Daily Bits: top blockchain journalists, sublime hype and a gripe – July 25th, 2017

After an overwhelm-induced break (work obligations intensifying) punctuated by a couple of days in rainy Scotland tending to a family errand, the Daily Bits resumes.

I confess I considered shelving the format, but instead I will continue to tweak the presentation. My purpose is unclear, to be honest – do I really think I’m helping anyone, is this a learning tool, or am I just having fun? I don’t have a clear answer. So, expect less structure and more free-form (whatever that means).

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The mainstream coverage of blockchain and cryptocurrencies has shot up. The pity is, most of it is still bad. There’s just more of it.

Why is it bad? Incomplete, cursory, relying on soundbites and hype. To be fair, I probably bought into the hype a bit too much when I was starting out. But as I’ve pointed out, hype serves that purpose: it ropes people in. Maybe what grates most is that I’ve been around it now for so long that it’s getting really tiresome.

Actually, what most annoys me about mainstream coverage is the unnecessary generalities. Take, for instance, this article from the BBC: “How Bitcoin is infiltrating the $60bn global art market”. There is so much to say about the potential impact of blockchain on art, but instead they interview a gallery owner who doesn’t seem to grasp the basic tenets.

“And the fact that there is no centralised body – like a bank head office, for example – makes cryptocurrencies safer, she argues, despite their reputation for being volatile, high-risk and the favourite “store of value” for criminals and hackers.”

No explanation of why the lack of a “head office” makes cryptocurrencies safer (than what?). And there is no evidence whatsoever to show that bitcoin is the “favourite ‘store of value’ for criminals and hackers”. I mean, groan.

What frustrates me is that reputable sites are spreading misinformation, either in a misguided attempt to sound like experts, or in the hopes of generating fear-induced clicks.

However, my frustration is tempered by the comfort that not everyone needs to be interested in cryptocurrencies – the markets are not yet liquid enough to withstand full mainstream attention. Also, it’s not essential to “get” blockchain’s potential – it will reach it with popular support or without.

Not all of us are going to get involved in blockchain applications. Most will end up benefiting from improved processes without understanding why. The “misinformation” won’t derail work underway, or deter those pushing the limits of what we can imagine. In other words, the poor journalism can’t really do much harm, other than perhaps the occasional boring social encounter with someone who knows more than you do because he/she read it in the news.

It just drives me mad, that’s all.

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Who are the best blockchain journalists out there?

Needless to say, my colleagues at CoinDesk “get it”, and the professional rigour is impressive. Aaron von Wirdum of Bitcoin Magazine is usually excellent, and has published some of the most easy-to-understand explainers of the scaling debate.

Beyond the specialist sector, I will read anything written by Joon Ian Wong of Quartz and Tanaya Macheel of Tearsheet. Izabella Kaminska’s well-known scepticism, published in the Financial Times, makes entertaining reading – and, worryingly, I’m agreeing with her more and more. Kadhim Shubber, also of the FT, knows a lot and writes well. For wittily lacerating yet insightful comment, Matt Levine of Bloomberg. Jordan Pearson of Motherboard does excellent reporting. Their work is all the more impressive since they don’t just cover the blockchain sector.

This is my off-the-top-of-my-head list – I’m sure there are more that deserve inclusion, and I’ll add names as I think of or come across them.

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A flash of inspiration, humour and almost poetry from the Alphaville team at the FT, who finally got their act together enough to set up what we’ve all been waiting for – the Alphaville initial coin offering. Their white paper title gives a hint at the jargon that is to follow:

“Alphachain: a self-potentiating, decentralised crypto-spool for independent journalism.”

And the text includes such gems as:

“Alphachain empowers smart-contract bubble journalism, decentralising hack finance for a trustless news protocol with a deep commitment to verified insecurity.”


“Tokens are fully fungible in a Turing-complete context, enabling subsequent resale or lease transactions with Zero-Day settlement invulnerability.”

Seriously, read, re-read and bow down in awe.

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This collection of old stock photos will no doubt come in handy to add some retro style to blog posts. (Via Mashable.)

stock photo old 2


Or they’d be great for caption contests.


stock photo old


But some of them are really scary.


stock photo old 3

(All images via Mashable.)


Daily Bits – central banks, equity markets and fun stuff like that – July 11th, 2017

I’ve been skimping on posts because I’m working on an overview of central bank activity in the blockchain space – so much more complex and varied than you probably imagine. But I’m sure I’ll have stuff to share soon!

Meanwhile, some random (ok, not so random) thoughts…

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My article on CoinDesk this week, on Delaware’s bill amendment that expressly allows shares of Delaware-registered companies to be traded on a blockchain. This is huge, given that two thirds of listed companies in the US are incorporated in Delaware.

