Bits and stuff: incumbents, matching and satire – Oct 16, 2017

Quartz’s John Detrixhe interviewed ex-Barclays CEO Anthony Jenkins, and the result makes for compelling reading. Since he jumped across the chasm from big bank to startup (his company sells cloud services to banks), his take on the balance between disruptors and incumbents is worth listening to.

For instance:

“I think the biggest trend that we’re going to see if the next five years is the fight back of the incumbents. The incumbents are going to wake up, and are waking up, and saying, we’ve got to get in this game.”

We’re seeing this in blockchain technology, with big banks experimenting like crazy. As I mentioned the other day, there’s so much more going on “under the hood” with enterprise financial applications than we realise.

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BBVA and BBVA Bancomer (majority-owned by BBVA, no surprise) are testing a blockchain platform for FX trade matching. As usual with capital markets, this terminology needs some unpacking.

“Trade matching” is the process of 1) verifying the validity of a trade request (is the trade actionable, is the client registered, etc.), and 2) checking that it can be executed at the requested price.

This is more complicated than it sounds, as there are a lot of details that need contrasting, confirming and comparing. Plus, there is often some uncertainty – what if the bid/ask prices don’t match? How much leeway do the institutions have? Which trades have priority?

Notice that it does not sound like the settlement takes place on the platform. Just the trade set-up.

One aspect I find perplexing is that the press release claims that the current system of matching produces a lot of errors, because different systems struggle to communicate with each other. It’s possible that their definition of “matching” is not the same as mine – isn’t it carried out on the same platform? So, no communication problems? And, wasn’t matching introduced to reduce the number of errors vs. the more labour-intensive “affirmation” system?

Further questions: Will the matching be random, or first in first out? How will order “leftovers” (the parts of an order that don’t match – the buy/sell amounts are rarely the same) be handled?

I’d be interested to see more information on this, because there may be a lot about matching that I don’t know. Or, it may be press-release hype. I hope not.

— x —

These miniature scenes are, um, strange, to say the least… But since I have yet to come across a small world I don’t find fascinating, I’m sharing them with you. You might find them as disquieting as I do.

By Frank Kunert, via Colossal.

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Bits and stuff: clarity, overviews and deeper questions – Oct 15, 2017

I’m sure that Jamie Dimon is a very smart man… for last decade’s banking.

According to Vanity Fair, he told an audience on Friday:

“The blockchain is a technology which is a good technology. We actually use it… Gold bless the blockchain. Cryptocurrencies, digital currencies, I think are also fine.”

The term “cryptocurrencies”, however, apparently does not include bitcoin. It’s not clear why. Dimon’s explanation:

“I don’t personally understand the value of something that has no actual value.”

Without even going into the intrinsic value of fiat currencies (and, for that matter, gold – it’s nice and shiny, but so are sequins – it can be argued that it has value because we’re used to thinking it has value), I’m confused as to why other cryptocurrencies are ok but bitcoin not.

Bloomberg reported on Friday that JP Morgan’s CFO Marianne Lake said on a conference call earlier this week that the bank was “open minded” about the potential uses of cryptocurrencies.

Including bitcoin?

It’s getting annoying hearing a big bank CEO talk publicly about a subject he does not seem to truly understand. It’s ok to not understand. Just stop talking about it publicly.

Surely it’s the mark of a good leader to recognize what he does not know, and lean on those in his team who do?

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Check out Josh Nussbaum’s market map – hours of painstaking work to give us a visual overview of what sort of work is going on in various sectors. Plus, he offers his top-down comment on what to look out for.

Josh Nussbaum market map
click to go to original article, with more detail and insightful comment

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This article on Quartz about moral philosophy makes compelling reading.

“Why bother with moral philosophy when common sense serves most of us perfectly well? The simple answer is that, as history shows, commonsensical beliefs are very often wrong.”

It’s also disturbing – is it productive to question your values? How much ethical discomfort should we encourage? When is tradition helpful, and when does it slow us down?

“Though our intuitions are very often wrong, they’re nevertheless necessary to give morality its meaning. If we have no emotive response, if no one cares at all when an act of evil is committed, then morality does not exist… And so rational thinking and moral instinct are in a constant state of slippery conflict.”

This would make a great subject for teenagers to think about. If we learn to question our parents’ beliefs more thoroughly (rather than just rejecting them because they’re old fashioned), we might end up with a generation more open to change, and more willing to look for solutions to tough problems rather than assume (hope) they’ll go away.

The main problem will be deciding what the problems are. Perhaps they’re not what we assume. (And like most of you, what I have is not so much answers as more questions, which lead to more questions – how many layers down should the questions go?)

