin wrote a famous essay in 1953 titled, “The Fox and The Hedgehog.”

The idea behind the fox-hedgehog comparison is that you can divide people into two groups: hedgehogs, who see the world through the prism of a defining principle or idea, and foxes, who focus more on their experiences and the particulars of a given situation. You could say that hedgehogs are more likely to see the big picture, while foxes get into the weeds.

So what does this have to do with retirement planning?

Well, if you’re a fox, you’re always looking for some type of edge or way to exploit circumstances to your advantage. You track the ups and downs of the stock market with an eye toward getting in before a big upswing or out before a crash. You listen to investment pundits, hoping to score tips on stocks or sectors that are supposedly poised to outperform the market. Chances are you’ve been glancing at what the Dow and the S&P 500 have been doing as you’ve been reading this column.

In your continuing efforts to gain an edge, you’re also constantly on the lookout for exciting new investment opportunities—smart beta ETFs, the Bitcoin Trust, whatever—and revolutionary techniques that can enhance your reitrement-planning efforts. You probably believe that finding the best investments is the single most important thing to do to build a sizeable nest egg, when diligent saving actually trumps savvy investing.

If you’re a hedgehog, on the other hand, you’re probably more apt to believe that successful retirement planning comes down to following a few simple principles: saving regularly (preferably by putting your savings on autopilot), making the most of tax-advantaged accounts whenever you can and, to the extent possible these days, not pulling the trigger on retirement until you feel you have a large enough nest egg to give you a good margin of safety on withdrawals (as opposed to relying on some investing black-magic that’s supposed to help you squeeze more out of your assets).

As for new products and cutting-edge strategies, the hedgehog views them with more than a little skepticism and is more likely to see them as a gimmick or distraction than a can’t-miss opportunity. As a hedgehog, you believe it’s unlikely that the Next Big Thing can significantly improve on time-honored strategies like looking for ways to save a bit more, reining in investment costs and building a basic stocks-bonds portfolio that you rebalance periodically. So you’re more likely to pass on the latest fad, knowing that in the financial world, fads come along pretty frequently, and often leave disappointment in their wake.

Full disclosure: I’m primarily in the hedgehog camp. Thirty years of writing about retirement planning and investing has convinced me that true innovation is pretty rare, and that “sophisticated” strategies is often another way of saying “expensive” strategies. I believe that if you get the Big Things right—you save regularly, invest sensibly, set reasonable expectations and monitor your progress—you don’t have to resort to fancy techniques that too often have the potential to blow up on you.

That said, while we may live in a digital world, we humans are not digital. We’re analog. No one is solely a fox or a hedgehog. We may be more one than the other, but we have elements of both. And I think that whether you consider yourself mostly a fox or a hedgehog, you can learn from the other.

If you’re primarily a fox, for example, you might occasionally want to pull back and take a big-picture look at your retirement planning. You want to be sure that have a sound basic strategy in place and that you’re not undermining it by chasing every new product or approach that comes along. To help you improve your focus, you’ll probably want to cultivate some of the hedgehog’s skepticism.

Conversely, if you’re a hedgehog, you want to be careful that you don’t let your wariness about The New New Thing completely shut you off to the possibility of innovative approaches that may improve your planning and your retirement prospects. Truly transformative products, services and strategies may be rare, but they do come along.

ETFs have helped many investors lower investment expenses and their tax bills. New tools that can help you decide when to claim Social Security—which you can find in RDR’s Retirement Toolbox—really do have the potential for dramatically improving many people’s standard of living in retirement. You don’t want your “hedgehoggish” tendency to view the world from 30,000 feet make you overlook something at ground level that that may prove helpful to your planning. To prevent that from happening, try to think like the fox sometimes.

So the next time you’re contemplating your retirement planning, be sure to think like a hedgehog and make sure you’ve got a good overall retirement plan in place. Then make like a fox and see whether there’s anything worthwhile new or interesting that might help you improve your plan, even if incrementally.

Doing this will help you see from both fox’s perspective and the hedgehog’s. And you’ll reap the benefits of thinking, shall we say, like a hedgefox.

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TIME Crime

Man Accused of Running the First Ever Bitcoin Ponzi Scheme

He allegedly raised the digital equivalent of $4.5 million by offering insanely high interest rates

A Texas man was charged with fraud in New York on Thursday, in what federal authorities claim is the first-ever Ponzi scheme involving the unregulated digital currency Bitcoin.

