976 sats \ 20 replies \ @elvismercury OP 4 Oct 2023 \ on: Lyn Alden book club part I bitcoin
Lyn talks about money from a perspective of technological determinism: as if the fate of money were an inevitable consequence of its functional characteristics. A few years ago, my previous favorite btc intro was Boyapati's Bullish Case for Bitcoin, which contains this chart:
According to the chart, btc is strictly better in almost every way than gold, and way better than fiat. It's not even close, right? And yet it's worth being mindful of what is not included in this chart, and the implications of what is included.
For example: a six month old child has the neural machinery to understand commodity money -- she knows that if I take your gold coin, you no longer have it, and if I put it behind my back, it's still there. However, there is no built-in machinery to process the curious "physics" of btc -- it is abstract, purely symbolic, and strange.
This is not a matter of 'education' or 'better ui', it's a statement about the innate difficulty of the concepts required to understand btc, which is a function of the built-in hardware we have available in our brains. Put another way:
- scarce objects mediated by the physical universe: easy
- scarce digital objects mediated by software and human convention: harder
My take is that a cognitive revolution is needed to make the underlying concepts graspable, and they may not be graspable to some people, ever. So, given all this, how comfortable are you with Lyn's "technological determinism" argument?
I believe it's hard to understand digital scarcity if you have grown up without ever witnessing such a thing in the 50+ years of internet history. The internet, a network of networks, built to share data. How can a thing which purpose was to share data make the complete opposite possible: to keep data scarce? Which introduced p2p file-sharing and thus the biggest enemy of copyright holders? Which made more information available than ever before, to so many people at their fingertips, wirelessly and globally? The internet is like a printing press on steroids. And that's an understatement.
So I think the problem is not that bitcoin is complex: the problem is that it's such a paradigm shift, you need to unlearn some things you thought are never possible to start to grasp it and the concept of digital scarcity. And some people will indeed never grasp it. They simply don't have enough time in their lifes left for unlearning or adapting.
I will always remember how my professor said that when he heard about public key cryptography for the first time, his first thought was that that's impossible: how can you share a key over an insecure communication channel and keep it secret? Surely there is no way!
That's when I witnessed myself how I take things for granted which were considered miracles when they were discovered (do we invent math or discover it?). The way he framed it, I realized what an astonishing discovery RSA and the Diffie-Hellman key exchange must have been. And now we take HTTPS and E2EE for granted and use it in our daily lifes to message friends in private, do online banking or... write on SN, knowing it's the real SN since TLS certificates authenticated the host.
I believe the same will happen with bitcoin. Future generations will grow up with it and just accept digital scarcity as something so natural, you won't question it at all.
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So I think the problem is not that bitcoin is complex: the problem is that it's such a paradigm shift, you need to unlearn some things you thought are never possible to start to grasp it and the concept of digital scarcity.
This is a better way of saying it than 'complex', I agree.
That's when I witnessed myself how I take things for granted which were considered miracles when they were discovered.
You raise a good point about the analogues to digital-nativity, e.g., if you grow up w/ x then it's familiar to you and you don't have trouble with it, and in fact you'll hold onto it forever, even when you maybe shouldn't, as @SatsCats mentioned wrt his mom and the printer. Is btc within the realm of things that will work like that, and someone who's ten years old right now will find all of this intuitive?
I'm suspicious of this. As mentioned in another comment, if we think of theories of money rolling up at least two key aspects (credit, commodity) then we can see how deeply ingrained these things are in the human brain -- we have hardware dedicated to solving social coordination issues (credit) and we have hardware dedicated to thinking and reasoning about objects and the possession of them (commodity). Even though money is a symbolic construct, it has underpinnings that the earliest homo sapiens would feel in their flesh and bones.
It's an open question to me if btc can feel real in that way. But maybe it doesn't need to feel equivalently real? Obviously people work in these abstract worlds all the time and it doesn't feel like a big deal. Is money different somehow, though? I still don't know.
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Note from the future: this great article is a beautiful illustration of some of what you're talking about.
I didn't know about it at the time of posting or I would have referenced it!
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Your time + learning quote resonates with me:
They simply don't have enough time in their lives left for unlearning or adapting
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Yes. For the first 4 years of bitcoin, I didn’t think digital scarcity made sense. As a software engineer, I thought that software always goes out of date and gets replaced so I didn’t expect Bitcoin to remain dominant. What I had missed was that the network effect itself was the meta-sentient entity that came into existence and remains antifragile (using software as a substrate). It took examining the staying power of social networks for me to grok this and, having grown up mostly without the internet, that wasn’t native to my mindset.
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Almost the same for me -- first was to view btc as software. Applying a software (or tech) perspective leads you to certain assumptions, so I was not very interested in it, figured it would get upgraded a few times before I needed to pay attention. Thus why I am still a working stiff :/
Even the "network effect" frame isn't how it sits in my head now -- it's human coordination / belief, which I suppose is a function of network effects, though the dynamics are hard to untangle. That makes it a lot easier to reason about, and leads to quite different places than where the software / tech metaphor will take a person.
I still don't rest completely easy on the network effect / coordination distinction, though. Whether it even is a distinction.
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I also had to spend 10 years learning about economics in the context of a massive desire to retire early :)
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I feel the importance of this is overstated.
People use banking, credit and debit cards without understanding how they work. They don't care how, they just know they do work.
One day they will use Bitcoin without understanding how it works. The long history of use without security breaches, the amount of institutional money in it and the good reputation will be enough to convince them it's safe, and the improved UI will hide the technical details from them successfully.
They will use it, because they will have no choice.
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I can see that perspective. There's certainly no shortage of stuff that we use in almost total ignorance of how it works. Cars, computers, phones. We don't know how our bodies work, either, at least, most people don't.
What seems potentially different is that the whole thesis for btc is (to paraphrase Satoshi) the amount of sovereignty needed to make it work. It is not uncommon for people to talk about putting their life savings into it -- in fact, btc is often discussed not as a tool, but as a virtue, a philosophy. Can you adopt a philosophy like this without deeply internalizing it? Without having profound intuitions about its core actions?
Maybe you can. Maybe it's not necessary. Those are the issues that give me pause, though.
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Can you adopt a philosophy like this without deeply internalizing it?
I suspect much of technology could be characterized as once being difficult to internalize. To pick some more modern examples, being an early adopter of telephones and being asked to remember phone numbers or usernames and passwords.
I share the suspicion that we might be asking too much of our nature, but I also know I under-appreciate how adaptable we are. Why might public key cryptography be uniquely resistant to internalization?
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Yeah, it's funny, in a way, that I'm raising this objection, sitting here typing to you on this computer, which has such unfathomable layers of complexity that it's practically magic. (And we thought pencils were complicated!) And even though I understand the stack, at least in theory, down to the physical layer, my working schema is much simpler: I'm sending you a message.
If you handed a computer to someone from 1500 (after representational art and the printing press, among other things) and said to him: "Behold, I am magically sending a message to my friend through the ether!" they would get like 90% of the idea, don't you think? It might even be a little easier in 1500 than, say, 1900 -- you'd convince him you were some kind of magician, which might well be plausible according to his worldview, and he'd be sorted. The communicative act is fundamentally the same, even though the medium is not, the manner is not.
So:
Why might public key cryptography be uniquely resistant to internalization?
Knowing what I know of the math behind it, there's just so much spooky weirdness that defies intuition. And not just PKC, but all of these abstractions. The idea that the mere knowing of a thing makes it yours, for instance; or that your entire history of transactions can be revealed if you can guess a number, but that the number of guessable numbers is so large that guessing any of them is impossible --
I dunno. The more we talk about it the less convincing I find my own argument. But I'm also acutely aware of how long I've been thinking about this topic and how foreign it still seems.
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the fate of money were an inevitable consequence of its functional characteristics
Having perceivable characteristics is a characteristic itself. I wouldn't have pegged it as one, but it makes me curious what else we aren't considering.
When compared to gold, bitcoin is kind of establishing its own set of physics that bitcoin's other characteristics rely on. If those physics aren't perfect, some of which make psychosocial assumptions, it'll need to be capable of significant alteration.
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Or flip it the other way: whatever physics it has will produce affordances in the psychosocial environment. Will we find those amenable to using it as money? Or perhaps: what sort of money will be amenable to those physics?
We've seen for ~15 years or whatever one answer to that. Can we get all the way with that sort of answer? This sort of butts up against our earlier exchange, about what the human mind (or enough of them) can accommodate, given other options and other environmental (including the social envt) circumstances.
For instance: we might consider that ETH has its own physics that are quite different. From my perspective, it's kind of nutty that people are treating ETH as something money-like, in the same speculative way they're treating btc that way, since btc is all-in on censorship resistance and decentralization and ETH is much less so. And yet people barely give a shit. They like silver nearly as well as gold.
Perhaps physics -- broadly construed -- isn't working like we thought?
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Perhaps physics -- broadly construed -- isn't working like we thought?
It's too early to tell. In Lyn's telling, you often have bimetal and trimetal systems but we can explain why they end up that way. One consequence of bitcoin being difficult to understand might be that it takes the market longer to see the difference between eth and btc.
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That's a really good point. I think sometimes of the way the "organism" of the world feels its way around. It had had to sense, like some ponderous amoeba over hundreds and thousands of years, how much of these metals there were in the world, and for prices and exchange rates to emerge as a result of those felt quantities.
Surely btc / eth must be like that too -- although literal propagation time is short (measured in milliseconds), the time for the full complexity to be absorbed in the course of that propagation will take a while. Maybe generations. How long did it take the idea for the number/numeral zero to propagate and be internalized? Hmm.
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I had to skim some of gold/silver stuff in Lyn's book (chapter 3 I think) because I found it repetitive ... which I think was part of the point of Lyn telling it ... "look how deterministic this is."
It took time for gold to be recognized as superior money because its scarcity, durability, verifiability, etc weren't obvious by holding it in your hand. But yeah, truth takes time to travel and some truths travel slower than others.
If you're interested in being a metaphor test subject, I started sharing this and I caught glimpse of myself in the mirror ...
I like to think markets are performing a forever gradient descent of a dynamic landscape; we are wrong and frequently caught on saddle points before we're right and if we're standing right on bad ground we sooner than later end up wrong again.
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I actually got kind of excited about bi / tri-metallism once I learned more about it.
I have a friend who, for the last number of years, would always go on about how silver was "historically under-valued" vs gold. But now it's clear (at least to me) that silver was useful insofar as it was less scarce than gold, and when you're carting the actual metal around and transacting with it, that's a useful property. But now that we're not carting it around nor transacting with it, its monetary premium is eroding. I would expect it to continue to erode, and now I can make a more coherent argument about why.
I like your metaphor -- something very like that at work in the dissonance-reduction world I think: the best model of reality is a lower-energy state; although the tricky notion of what "best" means complicates it as per usual.
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Do younger generations still relate to the physical world as we did before?
Many of us here now have gone through the shift from analogue to digital. Almost all physical objects that matter have been digitised. I recall having a similar conversation with my mother 20 years ago when we got our first colour printer. She was thrilled to print out a picture, but I needed to understand why she preferred an inferior quality to a digital one. I was content with either a digital image or the developed 35mm camera reel. However, she explained that it wasn't about the physical object but the process involved and the control it gave her.
I know several young adults who have never stepped into a bank, and the younger ones want Robolox money or some other form of "digital cash" over physical cash.
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I'd love to hear more about the kids who want Roblox money first -- is this something you've seen first-hand?
It's hard to anticipate the magnitude of things like this -- it seems to take forever, but then decades suddenly pass, and now it's a different world.
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Yeah, my 11 yr old niece asked for a super super happy face (skin) and from that day I felt old lol
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