Category: Web/Tech

Tyrone on crypto assets

Egads, what a fool this man is!  Nonetheless he has grown wealthier as of late, so I thought I would give him the indulgence of another MR post.  Little did I know what arrant nonsense he would come up with.  Here is what he started with, the transcription from the Pig Latin being mine:

“Tyler, let’s play the envelope game.  I give you an envelope with $100, and I tell you it is going to either double or half in value.  (Think of it like a floating exchange rate that either will go to 2-1  or 1-2, with equal probability.)  So you will end up with either $200 or $50, the expected value therefore being $125.  That is a good deal for you!  You started with $100, and you can expect now $125.

You would love to keep on playing this envelope game of course, except no one will play that envelope game with you even once.  Until now.

In essence, by “tolerating” cryptocurrency, big-time fiat money holders have agreed to keep on playing this game.  And so, if this continues, over time crypto will absorb more and more of the wealth in an economy.  Just by playing the envelope game!

After all, the indirect utility function is convex in prices and the rest of the world is creating a floating exchange rate game for us for free!  That is why so many different crypto assets keep proliferating!

The only joke about dogecoin is that it isn’t doing even better than it is.

What is philanthropy going to look like in five years’ time?  All life extension technologies?

The envelopes game, of course, doesn’t boost the quantity of real resources, so eventually the purchasing power of non-crypto holders will shrink, shrink, shrink.  That is why we will need a UBI, not because of AI.

Of course you might think that the fiat holders won’t tolerate the crypto game forever.  And maybe not.  But as long as there is any chance whatsoever that crypo assets turn out to have real value, at least some of those fiat money sows will be lining up at the trough to trade at some exchange rate…the envelopes game thus will continue!

At this point I had to push Tyrone down the stairs.  Such fallacies!  Such absurdities!  I even offered him an envelope of his very own if he would shut up, but to no avail.  I demanded that he write down the transversality condition for this fool game he had postulated, but all he could was recite the envelope theorem, another sign of his deep and utter confusion.

As he was falling down the stairs, he kept on insisting that Satoshi really was Satan, that all of the world’s wealth would fall into the hands of The Whales, that we all needed to reread Melville, and Johan Jensen, and ponder the Leviathan from Psalms, Jonah, and Job, and our sins, and that everyone trading with crypto holders was caught in a massive prisoner’s dilemma — collectively handing them volatile exchange rates and thus envelope games for free — and yes this was a long and deep stairwell…

Dear reader, I hope you never have to suffer under such sophistries and indignities again.

I return you now to your regularly scheduled programming, for however long it may last…at the very least writing this blog does not require much money.  Yes, my cherished reader, it is my UBI…and so crypto will be allowed to proceed…

Will stablecoins have fluctuating prices?

That is the topic of my latest Bloomberg column, here is one excerpt:

Even if all goes well, why should those different brands of stablecoins remain priced at $1 apiece? In most well-functioning markets, suppliers compete on innovation, quality and price. That diversity is the natural outcome of trying to figure out which coin systems — fully stable or not — are best.

If market prices do not communicate this information, how can you discover it? In my vision, higher prices will signify a coin’s quality and attract more business; the coins with strictly fixed prices will fill a niche; and the coins with lower prices will lose business, or otherwise serve as discount issues for those of lower means.

And:

On a more positive note, if you think stablecoins serve so many new and marvelous functions, you would expect many of those assets to sell for more than a dollar.

And:

For another look at why prices won’t stay fixed, consider the incentives of a stablecoin issuer. Let’s say your issue is currently one-to-one with the U.S. dollar and you are holding 100% reserves of very safe assets. Might you then be tempted to go down to 98% reserves? 95%? If the price of your coin stays at $1, fine, you come out ahead. If the price declines in proportion to the new and higher risk, you as an issuer still have broken even. So it seems that coin issuers will have an incentive to test the one-to-one exchange rates by diluting their backing.

Recommended.

Markets in everything

In the latest phase of the quest to turn everything into an NFT, crypto traders are now bidding to digitally own a 1,784-lb. cube of tungsten in Willowbrook, Illinois. According to the terms of the sale, which will have the receipt posted to the blockchain for posterity, the “owner” can have one supervised visit to the cube per year to touch or photograph it.