Trendon Shavers, 32, who runs a company called Bitcoin Savings and Trust, allegedly raised the equivalent of $4.5 million by offering investors weekly interest rates of 7%, Reuters reports. That translates to a 3,641% annual rate of return.

Shavers is suspected of embezzling about 146,000 of the 764,000 bitcoins he raised between Sept. 2011 and Sept. 2012 and allegedly using the proceeds to buy a BMW sedan, spa treatments and a $1,000 steak dinner, among other things.

If convicted, Shavers could serve up to 20 years in prison.

“This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency,” said U.S. Attorney Preet Bharara in a statement.

[Reuters]

MONEY Bitcoin

Why Bitcoin Fans Don’t Believe in Bad News

People attend a Bitcoin conference on at the Javits Center April 7, 2014 in New York City.
Andrew Burton—Getty Images

Bitcoin might be doing poorly, but for the currency's online proponents, it's always time to buy. Here's the reason behind their optimism.

Updated—Friday, October 10

Last weekend, Bitcoin crashed. The dollar value of a single Bitcoin began to decline on electronic markets starting on Friday and by Sunday afternoon had fallen 14%, to $290.

It recovered a bit in the days that followed, but the slide appears to part of a broader trend: At the Thursday price of about $350, the digital currency has lost almost 70% of its value since its all-time high of $1,147 in December 2013. At the New York Times, Paul Krugman used the roller coaster weekend as an occasion to once again call Bitcoin a long con.

But among the Bitcoin faithful, the sun never stopped shining. On Reddit’s Bitcoin discussion board, for example, home to almost 140,000 enthusiasts of the electronic currency, the price drop was framed as good news. “The good old days are back! Massive walls, manipulation and a true financial wild west – I love it” chirped one of Monday’s most popular posts.

“Who else is enjoying the firesale?” asked another popular participant who claimed to be “picking up tons of cheap bit coin.”

How to explain the eternal optimism? Is it possible that Bitcoin’s most dedicated fans are simply more tuned in to the currency’s long-term potential than the broader market and therefore have a more favorable view of its true value?

Sure, it’s possible — but Meir Statman, a professor at Santa Clara University specializing in behavioral finance, has a more plausible explanation for the findings: Confirmation bias. In short, he says, Bitcoin communities tend to be echo chambers of optimism, giving their members a false impression of the currency’s true value. “What you hear, really, is what you want to hear; what is easy for you to believe: That bitcoin is going to take over and banks are a thing of the past,” explains Statman. “And when you have people who reinforce it, people are not looking for the truth, they are looking for views that are going to support their prior beliefs driven by ideology and self interest and so-on.”

This explanation would seem to be supported by a recent study of Bitcoin users by researchers at the University of Illinois, who found that those who participated in online Bitcoin communities were far more bullish about the currency’s future price than other Bitcoin holders. When asked about the long term value of Bitcoin (which the survey defined as the coin’s price in early 2019), users who talked about Bitcoin on various online platforms produced estimates 68% higher than those who did not.

Screen Shot 2014-10-08 at 10.11.02 AM
An r/Bitcoin user asks (and receives) reassurance following a December, 2013 price crash.

Of course, that’s not a phenomenon unique to Bitcoin or online forums. “There is a similar finding about communities where people describe their investment success more generally, because people tend to brag about their success and not brag about their losses” the professor warns. “If you are not careful, all you hear is that people are making tons of money.”

Statman suggests yet another psychological explanation for the behavior of the Bitcoin community, noting that many people who invest in Bitcoin — and other alternative assets like gold — do so in part because it fits their broader global outlook and ideology. “It is fair to say that lots of the people who invest in gold invest in a view of the world: That the United States is going down, bad things are going to happen, inflation is going to rise,” Statman says.

That makes hard truths particularly difficult to accept, he says. After all, divesting from a stock is easy. Divesting from a world view, well, that’s a lot more painful.

Statman advises investors of all types to avoid confirmation bias and “ideological” investing by talking to people with different perspectives. For example, he jokes, Bitcoin buyers should have asked his opinion of the currency before last weekend. His take: “I think it’s a scam.”

After being contacted by Bitcoin advocates, Statman clarified his position to MONEY. “My initial thought when I heard about Bitcoin from my students is that is a scam. I know now that the technology of Bitcoin might prove useful but I am puzzled by the rush to it.”

TIME Innovation

Five Best Ideas of the Day: October 8

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Quotas can cause lasting change. Rwanda’s new parliament is more than 60% female.

