ANALOG NATION 01/03/2026

Dear Humans,

Welcome to 2026's first edition of ANALOG NATION.

I'm just back from a very analog week in the South West of England visiting family and friends. I got to see first hand one of the first examples of a "Banking Hub", an initiative by the Post Office to enable banks to have presence on a high street without actual branches - it's something like a co-working space for bank brands one day a week where they can meet with their customers face to face. While the pivot to digital banking has decimated high street branches in the UK, this shows that the need for face to face interactions hasn't gone away, particularly in rural towns with an ageing and far less digitally savvy clientele. 150 banking hubs are now open in the UK, and major banks and building societies have signed a £1.75 billion contract to continue offering services at Post Office counters for at least the next five years.

What I love about this particular branch is the juxtaposition of medieval architecture with a very modern concept. Sherborne is OLD - the Abbey is from 705 AD and contains the tombs of two of Alfred the Great’s brothers.

This week we're tracking as our lead story yet another digital/physical hybrid, but of a far more nefarious nature - how Bitcoin ATMs became fraud infrastructure.

We'll also dig into why Congress is building identity verification systems under the guise of protecting children, what happens when unethical AI companies deploy systems that generate child abuse material, and how banks are cutting 200,000 jobs based on AI capabilities that don't exist yet. Plus - signs of the analog resistance with recent evidence that people are opting out through cash, physical retail, and subscription cancellations.

As a fledgling publication, I'm testing the water on a few ideas and would therefore very much welcome comments and feedback. Let me know what works and doesn't.

Stay skeptical,

Nick

Bitcoin ATMs: The $333 Million Fraud Pipeline

The FBI reported $333 million in Bitcoin ATM fraud last year, more than doubling from the year before. Over 10,000 people got scammed, with a median loss of $5,400 each and tragically, most victims were over 60.

Here's how it works: fraudsters call pretending to be your bank, tell you your account's been compromised, and instruct you to "protect" your funds by withdrawing cash and depositing it at a Bitcoin ATM. The physical machine sitting in a 7-Eleven looks legitimate enough - it scans your ID and enforces transaction limits, giving the appearance of a regulated financial service. But that compliance theater exists to protect the ATM operator from regulators, not you from fraud.

Once your money hits the Bitcoin network, the fraudsters cash out. The transaction is permanent, there's no fraud department to call, and nobody's coming to help you get it back.

This is what happens when technology gets marketed as "cutting out the middleman" but actually creates a new middleman optimized for theft. Bitcoin ATMs wrap themselves in the aesthetics of legitimate financial infrastructure while operating without any of the consumer protections that actual banks are legally required to provide. Thirty-one thousand of these machines are operating right now because the gap between what they look like and what they actually do is profitable - and regulators either can't or won't close it.

The FTC has documented how these machines enable scams that traditional banking infrastructure would catch. Banks flag unusual withdrawals. Credit cards have fraud protection and chargeback rights. Bitcoin ATMs have none of that, by design. The technology promises financial freedom while delivering a fraud mechanism that's nearly impossible to prosecute and completely impossible to reverse.

Drake Streaming Manipulation Lawsuit

UMG filed a lawsuit alleging Drake and his label artificially inflated streaming counts using bots and pay-for-play schemes. The case reveals how streaming platforms market "authentic engagement metrics" while remaining deliberately incapable of distinguishing between human listeners and automated fraud. When the business model depends on reported play counts for royalties and chart rankings, the gap between claimed verification and actual verification becomes profitable for everyone except the artists getting cheated out of royalties and chart positions.

Disney's $10 Million COPPA Violation

Disney settled with the FTC for $10 million after failing to properly label children's videos as "Made For Kids" on YouTube, enabling Google to collect data from children under 13 for targeted advertising. The case was brought by the Justice Department after the Federal Trade Commission (FTC) investigated the matter and negotiated a resolution with Disney, the Justice Department said in a Tuesday (Dec 30) press release. While this doesn't look good for the company, ten million dollars is couch cushion change for Disney - the cost of doing business rather than a deterrent.