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I used to love doll houses when I was little. There was a time I even dreamed of becoming a curator for museum dioramas. So of course I am mesmerized by these little scenes of gloom and portent. Gazing at them, I feel drawn into a hypnotic story that won’t have a happy ending but from which I can’t tear myself away. And, I find them utterly beautiful.

Give me this over VR any day.

By Andy Acres, founder of Chimerical Reveries. Via MyModernMet.

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Bits and stuff: illumination, finance and Eminem – Oct 12, 2017

The silence of the past couple of weeks was an unexpected but needed break – some big issues got thrust to the fore, both personal (my mother had a stroke) and professional (a big decision that was once clear is now decidedly less so).

My mother pulled through (what she lacks in size she more than makes up for in force of personality). The part of the NHS deck that we got dealt was impressive – lovely doctors and nurses, and an incongruously pleasant hospital. We were so lucky, and are deeply grateful.

I had no idea that relief could be so exhausting.

And, as for the professional decisions, some news coming up (although I still don’t know what it will be).

I’ve heard this said before, and I can confirm that it’s true: the worst weeks of your life can also be the most illuminating.

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A good friend suggested that, to cope with the anxiety, I follow Hillary Clinton’s example. She swears by alternate nasal breathing. I’m pretty sure I could do the swearing part.

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the mountain version of "the floor is lava"? - photo by Eivor Kuchta, via MyModernMet
the mountain version of “the floor is lava”? – photo by Eivor Kuchta, via MyModernMet

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Keeping with the personal tone of this post (don’t get used to it), Things You Probably Don’t Know About Me #1: I like Eminem’s music.

Notice how I don’t say that I’m a fan of Eminem, because I don’t know him personally. But his music? One of my favourite Spotify playlists. Top fave this week: Beautiful.

So, his Trump rap blew me away. While entertainers appear to be getting increasingly politicized across the spectrum (with uneven distribution), this is Eminem, people, the entertainer that to my over-educated, liberal-elite eye most represents the demographic that voted for the current president.

But, he yet again showed me that I was wrong, with guts:

“Any fan of mine who’s a supporter of his / I’m drawing in the sand a line.”

Hats off.

Conor Friedersdorf in The Atlantic puts it beautifully:

“If Eminem feels a need to object, if Eminem can easily seize the moral high ground from the president of the United States, and if it now falls to Eminem of all people to defend core civic values, what does that say about us?”

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Anyway, stuff has been careening along in blockchain in my absence. I was at a conference in Dublin last week: the very well-organized Blockchain for Finance. I’m often reminded of the saying “if you’re the smartest person in the room, you’re in the wrong room”, and there I was definitely in the right room. Great people, too-short conversations and some interesting anecdotes.

The main takeaway for me is that there is more going on “under the hood” than we realise. I’ll elaborate more another time, but we should brace ourselves for a flurry of real-world applications early 2018.

It’s getting exciting, and my head spins when I start thinking about what the next steps will be. I would have written screenfuls more on this, but see Section 1 of this post.

Bits and stuff: blogs, banks and bookstores – Sept 27, 2017

 

Tim Swanson’s looooooong article pointing out the lack of oversight, due diligence and inquisitiveness in the cryptocurrency sector has many good points. The space could use more scrutiny.

I don’t agree with the insinuation, though, that CoinDesk’s reporting on ICOs infringes securities laws. Not even in a physically challenging stretch of the imagination can informing readers of how much has been raised be interpreted as solicitation, any more than reporting on bitcoin’s price can be taken to mean a recommendation to buy. Also, any reader of CoinDesk would know that the journalists report the news, they don’t give opinions (except for me, but that’s my job, and I’ve never “promoted” anything – occasionally I’ll opine on end uses for tokens, but no market recommendations are given). And our opinion pieces from industry experts are labelled as such.

Tim is right, though, in that all of us who work in blockchain media need to be careful in our reporting, especially given the rampant hype. Some myth-busting is generally constructive. And it’s good to have thinkers out there who can call the sector to account.

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A group of Japanese banks plans to introduce a new digital currency – J-coin, of course – in time for the 2020 Olympic Games.

It’s not based on the blockchain.

Japanese bank MUFG has been working on their own blockchain-based currency, but is reported to be considering joining the J-coin consortium.

Does this mean that blockchain lost?

No, of course not. Let’s see how the non-blockchain version works before we decide. It almost certainly won’t have the same privacy features.