By Eleanor Whitehead in This Is Africa

2. With open communication and smart procedures, we can contain Ebola.

By Atul Gawande in The New Yorker

3. A simple plan to begin saving for college at kindergarten helps families thrive.

By Andrea Levere in the New York Times

4. Teach For America is sewing seeds for education reform in unlikely places – by design.

By Jackie Mader in Next City

5. How Bitcoin could save journalism and the arts.

By Walter Isaacson in Time

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Bitcoin

Bitcoin’s Price Plummeted Over the Weekend

A woman buys bitcoins at one of Southern California's first two bitcoin-to-cash ATMs.
Lucy Nicholson—Reuters

The price of Bitcoin dropped almost 20% over the weekend, hitting a low of $290 before rebounding.

Bitcoin enthusiasts had a scare this weekend, as the price of the currency plummeted from $356 on Saturday to a low of $290 on Sunday—a drop of more than 18%, percent according to CoinDesk’s Bitcoin Price Index. The virtual currency has since rebounded to a price of roughly $330 at press time Monday, down about 13% over the last seven days.

Despite the price drop, Reddit’s r/Bitcoin, a popular gathering place for the currency’s supporters, was largely optimistic. “Who else is enjoying the firesale? Who else is picking up tons of cheap bitcoin?” asked one poster. But not everyone was confident that the price would recover. The New York Times quoted one worried user asking fellow Bitcoin fans for support. “As the price is going down, some of us are under immense psychological stress,” the post read. “Please share how you cope with it.”

Sunday’s crash was hardly Bitcoin’s first price panic, or even its most significant drop. In 2013, the currency lost almost 40% of its value between December 4 and December 7, when the price dropped from its all-time high of $1,147 to $694 in less than a week. After partially regaining those losses, Bitcoin fell 40% again from December 15 to 18, going from $879 to $522. Since the beginning of this year, Bitcoin’s price has been relatively more stable, but the descent has continued. From January through October 6 of this year, the currency has lost more than 40% of its value.

Exactly why the price cratered is subject to debate. Some have cited upcoming regulations, such as those proposed by New York’s Department of Financial Services, that will curtail the free-wheeling nature of the currency. Others have suggested that Bitcoin’s recent increase in popularity among retailers may have actually hurt its value. Paul Vigna at the Wall Street Journal theorized that because more merchants are using a service that instantly converts Bitcoin payments into dollars, all those Bitcoin sales may be driving down the price. However, as Vigna notes, such a long-term trend can’t directly explain this weekend’s sudden crash.

Bitcoin detractors have used this latest price fluctuation as a chance to take something of a victory lap. On Sunday, Paul Krugman, a longtime cryptocurrency critic, likened Bitcoin to a number of get-rich-quick schemes, from Glenn Beck’s “buy gold” ads to direct mail scams. “Bitcoin may be sold as a technical marvel, and it does indeed solve an interesting information problem,” acknowledged Krugman, but “it’s not at all clear whether solving that problem has any economic value.”

Other Bitcoin watchers say the hiccups may only be temporary. Rafael Corrales, a partner at Charles River Ventures, argued in the Times that recent Bitcoin price fluctuations are the result of its “transition stage” between between speculative vehicle and actual currency: “When Bitcoin becomes a currency, it realizes its potential.”

TIME cybersecurity

Nearly 5 Million Google Passwords Leaked on Russian Site

Google Reports Quarterly Earnings
A sign is posted outside of Google headquarters on Jan. 30, 2014, in Mountain View, Calif. Justin Sullivan—Getty Images

The usernames and passwords of 4.93 million users were posted in a Russian Bitcoin security forum

Almost 5 million usernames and passwords purportedly for Google accounts were uploaded to a Russian online forum by hackers late Tuesday.

The International Business Times reports that data for 4.93 million Google accounts of English-, Spanish- and Russian-speaking users was leaked and published on a Russian-language Bitcoin security online forum. The posters said about 60% of the accounts were active.

In a statement sent to TIME, Google said it had “no evidence that our systems have been compromised.”

“The security of our users’ information is a top priority for us,” the statement reads. The company said that whenever it is alerted that accounts may have been compromised, “we take steps to help those users secure their accounts.” Email users are encouraged to utilize two-step verification when logging into accounts, as well as to create strong passwords.

According to Russian news service RIA Novosti, this leak followed another large hack of Russian email accounts. Several million accounts of Russia-based email services were also posted in a Bitcoin security forum.

MONEY Odd Spending

WATCH: We Try Out NYC’s First Bitcoin ATM

The Bitcoin crypto-currency may be the wave of the future, but MONEY's Jacob Davidson finds that using it to buy lunch can be a hassle right now.

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