Bits and stuff: September 9th, 2018 – crypto, caution and codex

After two weeks off (partly spent in Cincinnati for a family wedding), I have come to the conclusion that even a full time job reading quality crypto articles would not be enough to keep up with the worthwhile ideas and analysis. I am grateful to @nlw for introducing me to stuff I would probably miss otherwise – if you’re not following him, you should. And the curation emanating from the @Messari team is also an eye-opener and a time-saver.

And meanwhile, I continue to struggle with the overwhelm, while really appreciating being able to work in SUCH a compelling sector.

Cincinnati at night
Cincinnati at night

(Anyone else out there often have 25 tabs open at the same time?)

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To add to the list of “great bitcoin articles for beginners” – I get asked for these quite often, and most of the ones I used to learn are now out of date – here’s one by Nic Carter that explains the basic concepts clearly. As a bonus, it refutes, almost point by point, one of those all-to-frequent pieces in the mainstream press (this one from The Washington Post) that – while they may have some good criticisms – show a fundamental lack of understanding. (Looking at you, The Economist – although with a less severe glare.)

“Bitcoin is designed to solve the double spend problem for digital cash, and to provide a predictable monetary policy. It does that very well, it has done that for the last nine and a half years, and it will continue doing that for the foreseeable future. Demanding low volatility on top of that is farcical, and betrays deep ignorance about the tradeoffs inherent in monetary systems, and the way that financial markets work more generally.”

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Speaking of media missteps, the misplaced attention drawn to Goldman Sachs’ plans to set up a crypto trading desk is indicative of the intense level of attention given to institutional interest in cryptoassets. I believe that the slump in the bitcoin price when the article came out alleging that their plans were being shelved is coincidental – the report was denied shortly after, and the rebound didn’t come until a few days later. So, the market movement probably didn’t have much to do with that.

Nor should it. Goldman’s plans are relevant, but not material. The original article said that the trading desk launch was being delayed, not cancelled (“moving down the list of priorities”, or similar language). But that implies that they had a fixed timeframe in mind, which I doubt. Opening a “physical” bitcoin trading desk before you have crypto custody sorted out does not make strategic sense. The development of that business line is apparently still on track.

(I have an issue with the differentiation of “physical” bitcoin from bitcoin derivatives – it’s not physical!!! But should we use “actual”? “Real”? Searching for a better idea…)

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Here is a mind-blowing podcast from Epicenter (which I usually find quite hard going) about a potential new economic system. Glen Weyl talks about his book “Radical Markets”, in which he draws a more equal society that removes the monopoly of ownership through self-taxation and option to buy. While I don’t see this happening (because of human nature and the structure of power), the ideas are intriguing, especially the part about how pseudonymity leads to oligarchy.

And the idea of quadratic voting: each citizen gets a certain number of votes (which could be linked to income) to “spend” on issues that they care about. Instead of one-vote-takes-care-of-everything, which distorts influence, people can have more “skin in the game” and more influence in the issues that matter to them.

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After that, the article by Nuval Noah Harari in The Atlantic about democracy has a deeper resonance – how its durability is not obvious, especially given the redistribution of power via technology (such as blockchain):

“We tend to think about the conflict between democracy and dictatorship as a conflict between two different ethical systems, but it is actually a conflict between two different data-processing systems. Democracy distributes the power to process information and make decisions among many people and institutions, whereas dictatorship concentrates information and power in one place… However, artificial intelligence may soon swing the pendulum in the opposite direction. AI makes it possible to process enormous amounts of information centrally.”

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Leonardo Da Vinci’s notebooks online. Seriously.

codex

(From the Victoria and Albert Museum.)

 

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