It is curious that Japan, with its technologically-aware populace, is so reluctant to go digital with payments. 70% of transactions are still conducted with cash, vs around 30% for most western countries… This would be interesting to unpack some more, and could teach us much about the potential progress of digital coins in less developed countries.

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Ben Thompson of Stratechery on the advantages of blogs vs books.

“It became increasingly apparent, to me anyways, that while books remained a fantastic medium for stories, both fiction and non, blogs were not only good enough, they were actually better for ideas closely tied to a world changing far more quickly than any book-related editorial process can keep up with.”

Like blockchain and business, maybe??

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A bookshop-themed youth hostel? Almost enough to make me want to be young again… (via My Modern Met).

via My Modern Met
via My Modern Met

Bits and stuff: tokens, holes and turtles – Sept 20, 2017

One of the more plausible and clear-headed articles I’ve read on tokens, by Michael Casey (who has joined CoinDesk as chairman of the Advisory Board!):

“Under this new model, all who share the interests of a community should, in theory, be acting in those interests whenever they exchange tokens. And as more people do the same, the token’s value should rise in line with its network effect.”

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This is very techie, but also quite moving, from someone who reviewed the bitcoin source code back in 2008 (it was officially uploaded in 2009).

One paragraph jumped out at me as being especially applicable to the token scene today:

“The road to progress, as Chuck Yeager observed, is marked by great smoking holes in the ground. The fact that you have probably never heard of any of those scores of launches [of digital cash systems] should tell you how successful they were. I saw no reason to expect a nonzero valuation.”

Great smoking holes in the ground… At first I dismissively thought “but in the digital token space, the disappeared ones are largely due to spectacular speculation”. Then I realised that’s untrue. The failures, for whatever reason, are part of the journey. And from each, we learn (just look at what The DAO implosion gave us).

I’m feeling more optimistic and less fed-up now.

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From David Birch’s “Before Babylon, Beyond Bitcoin” (highly recommendable):

“It is interesting to note that the fledgling United States, which had strongly resisted the notion of a central bank (the Federal Reserve was not created until 1913 – a direct consequence of the banking collapse of 1907), was the home of the first great monetary experiment of the industrializing world and ended up with the world’s reserve currency.”

So, basically, we don’t even know what we don’t know. And what we do know perhaps just ain’t so.

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Terry Pratchett would like these. Maybe.

by Secret Wood, via Hyperallergic
by Secret Wood, via Hyperallergic

Tell me this doesn’t shift your perspective:

“The place where the story happened was a world on the back of four elephants perched on the shell of a giant turtle. That’s the advantage of space. It’s big enough to hold practically anything, and so, eventually, it does.

People think that it is strange to have a turtle ten thousand miles long and an elephant more than two thousand miles tall, which just shows that the human brain is ill-adapted for thinking and was probably originally designed for cooling the blood. It believes mere size is amazing.

There’s nothing amazing about size. Turtles are amazing, and elephants are quite astonishing. But the fact that there’s a big turtle is far less amazing than the fact that there is a turtle anywhere.”

(from The Last Hero)

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It’s been a strange day…

Bits and stuff: tech giants, token graphs and toothpaste – Sept 19, 2017

CNBC reported on a research document that places IBM ahead of Microsoft in the blockchain battle (according to a survey).

It’s not comparing like with like, though. Here’s something I wrote for CoinDesk a while ago that contrasts the tech giants’ blockchain strategies. IBM may have a greater mindshare now. But further down the road, who will have the greater flexibility?

(Actually, I think it’s IBM – Microsoft appears to be overly reliant on Ethereum, which is still very young. IBM’s blockchain platforms are also young, but much more flexible and malleable according to IBM’s criteria and goals.)

But, Simon Taylor of 11:FS wondered on Twitter about the number of “IBM is great on blockchain” articles emerging this week.

… and makes this contentiously intriguing observation:

But, here’s a report from a couple of weeks ago on how IBM needs blockchain to pull it out of its legacy slump.

I’m not saying there’s a connection…

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Outlier Ventures created a useful visual map of the token scene, grouping coins by sector. This will need more concentrated perusing, but at an initial glance, most of the action seems to be in “computing, verification and storage”, followed by “payments and banking”.

by Outlier Ventures - click to see full version
by Outlier Ventures – click to see full version

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From the New York Times’ article on what Jamie Dimon got wrong last week about bitcoin (because writing about what he got right would take up absolutely no space at all), a much cuter way to say “the genie is out of the bottle”: “the toothpaste is out of the tube”.

I hadn’t heard it before. Am I totally out of it?

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Mesmerising photos by Rune Guneriussen, via Colossal… I feel they should belong to a fairytale, only I can’t think of one that would be this interesting.