Traditional equity markets best take note.

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Speaking of central banks, this report from CoinDesk earlier today is intriguing: UK Central Bank Tests Ripple’s Interledger Protocol for Cross-Border Payments.

Two simulated settlement systems were set up, representing different currency regimes. Then Ripple’s Interledger protocol – which can enable payments across different ledgers – was used to simulate a transfer of funds. Apparently the two systems reconciled in sync, and invalid transactions were satisfactorily rejected.

So far so good. 😊

Since this latest reveal is crying out for some context, however, it’s worth noting that it is not the BoE’s first foray into blockchain testing. And, it is not the only central bank working on a similar idea.

It is, however, a big step forward in what is arguably one of the most compelling use cases: cross border payments.

More detail will follow on the above context soon…

(I found it amusing that the BoE felt it was necessary to clarify that no central bank accounts were harmed in the making of this film, I mean, the test area was completely separate from the real thing. Just in case you were worried…)

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Here, from a while back, is a masterful piece from Colin Platt on the potential impact of blockchain on the financial system. He takes a look at each of the main pillars (central securities depositories, central clearing houses, etc.) and thinks about how (if) their role will change as blockchain edges its way in.

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Thank God for the chicken police…

Daily Bits: ethereum capacity, private blockchains and the 80s – July 8th, 2017

I totally missed Fred Ersham’s post on Medium last week, on ethereum scaling – a major oversight, it’s epic.

He points out that ethereum right now needs to improve capacity by something like 25,000x to be able to handle the transactions of, say, Facebook. So, if we expect the new decentralized models emerging from the ethereum ecosystem to be able to replace centralized services, we’d better start focusing on ethereum scaling.

Fred helpfully summarizes the initiatives under way, which gives a perspective on how important the problem is. Expect more media attention to be placed on this issue as ICO frenzy continues and bottlenecks start to build.

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Richard Gendal Brown of R3 posted a (relatively) simple and concise overview of private blockchains, with a solid plug for Corda, drawing comparisons to Fabric and Quorum. He asks some good questions about distributed ledgers, and gives some clear answers – but I have the feeling this is only part of the picture.

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The Indian push towards cashless seems to be picking up steam, including (possibly) free internet for all. It seems like the Aadhaar program was just scratching the surface of the digital ambition. This is worth researching further…

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Have you been watching Netflix’s Glow? If so, or if you remember the 80s with a combination of nostalgia and revulsion (those shoulder pads!), then you’ll like this mini documentary from Vox on the main design influencers of the decade.

Bring on the patterned neon.

Screen grab from Vox
Screen grab from Vox



Daily bits: new models, databases and hugs – July 4th, 2017

I love this article – The Promise of Blockchain Is a World Without Middlemen, by Vinay Gupta – for the fascinating business model ideas Vinay uses almost like punctuation.

Airbnb rentals that offer custom furnishing options (since transaction costs have plummeted and the logistics are no longer a barrier). A Walmart with the diversity of Amazon. Off-the-shelf weddings that are totally customisable.

Vinay opens the door to a whole new realm of creative economic relationships and customer service.

The fundamental question seems to be:

“What if your database worked like a network — a network that’s shared with everybody in the world, where anyone and anything can connect to it?”

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Just over a year ago, Gideon Greenspan wrote an excellent article which set out with clarity and brevity the main differences between a blockchain and a centralized database.

In this time of overblown hype, it’s worth revisiting.

The main takeaway is this: if you want to retain control of the database, a blockchain isn’t for you.

If, however, you want to benefit from others’ participation, and need a robust solution, then a blockchain could help.

If confidentiality and performance are priorities, then a blockchain is not the best solution.

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And now for a bit of warm, fuzzy cuteness (go on, I challenge you to not smile):

(the lion cub’s my favourite)

Daily bits: trading, ethics and penguins – July 2, 2017

Happy July! And Happy Canada Day for my Canadian friends, and Happy 4th of July for my US buddies… 🙂

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This is huge: Delaware has passed a law that recognizes the right to trade securities on a blockchain platform. While this only applies to companies incorporated in Delaware, that is 2/3 of the Fortune 500!

I’ll talk about this more later (because the emergence of a new form of market is one of the blockchain applications I’m most excited about), but meanwhile, it’s worth thinking about how this will change market structures.

In chess, the winning strategy usually involves “occupying the middle”. In business, also. Those who control distribution, even today in this increasingly decentralized e-commerce world, can assign themselves a big slice of the market.