Over the past two weeks, a joke fired off by Coin Center’s Neeraj Agrawal about a nonexistent tungsten shortage thanks to crypto traders buying cubes of tungsten due to a meme actually caused one for Midwest Tungsten Service. The Illinois manufacturer actually creates small cubes of tungsten, and the tweet caused a 300 percent increase in sales that depleted the company’s stock on Amazon, Coindesk reported.

Last week, The Block reported that the company entered a partnership with crypto payment processor OpenNode to accept Bitcoin payments. One explanation as to why this is happening, which doesn’t really explain why this is happening, was offered to The Block by CMS Holdings’ Dan Matuszewski, who said “crypto just has a propensity for the density.” Tungsten is a very dense metal, comparable to uranium or gold, and its surprising weight is, apparently, pleasurable.

Midwest Tungsten told Coindesk that it primarily makes these cubes for industrial firms, and Sean Murray, the company’s director of e-commerce, suggested to Coindesk there would be a 14-inch cube next. The company offers cubes ranging from an 18-gram, 1-centimeter cube that costs $19.99 to a 41-pound, 4-inch cube that costs $2,999.99.

Well, the 14-inch cube is finally here. It weighs 1,784 poinds and is now listed on OpenSea as an NFT. Seemingly, it’s the biggest cube that Midwest Tungsten can create.

“Since we began selling the cube we have constantly asked ourselves, ‘What is the right size?’, and ‘Would anyone buy a bigger cube?’ Only recently has anyone asked us, or have we asked ourselves, ‘What is the biggest cube we can make?’

Here is the full story, via the excellent Samir Varma.  You know, circa 2010 I thought MR was about to run out of startling “Markets in Everything” examples — how wrong I was!

Will this revolution be televised?

More than a century after the artists of the Vienna Secession declared “to every age its art; to art its freedom”, the Austrian capital has found a new site for artistic expression free from censorship: the adults-only platform OnlyFans.

Vienna’s tourism board has started an account on OnlyFans – the only social network that permits depictions of nudity – in protest against platforms’ ongoing censorship of its art museums and galleries.

In July, the Albertina Museum’s new TikTok account was suspended and then blocked for showing works by the Japanese photographer Nobuyoshi Araki that showed an obscured female breast, forcing the museum to start a new account. This followed a similar incident in 2019, when Instagram ruled that a painting by Peter Paul Rubens violated the platform’s community standards which prohibit any depictions of nudity – even those that are “artistic or creative in nature”.

In 2018, the Natural History Museum’s photograph of the 25,000-year-old Venus of Willendorf figurine was deemed pornographic by Facebook and removed from the platform.

The Leopold Museum has likewise struggled to promote its collection of nudes by the expressionist Egon Schiele, with advertising regulators in Germany, the UK and US refusing to show them in a city tourism campaign in 2018. (The tourist board successfully resubmitted the posters with banners obscuring the bare bodies reading: “Sorry – 100 years old but still too daring today.”)

Here is more from The Guardian, via Jason D.

Stripe v. Elrond! Crypto and the Payments System

Recently Elrond, the blockchain startup for which I am an advisor, bought a payments processor (conditional on approval from the Romanian government). On the same day, Stripe, the payments processor, announced that they are moving into crypto. None of this is coincidental. Elrond understand that the payments market is a multi-trillion dollar opportunity. Stripe knows that crypto innovation could undercut them very quickly if they aren’t prepared.

How did Stripe turn into a multi-billion dollar firm almost overnight? Obviously, Stripe is a great firm, led by the brilliant Collison brothers, CEO Patrick Collison and President John Collison. But it’s also important to understand that the payments market in the United States is a $100 trillion dollar market. Yes, $100 trillion. Any firm that captures even a small share of this market is going to be big. Credit cards are actually a small part of payments, about $7 trillion with roughly a 2% transaction fee or a $140 billion market. (Quick check. Credit card companies had 2020 revenues of $176 billion).  ACH debit and credit transfers are the big market, $65 trillion, which at a .5% transaction fee amounts to a $325 billion market (this is retail price, wholesale is lower). Thus, payments revenue is on the order of $465 billion. A small share of $465 billion is a very big market (and that is just the US market).

Now consider the following. Crypto payments are in principle at least an order of magnitude cheaper than ACH payments. On Elrond, for example, a very fast and low cost blockchain compared to Ethereum or Bitcoin, someone recently transferred $17.5 million for less than a penny. Moreover, crypto payments are global while every other payments system gets much more expensive as you cross borders. I recently sent $1500 to India and it cost me $100 in transaction fees! To be sure, payments made through the banking system have to obey “Know Your Customer” regulations and also include invoicing and billing services which adds both to value and cost. The main reason, however, that payments through the banking system are expensive is because the banking system rails are taped together with two hundred years of spit and duct tape.

Crypto payments are the future. Stripe knows it. Elrond knows it. The race is on.

More details on Instagram being underrated

Contrary to The Wall Street Journal’s characterization, Instagram’s research shows that on 11 of 12 well-being issues, teenage girls who said they struggled with those difficult issues also said that Instagram made them better rather than worse.

That is from…Facebook, but it seems to be true.  Here is some further exposition:

In fact, in 11 of 12 areas on the slide referenced by the Journal — including serious areas like loneliness, anxiety, sadness and eating issues — more teenage girls who said they struggled with that issue also said that Instagram made those difficult times better rather than worse. Body image was the only area where teen girls who reported struggling with the issue said Instagram made it worse as compared to the other 11 areas. But here also, the majority of teenage girls who experienced body image issues still reported Instagram either made it better or had no impact.

The mainstream media, not surprisingly, are interpreting all this as a big takedown for Facebook, one of their main competitors I might add.  Here is one relevant image:

I would make two more general points.  First, you could very easily argue that eyeglasses make (many not all) teenage girls feel worse about their body image.  Lots of things will.  Automobiles.  Parties.  Clothes shops.  Such costs are not zero, but they have to be put in perspective.

Second, the lives of teenage girls are messy and complex.  Anything that plays a noticeable role in said lives also will have effects that are messy and complex.  Deal with it.  The same used to be true of the (old-fashioned) telephone as well, not to mention birth control pills and automobiles.

Instagram is a huge “universe,” and I have only a fragmentary knowledge of it.  Yet virtually everything I have seen, read, and heard indicates it is one of the more positive corners of the internet.

All via Nir Eyal.  And do note that I write for Facebook at marginalrevolution.bulletin.com.  Not afraid to tell you, though, that this post is what I really think.  I argued similar points years earlier in my book Big Business: Love Letter to an American Anti-Hero.

p.s. Every now and then tylercowenfairfax does some Instagram Stories…

*Ich bin dein Mensch*

The English-language title is the somewhat different “I’m Your Man,” as Mensch is a more universal and less gendered concept.  The premise is that a researcher woman is to spend three weeks with a robot man, possibly romantically, and then report back on the experience.  I thought this was a “good enough” AI movie, better than most American reviews are indicating.  Here are some links.  The first hour was quite good, with subtle German jokes about surveillance paranoia and grammar reform, among other matters.  It is partly about the German national character, and how difficult it is to fit together its earlier and current forms.  Then for a while the movie runs out of steam, though with a nice close.  I took the final message to be that older men and those content with inauthenticity will be the big winners from advanced AI and robots.  That might just be right.

Guardianship, in practice, is often worse than you might think: the surveillance of Britney Spears

Britney Spears’s father and the security firm he hired to protect her ran an intense surveillance apparatus that monitored her communications and secretly captured audio recordings from her bedroom, including her interactions and conversations with her boyfriend and children, according to a former employee of the security firm.

Alex Vlasov, the employee, supported his claims with emails, text messages and audio recordings he was privy to in his nine years as an executive assistant and operations and cybersecurity manager for Black Box, the security firm. He came forward for a new documentary by The New York Times, “Controlling Britney Spears,” which was released on Friday.

Recording conversations in a private place and mirroring text messages without the consent of both parties can be a violation of the law. It is unclear if the court overseeing Ms. Spears’s conservatorship was aware of or had approved the surveillance.

Mr. Vlasov’s account, and his trove of materials, create the most detailed portrait yet of what Ms. Spears’s life has been like under the conservatorship for the past 13 years. Mr. Vlasov said the relentless surveillance operation had helped several people linked to the conservatorship — primarily her father, James P. Spears — control nearly every aspect of her life…

Mr. Vlasov said that Ms. Spears’s phone had been monitored using a clever tech setup: The iCloud account on her phone was mirrored on an iPad and later on an iPod. Mr. Yemini would have Mr. Vlasov encrypt Ms. Spears’s digital communications captured on the iPad and the iPod to send to Mr. Spears and Robin Greenhill, an employee of Tri Star Sports & Entertainment Group, the former business manager for the singer’s estate.

This arrangement allowed them to monitor all text messages, FaceTime calls, notes, browser history and photographs.

Here is the full NYT story by Liz Day.  And by the way, there also was extensive surveillance of people in the “Free Britney!” movement, paid for ultimately by Britney herself.  Hi guys!

What is *the best* time zone for global work and Zoom?

That is the topic of my latest Bloomberg column, and my answer is Ireland and the UK (Portugal too).  Excerpt:

West Coast meetings are trickier. But if you don’t take any past 2 p.m., they’re still manageable. Keep in mind that a lot of technology types start their day at 7 a.m. or earlier, precisely because they are trying to more closely match East Coast hours. So the nominal time difference might be eight hours, but due to work norms you get about an hour and a half of that back, leading to what is in effect a six-and-a-half-hour time difference between your Cotswolds chateau and that conference room in Seattle.

And:

I, for one, prefer to be working in the British time zone, even though most of my commitments are on U.S. East Coast time. For one thing, I have mornings largely to myself. Emails have accumulated while I slept, but there is little pressure to answer most of them right away. Americans on the East Coast are sleeping; if they’re on the West Coast, they will soon be preparing for bed.

Call it an illusion if you wish. But sitting in Dublin with my computer, it feels like I am several hours ahead of everybody else. By the time the email and meeting onslaughts arrive, I’ve already gotten a lot done.

And if you believe in “money illusion,” you might not like that half hour trick they pull in India.  As a side note, you might wish to consider the times global chess tournaments are held (often starting 10 or 11 a.m. EST), or for that matter when pre-written MR posts pop up in the morning, namely between midnight and three a.m. EST.  You will again see a lot of catering to what I view as “the dominant time zone,” that of London.

Emergent Ventures India, new winners, third Indian cohort

Angad Daryani / Praan

Angad Daryani is 22-year-old social entrepreneur and inventor from Mumbai, and his goal is to find solutions for clean air at a low cost, accessible to all. He received his EV grant to build ultra-low cost, filter-less outdoor air purification systems for deployment in open areas through his startup Praan. Angad’s work was recently covered by the BBC here.

Swasthik Padma

Swasthik Padma is a 19-year-old inventor and researcher. He received his EV grant to develop PLASCRETE, a high-strength composite material made from non-recyclable plastic (post-consumer plastic waste which consists of Multilayer, Film Grade Plastics and Sand) in a device called PLASCREATOR, also developed by Swasthik. The final product serves as a stronger, cost-effective, non-corrosive, and sustainable alternative to concrete and wood as a building material. He is also working on agritech solutions, desalination devices, and low cost solutions to combat climate change.

Ajay Shah

Ajay Shah is an economist, the founder of the LEAP blog, and the coauthor (with Vijay Kelkar) of In Service of the Republic: The Art and Science of Economic Policy, an excellent book, covered by Alex here. He received his EV grant for creating a community of scholars and policymakers to work on vaccine production, distribution, and pricing, and the role of the government and private sector given India’s state capacity.

Meghraj Suthar

Meghraj Suthar, is an entrepreneur, software engineer, and author from Jodhpur. He founded Localites, a global community (6,000 members from more than 130 countries) of travelers and those who like to show around their cities to travelers for free or on an hourly charge. He also writes inspirational fiction. He has published two books: The Dreamers and The Believers and is working on his next book. He received his EV grant to develop his new project Growcify– helping small & medium-sized businesses in smaller Indian cities to go online with their own end-to-end integrated e-commerce app at very affordable pricing.

Jamie Martin/ The Queen’s English 

Jamie Martin and Sandeep Mallareddy founded The Queen’s English to develop a tool to help speak English. Indians who speak English earn 5x more than those who don’t. The Queen’s English provides 300 hours of totally scripted lesson plans on a simple Android app for high quality teaching by allowing anyone who can speak English to teach high quality spoken English lessons using just a mobile phone.

Rubén Poblete-Cazenave

Rubén Poblete-Cazenave is a post-doctoral fellow at the Department of Economics at Erasmus University Rotterdam. His work has focused on studying topics on political economy, development economics and economics of crime, with a particular interest in India. Rubén received his EV grant to study the dynamic effects of lockdowns on criminal activity and police performance in Bihar, and on violence against women in India.

Chandra Bhan Prasad

Chandra Bhan Prasad is an Indian scholar, political commentator, and author of the Bhopal Document, Dalit Phobia: Why Do They Hate Us?, What is Ambedkarism?, Dalit Diary, 1999-2003: Reflections on Apartheid in India, and co-author author (with D Shyam Babu and Devesh Kapur) of Defying the Odds: The Rise of Dalit Entrepreneurs. He is also the founder of the ByDalits.com e-commerce platform and the editor of Dalit Enterprise magazine. He received his EV grant to pursue his research on Dalit capitalism as a movement for self-respect.

Praveen Tiwari

Praveen Tiwari is a rural education entrepreneur in India. At 17, he started Power of Youth to increase education and awareness among rural students in his district. To cope with the Covid lockdown he started the Study Garh with a YouTube channel to provide better quality educational content to rural students in their regional language (Hindi).

Preetham R and Vinayak Vineeth

Preetham R. and Vinayak Vineeth are 17-year-old high-schoolers from Bangalore. Preetham is interested in computing, futurism and space; and Vinayak is thinking about projects ranging from automation to web development. They received their EV grant for a semantic text analysis system based on graph similarity scores. The system (currently called the Knowledge Engine) will be used for perfectly private contextual advertising and will soon be expanded for other uses like better search engines, research tools and improved video streaming experiences. They hope to launch it commercially by the end of 2022.

Shriya Shankar:

Shriya Shankar is a 20-year-old social entrepreneur and computer science engineer from Bangalore and the founder of Project Sitara Foundation, which provides accessible STEM education to children from underserved communities. She received her EV grant to develop an accessible ed-tech series focused on contextualizing mathematics in Kannada to make learning more relatable and inclusive for children.

Baishali Bomjan and Bhuvana Anand

Baishali and Bhuvana are the co-founders of Trayas Foundation, an independent research and policy advisory organization that champions constitutional, social, and market liberalism in India through data-informed public discourse. Their particular focus is on dismantling regulatory bottlenecks to individual opportunity, dignity and freedom. The EV grant will support Trayas’s work for reforms in state labor regulations that ease doing business and further prosperity, and help end legal restrictions placed on women’s employment under India’s labor protection framework to engender economic agency for millions of Indians.

Akash Bhatia and Puru Botla / Infinite Analytics

Infinite Analytics received their first grant for developing the Sherlock platform to help Indian state governments with mobility analysis to combat Covid spread. Their second EV grant is to scale their platform and analyze patterns to understand the spread of the Delta variant in the 2021 Covid wave in India. They will analyze religious congregations, election rallies, crematoria footfalls and regular daily/weekly bazaars, and create capabilities to understand the spread of the virus in every city/town in India.

PS Vishnuprasad

Vishnuprasad is a 21-year-old BS-MS student at IISER Tirupati. He is interested in the intersection of political polarization and network science and focused on the emergence and spread of disinformation and fake news. He is working on the spread of disinformation and propaganda in spaces Indians use to access information on the internet. He received his EV grant to build a tool that tracks cross-platform spread of disinformation and propaganda on social media. He is also interested in the science of cooking and is a stand-up comedian and writer.

Prem Panicker:

Prem Panicker is a journalist, cricket writer, and founding editor of peepli.org, a site dedicated to multimedia long form journalism focused on the environment, man/animal conflict, and development. He received an EV grant to explore India’s 7,400 km coastline, with an emphasis on coastal erosion, environmental degradation, and the consequent loss of lives and livelihoods.

Vaidehi Tandel

Vaidehi Tandel is an urban economist and Lecturer at the Henley Business School in University of Reading. She is interested in understanding the challenges and potential of India’s urban transformation and her EV grant will support her ongoing research on the political economy of urbanization in India. She was part of the team led by Malani that won the EV Covid India prize.

Abhinav Singh

Abhinav recently completed his Masters in the Behavioral and Computational Economics program at Chapman University’s Economic Science Institute. His goal is to make political economy ideas accessible to young Indians, and support those interested in advancing critical thinking over policy questions. He received his EV grant to start Polekon, a platform that will host educational content and organize seminars on key political economy issues and build a community of young thinkers interested in political economy in India.

Bevin A./Contact

CONTACT was founded by two engineers Ann Joys and Bevin A. as a low-cost, voluntary, contact tracing solution. They used RFID tags and readers for consenting individuals to log their locations at various points like shops, hotels, educational institutions, etc. These data are anonymized and analyzed to track mobility and develop better Covid policies, while maintaining user anonymity.

Onkar Singh Batra

Onkar Singh is a 16-year-old developer/researcher and high school student in Jammu. He received his first EV grant for his Covid Care Jammu project. His goal is to develop India’s First Open-Source Satellite, and he is founder of Paradox Sonic Space Research Agency, a non-profit aerospace research organization developing inexpensive and open-source technologies. Onkar received his second EV grant to develop a high efficiency, low cost, nano satellite. Along with EV his project is also supported by an Amateur Radio Digital Communications (ARDC) grant. Onkar has a working engineering model and is developing the final flight model for launch in 2022.

StorySurf

Storysurf, founded by Omkar Sane and Chirag Anand, is based on the idea that stories are the simplest form of wisdom and that developing an ocean of stories is the antidote to social media polarization. They are developing both a network of writers, and a range of stories between 6-300 words in a user-friendly app to encourage people to read narratives. Through their stories, they hope to help more readers consume information and ideas through stories.

Naman Pushp/ Airbound

Airbound is cofounded by its CEO Naman Pushp, a 16 year old high-schooler from Mumbai passionate about engineering and robotics, and COO Faraaz Baig, a 20 year old self-taught programmer and robotics engineers from Bangalore. Airbound aims to make delivery accessible by developing a VTOL drone design that can use small businesses as takeoff/landing locations. They have also created the first blended wing body tail sitter (along with a whole host of other optimizations) to make this kind of drone delivery possible, safe and accessible.

Anup Malani / CMIE / Prabhat Jha

An joint grant to (1) Anup Malani, Professor at the University of Chicago, (2) The Centre for Monitoring Indian Economy (CMIE), and (3) Prabhat Jha, Professor at University of Toronto and the Centre for Global Health Research, to determine the extent to which reported excess deaths in India are due to Covid. Recent studies show that that the pandemic in India may be associated with between 3 million to 4.9 million excess deaths, roughly 8-12 times officially reported number of COVID deaths. To determine how many of these deaths are statistically attributable to Covid, they will conduct verbal autopsies on roughly 20,000 deaths, with the results to be made publicly available.

And finally:

Aditya Dar/The Violence Archive

A joint grant to Aaditya Dar, an economist at Indian School of Business, Kiran Garimella, a computer scientist at Rutgers University and Vasundhara Sirnate, a political scientist and journalist for creating the India Violence Archive. They will use machine learning and natural language processing to develop an open-source historical record of collective public violence in India over 100 years. The goal is to create accessible and high-quality public data so civil society can pursue justice and governments can make better policy.

Those unfamiliar with Emergent Ventures can learn more here and here. EV India announcement here. More about the winners of EV India second cohort here. To apply for EV India, use the EV application click the “Apply Now” button and select India from the “My Project Will Affect” drop-down menu.

Note that EV India is led and run by Shruti Rajagopalan, I thank her for all of her excellent work on this!

Here is Shruti on Twitter, and here is her excellent Ideas of India podcast.  Shruti is herself an earlier Emergent Ventures winner, and while she is very highly rated remains grossly underrated.

My appearance on the Ezra Klein Show

Talking with Ezra is always both fun and enlightening for me, here is his partial summary of the episode:

So we begin this conversation by discussing the case for and against economic growth, but we also get into lots of other things: why Cowen thinks the great stagnation in technology is coming to an end; the future of technologies like A.I., crypto, fourth-generation nuclear and the Chinese system of government; the problems in how we fund scientific research; what the right has done to make government both ineffective and larger; why Cowen is skeptical of universal pre-K (and why I’m not); whether I overestimate the dangers of polarization; the ways in which we’re getting weirder; the long-term future of human civilization; why reading is overrated and travel is underrated; how to appreciate classical music and much more.

Here is the link, full transcript here, definitely recommended!