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Bits and stuff: flight delays, volatility and Dogecoin – Sept 18, 2017

My article on CoinDesk this week, on the potential impact of blockchain on insurance – starting with a small project adorably named “fizzy”.

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One of the better cryptocurrency infographics I’ve seen, via Visual Capitalist:

via Visual Capitalist
via Visual Capitalist

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I don’t agree – the volatility comes (for now) from the relatively low fixed supply. Strong inflows can move the price. Gold is (sort of) fixed, too – but it’s more abundant.

And, if the gold supply turns out not to be fixed (if price shoots up, it becomes more profitable to search for gold everywhere), then the price will come down (and a lot of mining will stop being profitable, so supply will stabilize).

Also, market jitters.

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A good article in the New York Times on the charm of Dogecoin and the fragility of initial coin offerings (ICOs), with a delightful analogy:

“If you’re having trouble picturing it: Imagine that a friend is building a casino and asks you to invest. In exchange, you get chips that can be used at the casino’s tables once it’s finished. Now imagine that the value of the chips isn’t fixed, and will instead fluctuate depending on the popularity of the casino, the number of other gamblers and the regulatory environment for casinos. Oh, and instead of a friend, imagine it’s a stranger on the internet who might be using a fake name, who might not actually know how to build a casino, and whom you probably can’t sue for fraud if he steals your money and uses it to buy a Porsche instead. That’s an I.C.O.”

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Jaw-dropping – a Banksy homage to Basquiat…

(via Hyperallergic)

(via Hyperallergic)
(via Hyperallergic)

Bits and stuff: China, regulation and identity – Sept 16, 2017

My article on CoinDesk this week, on why China’s ICO ban was drastic, but not unreasonable. What’s more, it’s almost certainly going to be temporary.

And I stick by that conclusion even after the news out on Friday that cryptocurrency exchanges in China are being asked to close down. That will most likely also be temporary, especially as the authorities realise that it is much easier to control what is going on with regulated exchanges than in the offshore or OTC alternatives that will replace the volumes.

oh

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Investor Albert Wenger makes the very good point that until we have global regulation for ICOs and cryptocurrencies, we won’t progress much in their development. A technology that aims to transform global capital markets needs global regulation – the current approach, he argues, appears to be to stuff everything back into country-specific, siloed regulations which complicate the cross-border application of the advantages.

Regulation is important and necessary, yes. But unless we can establish a global standard, we won’t end up with the new system that many of us believe we need.

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And then you have Balaji Srinivasan claiming in a CNBC interview that the internet will become one big stock market, just like Google became one big library.

I don’t agree with the analogy. Libraries don’t need regulating. Stock markets do. And while Google can hand out books, you’re not going to buy securities from “the internet”. The internet may become the marketplace in which various exchanges work. But that’s a far cry from becoming a global exchange itself.

With decentralized tokens, it is possible for an automated platform (ie. code) to act as an intermediary between people that want to buy and sell. But not on current internet infrastructure – you would need some sort of blockchain technology for that.

And sure, maybe the whole internet will one day be run on a blockchain, as Blockstack and IFPS (among others) are working on. But full replacement is, let’s face it, a ways off.

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A TechCrunch article on blockchain and identity succinctly points out why the technology is not the solution to the management of personal data.

It quotes an analyst as saying:

“Identity is not going to move to the blockchain in any big way (not as we know it). Blockchains were designed to solve problems quite different from identity management. We need to remember that the classic blockchain is an elaborate system that allows total strangers to nevertheless exchange real value reliably. It works without identity and without trust. So it’s simply illogical to think such a mechanism could have anything to offer identity.”

The analyst has a point. But he fails to tackle the nature of identity – it’s just data. Your identity is made up of certain characteristics, depending on the situation and/or need. Name? A sequence of characters. Place of birth? Coordinates on a map. Age? A date. Address, profession, marital status, favorite movie… They’re just bits of information.

And if blockchain technology can safeguard and distribute data in a more robust way than any other technology out there, why is it not appropriate for identity?

The thing is, the information needs to be verified. Depending on the use case, the requester needs to know that you’re not making up your date of birth or social security number. It also needs (again, depending on the use case) to be flexible – you’re likely to change your address at least once in your life, and possibly also bank account, IP address, even your name.

Could a blockchain handle that level of sophistication? Data that only you control, but that requires inputs from third parties? Yes, it most likely could.

Yet with a greater attack surface, could a blockchain identity platform guarantee security? Ah, that might be more complicated. It looks like data security and privacy might be even more urgent problems to solve.