This also applies to stock and bond distribution, which is taking a bit hit with blockchain platforms. It’s happening today with initial coin offerings, and now it looks like it will happen soon with the issuance of shares.

Who will the new middlemen be? According to “blockchain philosophy”, there won’t be any. I don’t buy that. I do believe, however, that a new type of middleman will emerge. Most likely, the owners of the blockchain platforms that facilitate the trading will take away the crown.

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In his latest post on Medium, Nassim Taleb introduced me to the concept of Gharar, which has a wide range of definitions, depending on your source. According to Investopedia, it is associated with uncertainty, deception and risk. Islamic-finance.com explains it as “deceptive uncertainty”. Taleb takes the last definition even further, adding the qualification “inequality of uncertainty”:

“No person in a transaction should have certainty about the outcome while the other one has uncertainty.”

Taleb intriguingly points out that this interpretation might not meet the highest ethical standards, as it still leaves some room for deception. If I suspect that something might happen to weaken the deal for you, but I’m not certain, then according to Gharar principles, I don’t have to tell you. But ethically, I should.

His writing on the ethics of asymmetry left me wondering if new technologies will nudge us into a world in which markets are transparent. How would that change the behaviour of markets and their actors?

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There are benefits to going cashless, but there are negatives, too. One major disadvantage that I don’t hear anyone talk about is the impact on families that prefer cash because it helps them to stick within their budget. You can’t spend more cash than what’s in the jar.

So, the emphasis on “making it easier for people to buy things” is short-sighted. It shouldn’t be “easier for people to buy things”, if they can’t afford them. Helping them to rack up debt is not doing them any favours.

Perhaps slick apps that help with budgeting can smooth flows. But will that demographic use them? Should they be obligated to?

I’d like to see the conversation widen to include those for whom payment convenience is not a priority.

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Haruki Nakamura’s paper figures are captivating, charming and deceptively simple. (Via Colossal.)

Two of my favourites:

By Haruki Nakamura, via Colossal
By Haruki Nakamura, via Colossal


By Haruki Nakamura, via Colossal
By Haruki Nakamura, via Colossal

Daily Bits – fail rates, trade (again) and bitcoin value – June 27th, 2017

I read with interest Erin Griffith’s essay in the Fortune Data Sheet newsletter this week, which contained this paragraph:

“I recently found myself carelessly repeating a statistic that I’d heard dozens of times in private conversations and on public stages: “Nine out of 10 startups fail.” The problem? It’s not true. Cambridge Associates, a global investment firm based in Boston, tracked the performance of venture investments in 27,259 startups between 1990 and 2010. Its research reveals that the real percentage of venture-backed startups that fail—as defined by companies that provide a 1X return or less to investors—has not risen above 60% since 2001. Even amid the dotcom bust of 2000, the failure rate topped out at 79%.”

A ha! On the one hand, better. But on the other, we’ve been misled. Although, as Erin points out, the actual numbers aren’t that important. The message – that it’s much, much harder than it seems – is.

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A few months ago I wrote about this platform for CoinDesk, and so was understandably excited to see it progressing.

The Digital Trade Chain Consortium, comprised of seven European banks working on blockchain supply chain applications for small and medium businesses (SMEs), has partnered with IBM for the roll-out of the platform, still scheduled for the end of 2017.

While not exactly shattering news, it does show that progress is being made, that the project is still on schedule, and that we might soon see a live version of a blockchain platform helping foster trade across borders. That is exciting.

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Forbes published a thought-provoking article on bitcoin, which the author argues has no clear intrinsic value.

He clarifies that its utility as a medium of exchange can’t be considered intrinsic value, either, unlike gold, and posits that its “political value” can’t be substituted.

What he neglects to include in the analysis is that bitcoin has another utility, one coming increasingly to the fore – the ability to transfer information without going through third parties. That information may be about a transaction (Alice pays Bob 0.5 bitcoins), or it may be a hashed document registered on the bitcoin blockchain. That function – bypassing centralized enablers in a reliable and tamper-proof fashion – has value.

So, even if you believed that bitcoin had no use whatsoever as a currency, it’s hard to argue that it has no intrinsic value.

I also disagree that the “political value” is worthless. In this increasingly politicized world in which we live, with tectonic shifts in economics, demographics and philosophy, it really isn’t.

And the claim that all libertarians want to return to the gold standard is a stretch.

As is his claim that a large part of bitcoin’s value stems from the ability to mine it. Apart from the fact that not everyone can do that (it’s bloody expensive), mining has nothing to do with utility or, for that matter, intrinsic worth. Just because we can create something, doesn’t mean it has value. It only has value if people want it.

Why would people want it? Because they believe it will be useful. Maybe not today, but some day.

How is that different from the value we ascribe to the dollar? It has value because we believe that the US government will honour its debt and repay it. In other words, the dollar will be useful. Not today, but some day.

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As a devout city-enthusiast, seeing a travel photo competition (for National Geographic, no less) full of stunning images of buildings makes me so happy… (via MyModernMet)

by Nikhil Rasiwasia, via MyModernMet
by Nikhil Rasiwasia, via MyModernMet


Daily Bits – chickens, ether and bitcoin bills – June 26th, 2017

My article on CoinDesk this week –  Counting Chickens: Can Blockchain Restore Trust in China’s Food Supply?

These essays are taken from the weekly CoinDesk email, which I produce. If you don’t subscribe, you should, they’re kinda fun (even if I say so myself).

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As the price of ether retreats, this is a refreshing take on its outlook.

If you’re tired of the hype surrounding ethereum, you’ll like this article. Bitcoin miner and investor P4man takes a look at the fundamentals and makes some observations about the ether token’s outlook.

For instance:

  • Virtually no traction as a transactional currency (no merchant infrastructure, little evidence it’s used for remittances or similar)
  • Due to its complexity, it’s not a good store of value
  • It does not offer trust or predictability (vis hard fork)

And then there’s this:

“Despite hearing many claims to the contrary, ethereum with its vastly more complex blockchain, has a much bigger scaling problem than bitcoin, that is yet to be solved, even in theory. Concepts exist to address this problem (“sharding” etc), but those do not exist yet and may not even work.”

Plus, if we accept that a large part of the run-up in the price of ether was due to the demand for tokens with which to participate in ICOs, then for the ICO promoters to use the raised funds, they will have to sell those ether. Which could lead to downward pressure on prices.

Which may be what we’re seeing now. At time of writing, ether is ___% down from its recent high.

However, it looks like the ICO craze is not over yet, so ether could well rebound. I just don’t know when, or by how much (ie. this is not investment advice! – I do not hold ether.)

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A good thread on decentralization:

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Artist Matthias Dörfelt wrote a program which, for each bitcoin block input, outputs a design for a bitcoin bill. As in, a paper currency version of bitcoin.

by Matthias Dörfelt, via Co.Design
by Matthias Dörfelt, via Co.Design

To top it off, Matthias hand-signs each bill “Satoshi”. Because. And, notice the shadowy figure in the centre of each design.

by Matthias Dörfelt, via Co.Design
by Matthias Dörfelt, via Co.Design

I spent years teaching my daughter not to ask “why?” when it comes to art. I’m beginning to wonder if maybe she was onto something after all.

(Via Co.Design.)


Daily Bits – central bank currencies, blockchain ad servers and cookie dough – June 23rd

JP Koning brings up central bank digital currencies (CBDCs), and explains the difference between account-based money and bearer-based money. Most economic accounts of CBDCs, he says, only talk about the former. However, society needs the latter for “robustness”.

In account-based money, payments go through a central authority (say, the issuing central bank) that verifies we have enough in the account and that we are who we say we are. Then it authorises and executes the transaction. Bearer-based money is more like cash. Onus on the execution lies with the user, and the ledgers are adjusted off the central issuer’s books (if I give you €20, it’s understood that it’s now yours and not mine).

A CBDC that only works with account-based money will be vulnerable. Technological glitches happen. Servers go down, settlement platforms can break and mobile telecommunications can have outages. Cash, on the other hand, keeps on working throughout.

So, says Koning, to avoid a step backwards in a future move to CBDCs, in which society is left worse off than it is today, we need to develop a digital form of bearer-based money.

I know, at this stage you’re probably screaming “Bitcoin! Bitcoin!”. But we’re talking central banks here, so…

Koning posits that a solution could be “digital tokens”. A central bank could issue digital tokens onto a distributed ledger, and verification could be outsourced to nodes spread all around the world. This sounds bitcoin-ish, but the central bank retains control of the issuance. An intriguing compromise.

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Favourite tweet of the day:

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I might start a collection of blockchain “applications” that don’t really need blockchain. The fun part will be removing them from the list as I find out that, wait a minute, maybe the blockchain can help…

Anyway, here’s one that I don’t yet “get”: serving online ads. I understand that there’s a lot of fraud, and that the blockchain’s transparency can help with the trust. I also understand that a decentralized “marketplace” for ads could lower costs and spread the income.

But, given the sensitivity of certain messages and images, a totally decentralized ad serving platform will be a hard sell. Someone has to vet, and someone has to take responsibility if sensibilities are offended. If I were to host ads on this site (not going to do that), I would prefer the centralized, more expensive version to a decentralized one that might display pornography.

And, as this article in Digiday points out, there’s the transaction confirmation speed to worry about.

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Cookie dough!!! By the scoop!!!!! OMG!!! (Via The New York Times.)

via The New York TImes
via The New York TImes


Daily Bits – distributed storage, tweetstorms and cities – June 22nd, 2017

I’ve been pondering for a few days now the question of why decentralized file storage is better than centralized file storage with a trusted third party that can be held accountable if things go wrong.

And then this morning I come across this article published on Coin Center’s blog, written by Juan Benet, Jesse Clayburgh and Matt Zumwalt of the Protocol Labs team (a startup that focuses on data storage problems – so they know a thing or two).

These are the arguments against centralized cloud storage:

“This architecture makes the web brittle, undermines privacy, allows the price of storage to remain artificially high, and creates bottlenecks that prevent innovative new uses of data.”

Okay, I get that.

I’m also intrigued by the idea of locating files by what they are, not where they are. If a webpage calls a file now, it references it by where it’s stored. That, as the authors say, does make the web “brittle”. Move the file, and the call no longer works.

The authors helpfully compare this to pulling library books by their location, not their title.

Add to that the economies of scale of harnessing all that unused computing capacity (just on my laptop I probably have a fair chunk).

So, I’m liking the idea. But I still don’t see how this system will get enough of a network effect going to be practical. Website code will need to be re-written, and given the vast size of the ecosystem, the incentives will be tricky. If indeed possible.

But, just because something is “too big to change”, doesn’t mean we shouldn’t try, right? Look at the valiant cryptoeconomists working on imagining a new central banking system.

A daunting task, though. But one that I am now more interested in.

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An epic 37-tweet thread from Naval Ravikant that, although it’s long, showcases the discipline of having to work within 140-character limits:

It includes gems such as this:

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Diverging from blockchains for a second, I came across an illuminating article on the three different types of cities: suburban (built for cars), hypertrophic (built for transit) and traditional (built for walking).

This reminded me of something I read recently by urbanist and philosopher Jane Jacobs, who asked: “Are we  building cities for people or for cars?” I know which type I prefer (hint: I don’t even have a car.)

I do, however, recognize the impracticality of having a totally walkable city. Pity.

city traditional
Traditional city


Hypertrophic city
Hypertrophic city


Suburban city
Suburban city

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Finally, an article on digital identity that recognizes that the incumbents may have a say in how this turns out. But, they may be amenable to a business model mutation: “Hey, so you lose all this income from the identities you control, but just think about all the extra users you’re gonna get!”

Okay, it needs some work, but it’s a start.

Moral: the incumbents aren’t going to let go of their stronghold on our identities without a good reason.



Daily Bits – identity again, ICOs and thread – June 20th, 2017

My colleague Michael was at a presentation at the UN yesterday that focused on identity. Neil McCann of the UNDP (who was excellent on our “Global Issues” panel at Consensus, which you can see here) stressed cross-industry collaboration, urging the private sector to join the UN initiative to develop a platform for digital identities.

An especially intriguing part is this: the UNHCR representative speaking at the event insisted that the eventual identities need to be owned by the individuals.

While this may seem obvious on the surface, it isn’t when you think about how identities are granted today. Our identities are not owned by us – if our government decides to revoke our passport, it’s very hard for us to prove who we are.

Spinning out a sovereign identity platform for refugees (although they are not the only target “market” for this service) would have a huge impact – not only on how aid is delivered, but also on immigration, education, possibly even finance. The effect could be much wider than we dare to imagine.

To coin a phrase: “bring it”.

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Favourite tweet of the day:

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If you’re contemplating doing an ICO (really????), read Emin Gün Sirer’s take on Bancor first. It’ll provide strong guidelines on what not to do.

Bottom line, you should:

  • Address a real problem
  • …without mumbo-jumbo terminology

He doesn’t attack the code (well, a little bit) as much as the business model. Which, in this manic eurphoria, disconnected from fundamentals, is refreshing. And sensible. Hype cannot stay disconnected from reality for ever…

What’s more, whether you agree with Gün or not, the prose is sharp:

“‘Double coincidence of wants’ is a real problem in economics today in the sense that the ‘itsy bitsy spider’ problem is a real problem in zoology — that is, it’s something one might learn in grade school, and it’s completely irrelevant in the real world.”

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In no way am I into embroidery (I once tried a colouring book for adults… and realized that I’m just not that stressed.) But this is captivating:

3d embroidery

3d embroidery by Justyna Wołodkiewicz, an abstract mix of thread and clay. (Via Colossal.)

3d embroidery 2