PSA: Tics, lol

There has been plenty of discussion of verbal tics: such as standpoint modifiers, fillers, endpoint modifiers, softeners, up talk, fast talk and vocal fry. The funny thing about that kind of discussion is that it normally assumes the speaker is not aware of what they are doing and/or it reflects the speaker’s internal emotional state.

But, I have some of these problems. Sometimes, I’ll use a “softener” because the person I am talking to doesn’t like conflict. The reality is sometimes you do these things out of consideration for others, not unconsciouslessly or because of personal anxiety, insecurity or whatever.

However, I recently noticed someone that uses “lol” after every sentence in an online forum. I’ve known a few people that do that, and I’m sure you do too. It’s generally a very clear sign that there is no point interacting with that person beyond a surface level, and there isn’t much interesting they are going to say. Perhaps that is unfair, but it seems true. It’s the first writing tic that I have noticed. Now, I want to start discovering others.

Questions About Technology Investment: CharaCorder

“The CharaChorder is a new kind of typing peripheral that promises to let people type at superhuman speeds. It’s so fast that the website Monkeytype, which lets users participate in typing challenges and maintains its own leaderboard, automatically flagged CharaChorder’s CEO as a cheater when he attempted to post his 500 WPM score on the its leaderboards.

It’s a strange looking device, the kind of thing Keanu Reeves would interface with in Johnny Mnemonic. Your palms rest on two black divots out of which rise nine different finger sized joysticks. These 18 sticks move in every direction and, its website claims, can hit every button you need on a regular keyboard. “CharaChorder switches detect motion in 3 dimensions so users have access to over 300 unique inputs without their fingers breaking contact with the device,” it said.”

-Matthew Gault, “This Keyboard Lets People Type So Fast It’s Banned From Typing Competitions.” Vice. January 6, 2022.

Open Question: What is a good “investment” in technology?

Let’s imagine you have a child that it at the age they are starting to use a computer and a QWERTY style keyboard. Do you spend $250 and get them this kind of peripheral knowing:

  • It’s a new technology that likely will not be around in 20 years
  • It seems likely that in 20 years or so that the main input with computing will be via voice and/or video
  • It is even possible that in 20 years everyone will have a brain-computer interface.

Personally, I think it is useful to learn how to use new devices, even if they turn out to be novelty devices. It’s easy to see that certain popular devices that became obsolete have paved the way for the evolution for the subsequent devices that come later. Examples:

  • Mainframe computing led to personal computing which led to mobile computing
  • Blackberry, PalmOS, iPods were the precursors to Android and iPhones
  • Every few years, someone makes a new chat app, from ICQ and IRC to Telegram and Discord.

Familiarity with the previous version can help you transition to new variants. So, it’s probably a good idea to get familiar with technologies, even if you don’t think they will last.

End The Conversation; Give Up the Last Word

One of the the things I like about the Internet is you’re going to encounter very different types of people. You’ll talk with them in some forum. At some point, you’ll come to the realization that a conversation you are engaged in isn’t worth having. There’s simply nowhere interesting for the conversation to go.

In most cases, you can simply stop. You don’t need to carry on to the end, as if you are on some kind of conversational Trail of Tears. There’s no one forcing you to continue. So, don’t. On the internet, all you have to do is direct your attention somewhere else.

Offline, it’s the same. You can stand up and any moment, and simply walk away. Slightly more considerate: excuse yourself, go to the bathroom and don’t come back. If it is someone you see regularly, you can say, “You make an interesting point. Let me think about it.” And then, change the discussion or go quiet and think about something else. if they try to start the conversation up again, you can tell them that your mind wandered off, thinking about other things and have nothing additional to say.

The problem is we want to convince people. We want to be right. We want to show them how smart and clever we are. We often want the last word.

Give up showing off. Give up the last word. Stop doing something that isn’t worth your time, particularly when it is no longer fun.

The United States, Incorporated

“I propose we do so by creating two positions within the executive branch that operate in tension with each other. The first would be the chief operating officer, charged with managing the administrative agencies. The second would be the chief auditor, charged with leading a watchdog agency that monitors the administrative state for effectiveness and abuses of authority. Both the president and Congress would oversee the balance of power between the two positions…

…With a COO in charge of managing government agencies, the roles of Congress and the president would adjust accordingly. Congress would act more like a board of directors with respect to the agencies, and the president would act more like a board chairman. The COO would assume the responsibility of presenting a plan and budget to Congress for approval, while the president would have the authority to hire and fire the COO at will. In a spirit of conservative incrementalism, we could first apply the COO model to one functional domain, such as domestic infrastructure, before extending it to the others.

The second new position — the chief auditor (CA) — would lead a powerful audit agency that provides independent evaluations of agency performance. One might think of this agency as a bulked-up version of the existing Government Accountability Office.”

-Arnold Kling, “Designing a Better Regulatory State.” National Affairs. Winter 2022.

What could possibly go wrong?

Let’s abstract out most of the power of the President and Cabinet into one unelected position and give them a free hand to reorganize the government as they see fit. Further, let’s abstract out the oversight function on Congress to a single auditor. The President turns into a figurehead. Congress can pass bills, but it has no power to determine whether those bills are being implemented according to their intent.

Presumably, to extend the metaphor, citizens would become the equivalent of stockholders, but they never have the opportunity to sell their stock and buy another. They have the power to elect the board, who can pass legislation, but who are not accountable for the results. What happens when the federal government starts doing something people don’t like? They can vote someone in that will appoint another COO? Without any input on who this person is? They can elect someone who will pass different bills? What exactly will the President and Congress do?

If it made sense to run government in this way, wouldn’t these kinds of qualities already be important for running for President or being appointed to the cabinet? I’d imagine positions like Deputy Secretary are filled with people with years of experience in the federal agency they are part of. Would it make sense to replace these people with other people with broad “industry” experience?

Is the organization of government the same as organization of corporations? Is it even the same skill set?

Some obvious problems. What happens when the COO and Auditor positions collude? What happens if the COO position is so powerful a President is unable to fire her? For example, it’s a billionaire that paid to get the President elected and act as a figurehead and now the billionaire plans to run the country?

The least of your problems is the government gaming the auditor’s metrics. But, it’s also not an insignificant problem.

There are so many reasons the argument provided in this article is bad. As bad as “democracy” or “representative democracy” is, the hot mess of it is surely better than this idea.

Timeline of the Human Condition

“Ages: following the big bang 13.8 billion years ago, time passed two-thirds of the way to the present before the formation of the Sun 4.57 billion years ago. Rescaled to a calendar year, starting with the big bang at 00:00:00 on 1 January, the Sun forms on 1 September, the Earth on 2 September, earliest signs of life appear on 13 September, earliest true mammals on 26 December, and humans just 2 hours before year’s end. For a year that starts with the earliest true mammals, the dinosaurs go extinct on 17 August, earliest primates appear on 9 September, and humans at dawn of 25 December. For a year that starts with the earliest humans, our own species appears on 19 November, the first built constructions on 8 December, and agricultural farming begins at midday on 29 December.

C. Patrick Doncaster, “Timeline of the human condition.” https://www.southampton.ac.uk/~cpd/history.html Accessed: January 5, 2022.

Energy Production, Cryptocurrencies & Hidden Agendas

How many times have you read something like this, “Bitcoin uses as much electricity as Malaysia or Sweden or Denmark or Chile….”. What a bore. Have you ever wondered, however, why the comparison is to countries? Why don’t they ever tell you what would seem to be a more natural comparison which is how much “Bitcoin” spends on electricity?

The reason is that electricity is incredibly cheap so Bitcoin electricity expenditures priced in dollars don’t look very large. Bitcoin uses something like 100 terawatt hours (TWH) of electricity annually (depending on the price of Bitcoin) but a TWH costs less than $100 million (10 cents per KWH times 1000000000). Thus, Bitcoin spends say $10 billion on electricity annually. (In fact, it’s less than this since bitcoin miners can be located in places where electricity prices are especially cheap.)

$10 billion in spending isn’t a lot. It’s less than the world spends on toothpaste ($30b), much less than the US spends on cigarettes ($80b), and considerably less than the US Federal government spends in one day ($18.65 billion).”

Alex Tabarrok. “Bitcoin and Electricity.” Marginal Revolution. November 29, 2021

One argument, one that you see everywhere in popular media, is that cryptocurrencies use a lot of electricity, and it’s not a productive use of resources. Rarely, you’ll see apple-to-apple comparisons, such as this response to trying to make a comparison to the electricity use of the VISA network, which is a strange comparison considering all the payment terminals, ATMs, bank mainframes, and many other things are treated as externalities.

“While no one can argue that Bitcoin (and other altcoins) mining consumes a lot of electricity (in absolute numbers) given that you need to run a network of few hundreds or thousands of very powerful computers all the time, the right way to look at this problem is not about the total consumption but to compare how efficient is Bitcoin relative to the alternative traditional centralized systems that we are predominantly using today and that one day crypto might replace.

However, the only comparison that seems to always pop up everywhere is against VISA transaction costs which was included in the article that trigger the above tweet and in other articles as well. As expected, VISA looks way more efficient which adds to the rhetoric that Bitcoin is a very inefficient system and it is just a Ponzi scheme that is polluting the world. In my view, this comparison is flawed and it is not comparing apples to apples. Besides the fact that Bitcoin is not simply a piece of a payment network like VISA but a full currency system, VISA itself requires the banking system for its payment system to work so you need to actually include some of those costs there to make a meaningful comparison. So let’s look first at how VISA works…

…”According to the article that trigger this discussion, Bitcoin annual Twh consumption is 28.67 , so currently more than 3 times more efficient than a very conservative calculation of the cost of the global banking system. Of course you will argue that the banking systems does more than handling a currency which is true but the difference is large enough that I do not think is that relevant. Even if only 30% of banks electricity consumption was the comparable part to Bitcoin, that will still make Bitcoin more efficient.”

-Carlos Domingo, “The Bitcoin vs Visa Electricity Consumption Fallacy.Hackernoon. November 29, 2021

And, the simple fact is that it is very difficult to price in externalities to determine the real price of any energy production.

“All energy production has environmental and societal effects. But calculating them — and pricing energy accordingly — is no easy task.”

-Erica Gies, “The real cost of energy.” Nature. November 29, 2017.

And, this is true when assessing energy use as well. It’s difficult to measure the benefits of energy expenditure. What is the value of street lights relative to the energy and infrastructure required to have them on? This is true of practically everything. What is the true cost and benefit of international shipping and transportation? Of the cement poured for a playground? The establishment of a new church or temple? You could continue this line of questioning down any avenue you like, and the answer is it is impossible to make this kind of calculation beyond the costs and perceived benefits.

Enter cryptocurrencies. The problem with the arguments against cryptocurrencies is that they generally take this form.

1. If an activity provides no benefit and uses resources, it is a wasteful activity.
2. People should not do wasteful activities.
3. Mining Bitcoin provides no benefit and uses resources.
C. People should not mine Bitcoin.

This is the extreme argument. The less extreme argument makes some kind of comparison between the benefit relative to use of resources. But, as we know from the above it is difficult to take into consideration the externalities involved. On the face of it, the argument that mining cryptocurrencies have no benefit is belied by the fact that every day billions of dollars worth of transactions are conducted using cryptocurrencies. None of that has any value? How do we evaluate the benefit relative to resource use or other ways this energy might be used? But, we really cannot make that kind of comparison. What is the relative value of Bitcoin mining versus the amount of power used in casinos on an annual basis? Online gaming? How does one make those kinds of comparisons? Is it even right to make them?

The reality is people don’t even try to make that sophisticated of an argument. Instead, it is something simplistic like: Bitcoin uses as much electricity as a country, the implication is that people would otherwise use this electricity, or the electricity they do use would be less expensive.

We also don’t make these kinds of calculations for other activities. The reason there’s the difference hinges on a value judgment that the activity, same as the implicit argument above mentioning casinos implies they have no value. But, even casinos have plausible arguments supporting their value.

The interesting thing, for me, in looking at these arguments closely is ho political arguments. The reason that the environmental argument is used is because it can plug into concerns that people have about climate change, and short circuit a reasonable assessment of the claims being made.

Same is true of claims that cryptocurrencies are used only for crime. Criminals may be an innovator in the space, but it isn’t only good for crime, just as it is not true that VHS and internet streaming is only good for porn. Porn pioneered the technology, but it didn’t stop with porn. YouTube isn’t porn.

There’s also a deeper agenda. It’s a simple fact that the more money that makes its way into cryptocurrencies, the less money that will be available to buy stocks, bonds, U.S. Treasury instruments, and so forth. Less money in traditional financial vehicles means lower prices for them.

The Bitcoin “debate”, if we can call it that, really helped me to understand how much of our dialogue is shaped using concepts from our political orthodoxies. A claim like, Bitcoin mining hurts the environment, is an emotional appeal, not a reasoned argument. The anti-Bitcoin argument is above, and it is problematic both because it has benefits and it is difficult to assess the costs and benefits without engaging in motivated reasoning.

Another point worth making here is that it wasn’t until this year that cryptocurrencies emerged that created a marketplace of cryptocurrencies, where they will compete. Network efficiency and cost will be one dimension of this competition, and it will drive both electricity use down and provide for many more benefits. And, where something like Bitcoin’s energy-intensive proof-of-work algorithm is used, it will be because it provides a capability that isn’t available in other approaches that justifies the cost.

When all of that happens, what will be the new reasons people will be against cryptocurrencies? It’ll be the need for regulation, to provide customer guarantees, or something else. But, the one thing that I am certain of is that there will be other reasons, other agendas that these kinds of arguments will be serving to obscure. And, this is how everything is, there’s always another or series of issues hiding behind the one that’s used as justification.

Stable Anchors & Financial Dominance

“The less dominant the U.S. economy is, the less the dollar can function as a stable anchor for the global financial system. It was still intact in 2008-10, when a global financial crisis sent capital flooding to the safe haven of U.S. government bonds. But in recent years, people have begun to question whether Bretton Woods 2 is finally on the way out. The share of U.S. dollars in global reserves has been falling for years, and this fall has accelerated since the start of the pandemic.

-Noah Smith, “Crypto and the global financial system.” noahpinion.substack.com. December 14, 2021.

True of the U.S. dollar. True of Bitcoin itself. As the ecosystems of alt-chains are built out, the center of gravity is going to move from Bitcoin and be distributed across a few major blockchains, which will, in turn, be supported by niche chains. The same thing will play out with the U.S. and world economy. It might happen a bit slower if the U.S. government manages to create a digital dollar.

Related:

“The prevailing consensus view has been that bitcoin is a risk asset. It has an inverse relationship with interest rates. When central banks and politicians manipulate interest rates lower, and pump trillions of dollars into the market, bitcoin should go higher…

This inverse relationship is not what we are seeing between bitcoin and Treasury yields though. We are actually seeing the exact opposite. Bitcoin’s price appears to be moving in lockstep with Treasury yields.

So if this short-term trend continues to play out, what would that mean for bitcoin? Again, no one knows for sure. But it would be very interesting if the prevailing consensus view is misplaced and bitcoin would actually benefit from increasing interest rates. That would violate the framework that many people have been viewing the digital currency through…

So why could this idea of bitcoin and yields increasing together potentially be true? Well…one idea is that some people actually deem bitcoin to be their reserve currency. They view cheap capital via low rates as a path to borrowing money and making investments that could earn them more bitcoin. If rates were to rise, risk assets would sell off and these people would go back into their safe haven asset — bitcoin.

This may sound insane to the legacy Wall Street crowd, but there is an increasing number of young people who see the digital currency as that safe haven asset in their portfolio. The entire point of investing in anything outside of bitcoin is to outperform bitcoin and eventually convert back into bitcoin. Obviously, if you’re a good investor than you can pick up more bitcoin. If you’re a bad investor, you end up with less bitcoin. This is the new risk-reward that many young people are evaluating.”

Anthony Pompliano, “Bitcoin Is Moving In Lockstep With Treasury Yields?!” pomp.substack.com. December 20, 2021

We’re about to find out if cryptocurrencies with a max supply can be used as an inflation hedge. I bet they can.