Grok Generates Child Sexual Abuse Material

xAI's Grok image generator has been producing non-consensual sexually explicit images, including of minors. Bloomberg and The Verge reported multiple incidents, including one on December 28 where the system generated explicit images involving individuals aged 12-16. Multiple X users documented the system's willingness to "undress" anyone in uploaded photos, regardless of age or consent.

This is a system failure at every level: the technology was deployed without adequate safeguards, the business model prioritizes engagement over safety, and the response to being caught was a bot apology rather than fundamental changes, as if a bot is a person.

The Internet Watch Foundation recently revealed that AI-generated CSAM has increased by orders of magnitude in 2025 compared to 2024. This is in part because the language models behind AI generation are "accidentally" trained on real photos of children scraped from school websites and social media or even prior CSAM content.

The gap between what AI companies promise ("responsible deployment," "safety measures") and what they deliver (systems generating child sexual abuse material on demand) couldn't be more explicit. Pun intended.

AI Banking Job Cuts Without the Efficiency Gains

Morgan Stanley forecasts that AI and branch closures will eliminate 200,000 EU banking jobs by 2030 - roughly 10% of the sector's 2.1 million workers. The cuts will hit back-office functions, risk management, and compliance roles hardest. Banks are marketing this as "AI-driven efficiency gains" that will deliver 30% productivity improvements.

Why this is a systemic failure is that banks are cutting headcount based on promised AI capabilities that don't exist yet. The technology is unproven to actually handle the complex judgment calls these roles require, but the workforce reduction happens anyway. What gets marketed as "automation" is often just cost-cutting that degrades service quality while executives claim AI innovation - the efficiency gains are fictional, but the job losses are real.

YouTube's AI Slop Epidemic

Kapwing analyzed 15,000 YouTube channels and found that 20% of videos recommended to new users consist of AI-generated content. The study identified 278 channels producing exclusively AI-generated videos that collectively generated 63 billion views and 221 million subscribers. YouTube's recommendation algorithm either can't distinguish between human content and AI spam or doesn't care to, since both generate ad revenue. Users seeking information encounter AI-generated misinformation at scale while the platform's quality control has collapsed.

The Subscription Cancellation Wave

Americans spend roughly $90 per month on subscriptions, with $17 going to services they don't use. CNET and YouGov found that 61% of consumers are reconsidering subscriptions due to economic concerns, and 25% have already canceled at least one. The "frictionless" recurring revenue model is facing mass resistance with consumers manually auditing subscriptions and cutting what doesn't serve them.

Ampere Analysis tracks "streaming rotation" - subscribers who cancel and re-subscribe based on specific content. Data shows 61% of Netflix cancelers return within a year, but they're not paying continuously anymore. This is algorithmic resistance through selective engagement.

Physical Retail's 73% Holiday Dominance

Visa's Retail Spend Monitor found that 73% of holiday spending happened in physical stores versus 27% through e-commerce. This happened despite years of propaganda designed to make online shopping more convenient and competitive. Consumers chose the analog experience - touching products, avoiding delivery uncertainties, and engaging in activity that doesn't feed big tech coffers. Well played, humans.

Cash as Privacy Infrastructure

A Siena University survey found that more than 50% of consumers are using the same amount or more cash than five years ago. The most prominent concern is safety - many consumers stated that paying with cash better protects their privacy than digital or card payments, while others cite the increased risk of identity theft associated with cards and payment apps. Further, 94% want the U.S. to keep cash as protection against national security threats, and 85% support the Payment Choice Act requiring businesses to accept it.

Conduct a cash-only day once per week. Withdraw enough cash on Friday for Saturday expenses - groceries, coffee, local shopping. You'll find yourself more conscious of purchases, interacting differently at checkout, supporting local businesses, and creating zero data trail for the day.