Sunday, August 21, 2016

Bitcoin's Price is Antifragile to Hacking

I got into a little discussion in this post by Fred Wilson about the Bitfinex hack after a comment from blockchain expert William Mougayar about how bitcoin exchanges need to have deposit insurance. It makes sense on paper, but the truth is that with deposit insurance the best you're getting is a forced liquidation of your cyrpto assets should a hack occur.

In the comments I pointed to Coinbase as they hold 20% of the active bitcoin in circulation and questioned what would happen to the price should those coin disappear overnight. He didn't have a good answer for me, but I suggested a lower end of $100,000. Interestingly, in the previously linked post from Qntra they actually did a similar calculation a full year and a half ago and came to a similar conclusion. Their numbers were 100,000 BTC (Bitfinex was 119,756 BTC) and when they put that on the Bitstamp order book the price was $99,999 and that only got ~12,500 BTC in return.

All of this is to say that when bitcoins get stolen, the price goes up. The price is antifragile to hacking.

Sunday, August 7, 2016

Intellectual Ghettoization and the Rise of Trump

Another interesting term mentioned in the podcast discussed in my last post is the idea of intellectual ghettoization. Intellectual ghettoization is the separation of people by ideas, and as in life where separate but equal is not always equal, so to in the world of ideas is this the case. If news sources were categorized by their normative value based on truth and usefulness, many would not make the cut, but this does not stop millions of people every day from getting their news from these sources.

The only way the rise of Trump makes sense is in the context of intellectual ghettoization. How can someone be so hateful and untruthful and yet still manage to win the Republican nomination? Start by telling people what they wish were true, stir some passion by tapping into their biases and bigotry, and as long as you're using a communication channel that will not contradict your story

Trump's voter base is not fact checking. They don't care if he's right because they want him to be right. It makes them feel good believing that he's right, and they feel like this is their only chance to "take back their country."

For months now on his show Bill Maher has asked anyone he can "how do we stop Trump?" It's a very good question, because when people silo themselves from outside information sources that contradict their beliefs, they are unreachable by facts. I definitely don't have a solution, and nothing I can think of could be enacted over a time frame that is short enough to impact this election. It may turn out that Trump doesn't need stopping because his opinions are minority opinions, but that is to be determined.

For a project that has a longer time horizon, we could ask the same question about global jihad. These terror attacks are getting more and more frequent, Safety from these attacks can only be achieved by winning minds, as this seems to be an antifragile problem that gets worse as we try to attack it with force.

What we need is a war of ideas. This war must encompass not just islamism but all religious beliefs and in fact the very foundation in the idea of "faith." The baby and the bathwater all need to go out the window, and we need to start to come to terms with the fact that life goes around only once so that we can begin to make more practical choices about how to keep our species around and thriving.