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If these photographs of stunning fireworks don’t take your breath away, then you have no soul (or maybe you just don’t like fireworks…)…

By photographer Keisuke (who is just 25 years old!!), via Colossal.

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You should check the other photos out, they’re all staggering…

Bits and stuff: new calendars, woo and mathematical cakes – Sept 10, 2017

Popular Science explains a new calendar proposed by economist Steve Hanke, which would adjust our calendar to a less random, more efficient structure. We would have four quarters of three months, each with 30 or 31 days. January 1st would always be on a Monday, Christmas Eve and New Year’s Eve always on a Sunday. Every five or six years we would adjust for the orbital drift by having a work-free “Leap Week”.

It makes sense. We would waste less time jiggling calendars. But it is unfortunately unlikely to happen, since we tend to resist change. Getting rid of daylight savings time might be a better first step, to get us in the mindset.

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Finally, we have a good definition of “woo”, from Preston Byrne:

“Woo is understood specifically as dressing itself in the trappings of science (but not the substance) while involving unscientific concepts, such as anecdotal evidence and sciencey-sounding words.”

He holds up ethereum as an example of “woo”, especially its claims to be “a world computer”.

It seems to me that this argument is beside the point, in that it depends on what your understanding of a “computer” is. If to you a computer is a device, then no, ethereum is not. Yet if you understand “computing” to be more of a function than a thing, then maybe. Either way, it’s not important – I, too, get pissed off with annoying and meaningless hype. But, beyond that, it’s not important.

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From “The Sovereign Individual”, by William Rees-Mogg and James Dale Davidson:

“Whenever technological change has divorced the old forms from the new moving forces of the economy, moral standards shift, and people begin to treat those in command of the old institutions with growing disdain… This widespread revulsion often comes into evidence well before people develop a new coherent ideology of change.”

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These are cakes, not modern art sculptures… Cakes… Awesome. By Dinara Kasko, via Colossal.

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all images by Dinara Kasko via Colossal

Bits and stuff: Equifax, ICO tax and stock photos – Sept 9, 2017

The Equifax hack and subsequent theft of personal data from 143 million Americans is… staggering doesn’t quite seem to cover it.

“Never waste a good crisis,” said Winston Churchill, and this one brings data security front and center. We can expect to see over the next few days an increasing number of experts explaining how it could have been avoided (and no, the answer is not necessarily “the blockchain”).

It should go farther, though. The issue speaks to centralization, not only of data storage but also of financial influence. Why does Equifax need that much data? Credit scoring, yes, but why does one firm hold that kind of power? A safer construction would be to use a combination of inputs, each gathered by a different entity, with relevant information fragmented and distributed. And yes, here is where blockchain technology could play a part – a relatively decentralized system with many, smaller and more insignificant points of failure.

If, on top of it all, you can get an identity system in which the information resides with the user, and all the aggregators see is the verification that the information satisfies certain requirements (without seeing what that information is), then we are looking at a potentially secure service.

This crisis has to drive home the point that the current vertical and siloed business and information structures need to evolve. The verticality of finance – inherited from the previous generation of powerful corporations – is at odds with the liquid nature of today’s principal product, data.

It’s also a welcome reminder that all corporations should have a “we’ve been hacked” protocol in place. And it should be rehearsed regularly, because the simulated horror should be enough to remind the IT executives to make sure this doesn’t happen. If it does, at least the firm could avoid irreparable damage to its reputation by handling it with more empathy and ethics than the current management seems to be doing.

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This is interesting (from ICOs: Compelling Advantages, Real Risk, on CoinDesk):

“When a company sells equity to raise money, it doesn’t pay any income tax on the proceeds. When a company raises money through a token sale, the proceeds are treated as revenue, and therefore subject to tax.” (my emphasis)

In the US, that could equate to 40%. So, if the threat of SEC scrutiny and sanctions weren’t enough to put you off the idea of doing an ICO, there’s the fiscal efficiency of the proceeds. Not that investors would care in this get-rich-quick market… But they should.

— x —

via giphy
via giphy

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The New York Times published a fascinating timeline of best-selling stock photos for the search term “woman”, which shows a stark trend towards less focus on beauty, more on activity. Less on serenity and more on personality. Less on youth and more on achievement.

“In 2017, based on the Getty photos most chosen by marketers and the media, to be a woman is to be on your own, physically active and undeterred by either sweat or circuit boards.”

We all know it’s not that simple, and media trends do not always reflect reality. They can influence it, though.

It’s a good time to be alive, and a good time to be a woman.

— x —

I love this: