Tuesday assorted links

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Bitcoin USD value = inverse of confidence in government money. So B=1/$

Or B could directly correlate with wealth inequality between D.C. and rest of USA.

Maybe B is a countdown timer to end of the nation states? How does a gov tax income, wage wars, and regulate commerce with 3rd party transactions.

From this week's Barron's "Market Watch" - by MAI View. Outline: Is nature of wealth changing? Now wealth is held in debt tokens (Federal Reserve Notes) or assets that are denominated/measured in them. Classically, an asset has intrinsic value transcending time and money - value regardless of how and when measured. Currency is a unit of account and provides means for measuring and exchanging value.

Now, I feel minimally less idiotic for owning some land and PM's.

Bitcoin isn't for direct use by humans -- it's more blade runner 2049.

And on the ICO front, it's surprising that Matt Levine didn't go after Wilson, Sonsini et al. for failure to cite precedent. It seems difficult to argue that
a dual natured item should be per-nature regulated when it doesn't have a bright-line divide, given that other items in
similar situations are regulated by the stricter regulatory regime, e.g. anything lottery-ish gets regulated like a lottery...

2 is very well structured, and based on my reading, legit.

I don't understand the desire to frame as asset class rather than currencies. This seems pedantic and not necessarily true, especially when the debate on whether or not currencies are an asset class seems alive and well.

The framing may be useful because is is something a few people buy with currencies, rather than anything like a complete currency ecosystem. And for reasons outlined, likely to stay that way.

A device designed to stay difficult and at the wavefront of computation cannot at the same time become both cheap and fast.

I own BTC and have, like everyone else, made money off of it. But these Bitcoinsplainers that now come out daily never, to me, offer anything but the feeblest explanations of what the hell has happened this past year.

I don't care if it's a "currency" or "asset class," I care whether there's any real evidence that demand from Venezuela and the dark web and even individual actors with FOMO actually explains this surge. Instead, mostly I get philosophical treatises or semantical debates or gloating from morons who will lose their money on the next ICO, and my guess remains those are a drop in the bucket and this is some weird manipulation tactic by Chinese bitcoin farmers.

Nor am I sure, even as a libertarian, that I'm all that eager to be keeping the dark web safe and prosperous. Drugs are one thing, but I have a sense that the sorts of crimes being covered up on the dark web are things that I want to remain very illegal.

Surely we have bright Bitcoin fans around here who can defend its current value and explain my misconceptions without the blind anger you incur when you mention these things on crypto twitter?

1 seems to leave legitimacy aside, worrying abstractly about numbers of patents, and "missing patents" as one to one with "unprotected innovation."

Patent trolls were just part of the prior problem. Another was basic incremental work from "A" blocking similar basic work from "B."

The whole of tech slows down when a month's work receives a decade's monopoly.

Agreed. There is also real good reason to doubt that a right to obtain an injunction, as opposed to an FMV royalty, for an infringement is ever an appropriate remedy.

3. It's to Sumner's credit that he can both support Taylor as Fed chair (the first link) and acknowledge that left-leaning economists are on the whole a lot more intellectually curious than those who are right-leaning (the second link). But I must say that Sumner is guilty of a little wishful thinking about Taylor ("Also recall that Taylor said good things about NGDP targeting during the 1980s, so that’s another possible direction for reforms.) and a little negative thinking about Summers ("When Summers came out for NGDP targeting I briefly wondered whether I'd made a mistake in favoring Yellen for Fed chair, but this comment (Summers's doubts about achieving a 4% inflation target) reconfirmed my initial preference (for Yellen)").

#3. On his blog Scott writes, "I believe that Taylor (and most other conservatives) missed the boat during the Great Recession, and was excessively worried that QE would lead to high inflation. But he is also extremely smart and well-qualified, and a person who is likely to keep the Fed out of politics. "

Does this not give anyone pause to think about this. Two of the biggest issues of the past decade and Professor Taylor was wrong on both of them. Does this still mean that he is '...extremely smart and well-qualified....?'

Until someone can conclusively prove that Yellen is the wrong person to chair the Fed based on past performance, then the selection of someone else is just a political move in the absence of reason (as are most political moves).

#4 Reduce Japan and Red China to rubbles with systematic nuclear bombing of infrastructure and North Korea will stop being a threat to peace. The Japanese and the Chinese regimes are the real causes of disturbance in Asia. Free Tibet, Okinawa and Inner Mongolia and support India and Vietnam. Return Macao, Formosa and Goa to Brazil.

Stop impersonating me.

Unkind manic confusion is not a good psychological place to be, my friend, but we all understand how that can happen. I will pray for you, my sad Paraguayan/Brazilian friend: we shall all forget the foolish things we have said, and be loyal friends to one another, one day. God bless and God forgive! You are not as ****** as you one day will think you have been, believe me: and we will all forget, out of our love for Brazil, the shame you have almost brought down on the heads of Brazilians with your foolish and violent words. Truly we will: but please: reflect on that which is good. Stop following that which is bad. From my heart I ask you this. God bless our beloved Paraguay. God bless our beloved Brazil. God bless the United States of America which has been a country that any other country should be honored to share a hemisphere with! You know that is true. Anyway I, not you, have called today for the blessings of the Lord on Brazil. Please reflect on that which is good. We can bring good out of bad by deciding to care about each other. God bless you, my equatorial friend. And God bless your dogs and your cats and your goats and horses and pigs and donkeys, and if you have any monkeys in your apartment and your house, God bless those monkeys. I prayed for Brazil today: you did not. Tomorrow it is you who will pray for Brazil, as well as our beloved Paraguay and our beloved United States. Peace, brother.

2. Cryptocurrencies are the culmination of the era of rising asset prices: "it is currently rational to be irrational". Up is down, down is up. And that's a good thing? This is also the era of ambiguity in communication: "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean- neither more nor less." And that's a good thing?

From the link (in Adam's own words):
The market for cryptocurrencies is overheated and irrationally exuberant
There are a lot of poseurs creating them, and some scammers, too
There are a lot of conflicts of interest, self-serving hype, and obfuscation
Very few people in the media understand what’s going on
Very few people in finance understand what’s going on
Very few people in technology understand what’s going on
Very few people in academia or government understand what’s going on
Very few people buying cryptocurrencies understand what’s going on
It’s very possible I don’t understand what’s going on

2 Isn't all that great. Most problems that look like a cryptocurrency can solve end up being handled better by some of its parent structures, like plain old public read-only logs: The blockchain innovation: making anyone do writes, leads to an immense number of headaches that make it less suitable for a wide variety of applications.

Without talking about said weaknesses, and how they limit the concept's potential, it's still easy to remain way too bullish about blockchains, while still believing that one is taking a moderate approach, when in fact moderation is closer to bear territory than we'd like to admit.

The unfortunate part of all of this is that the problems are tied to details of distributed system and computer security operability that are hard to grasp for laymen. So let's just look at how the experts behave: Are the top distributed systems experts working on cryptocurrencies? What's the perspective on bitcoin from the average DefCon speaker? The lack of enthusiasm from those communities speaks volumes.

2. A good way of thinking about cryptocurrencies.

He missed the most obvious advantage, crypto currencies can be autotraded. Thus high frequency traders have no advantage, all the trading is asynchronous and responsive to the current conditions of the trade book. In fact, all the hedges are going away via auto=trading, government and wealthy hedges.

Auto-trading is what is driving the banker's fear, and it is an obviously announced fear in the public media. It is impossible for anyone to write on crypto currency and ignore auto traded cash.

5. Very cool! Of course, Rodin wouldn't get anywhere in the art world nowadays, what with his obsession toward realistic art and insisting on sculpting directly with the stone - too much skill needed for the art world of the last 50 years to pay attention to.

Tyler,

Google thanks you for your famous napkin. :)

Rodin: this beauty used to stand on the moors near where I grew up. We used to visit it and its companions every summer.
https://en.wikipedia.org/wiki/Glenkiln_Sculpture_Park#/media/File:Statue_of_John_the_Baptist_-_geograph.org.uk_-_223412.jpg

A lovely act of philanthropy - and then they all had to be removed for safe keeping because one was stolen. The decline of civility, you see. I don't suppose economists measure that. And yet it contributes so much to the standard of living.

Would it be noticed if the originals were all replaced by copies? I mean, it’s not like being deprived of Lascaux. Perhaps that’s a solution?

2. "Why the elaborate and expensive competition to do something as simple as timestamp transactions for the network? So that we can be sure the competitors have incurred a real financial cost. That way, if they win the race to find the random number and become the designated timestamper for a given batch of transactions, they won’t use that power for evil (like censoring transactions). Instead, they will meticulously scan each pending transaction, eliminate any attempts by users to spend the same funds twice, ensure all rules are followed, and broadcast the validated batch to the rest of the network."

That.... does not feel foolproof. At all. Why wouldn't a miner cut a deal with a large-transaction user to seek to selectively validate transactions or allow double transactions, and still pocket the miner's fee? And how are the random numbers generated, and who makes sure that's not something that can be hacked?

"They have volatile and uncertain governance"

Ah. That's how. Got it.

There is no novel forms of criminal conduct stagnation. http://www.denverpost.com/2017/10/14/oreilly-auto-parts-power-knocked-out-by-erotic-whip-longmont/

#3 I shall not standby while Scott Sumner slaps me with his penis again. I mean I WILL standby but I will also write this strongly worded comment about it!

#3b Google Chief Economist Varian and Thaler were previously on the panel of some confrerence. Later Varian interviewed Thaler on Google Talk.

Varian: I'll ask you the same question to your previous talk.

Thaler: I have a differnet answer.

Varian: Yes. Micro econmist answers different questions with the same answer. Macro economist will answer the same question with different answers.

...

A student commented to the economic professor that the exam question was the same as that for last year. The professor replied that this year the answer is different.

4.

The North Koreans don't need to impose hard-left ideological censorship on our TV. We have the BBC.

2. Its all well and good to say cryptocurrencies aren't currencies but rather assets for supporting decentralized apps. However 1) BTC is still biggest and is functionally a currency. People buy things with it. I'm not an economist and I don't care about the definitions but those are facts. This seems like a silly piece of logic to base your thesis on. 2) I;m not sure there are any decentralized apps aside from BTC, in this space, that are actually gaining widespread acceptance. I'm an enthusiast of ETH and many decentralized app startups, but I can recognize that its still a very new space and scale-up is not guaranteed. Both BTC and ETH have had their growing pains (for those in the know, the DAO episode and hardforking ETH? censorship resistant? lol.) and its not at all clear decentralized apps are what most people need or want. 3) Use-cases could be far more compelling. Think mining in Venezuela to avoid regime currency controls. Is there a case study in Syria or elsewhere in which citizens used crypto assets to avoid persecution? Would love to hear about that instead of "people off the grid" which conjures images of over-privileged first-worlders pretending to be poor.

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