GameStop, Bitcoin and the Commoditization of Populist Rage
stephendiehl.com
stephendiehl.com
South Korea and Japan are 10-20 years ahead of the same curve here. However, the result has been resignation and stagnation, not revolution.
Elsewhere in the world, this same generation also represents itself as ISIS and revolutionaries in Syria, cartels and gangs in Mexico & central America, and pirates in Somalia. As a developed nation, demographic realities reached America after they reached those countries. We'll see what form it takes here.
People in poor countries, the Philippines for example, have fewer opportunities, less ability to save, yet somehow form families, raise kids and look to a better tomorrow.
In rich countries people feel like they’re missing something if they’re not keeping up with the Joneses.
In the Philippines not many people are ashamed of second hand clothing. In Korea that’s just not something people would do.
It’s not pride but it’s also not the best way to deal with reality.
Stagnation and resignation has also been the answer for millenials in the West. If by revolution you mean the recent Capitol riots, most of the protesters were over 40 and well off. If anything I'm surprised by how politically apathetic this (my) generation is.
In the end, most people flock to the greater Seoul area because that's where most jobs are.
It's sad because it is much more enjoyable and realistic to live, raise a family, and buy a home in these types of areas as compared to a city.
I havnt thought about it before but it's probably very similar with the people. People who enjoy the same type of music as you and that you'd want to hangout with? 1. People who enjoy playing boardgames and have time to play them? 1. Potential life partner? 1.
The options just drastically decrease which is hard to cope with for a lot of people.
I am finishing reading the Code of Capital, very interesting look at this exact issue (though bit though for me to go through)
Rigged pharma. Unethical medical billing. Out of control healthcare costs. 2008 mortgage crisis. High Frequency trading firms front running trades. Panama Papers. Libor. And a million more.
Citizens won't have it any more. Fixing congress (so they don't sell us out), and congress CAN would WOULD fix this.
All of these justifications are just an excuse to erect artificial barriers around the early stage market (aka where all the upside is). People should be free to spend their money as they see fit, even if that means shoveling it into a campfire.
That said nothing preventing kick starter for seed rounds with a cut for said audits of at least good faith intent to build business value in some way.
> That said nothing preventing kick starter for seed rounds with a cut for said audits of at least good faith intent to build business value in some way.
To the best of my knowledge accredited investor laws are preventing this.
Citizen's will not ever fix this until they pick non-sellout congress people over only caring about their partisan fights.
I find it funny how first-worlders are horrified by the idea that they might have to live in mild discomfort. Maybe try looking at how most of the world that isn't the US and Western Europe lives before saying people's lives will be "nasty, brutish and short" because they won't be working some low-skill 9 to 5 for 40 to 50 years while making 6 figures and then retire with the rest of their lives pretty much planned out for them.
IMHO I think globalization is to blame for this; it has transferred equity/ownership from Western countries over time. It has given us cheaper electronics, cheap aviation/holidays, and other discretionaries but in return has denied people of the essentials (cheap houses, job security, etc) and has transferred existing wealth away. The rich have the means to protect themselves and even profit from this redistribution of wealth; it's the middle class instead where much of the wealth was has slowly been drained. Instead of wealth they now substituted it with debt to keep the system running.
In the country I live in house prices are highly proportional to debt growth, much accrued to foreign debt. Our exchange rate stays high since issuing debt in the local currency despite increasing the CAD and draining wealth bids up the currency on the FX market. As long as houses don't crash (which is where most debt is issued) the dollar's worth doesn't deteriorate and we don't see the drain of wealth. As long as debt growth keeps growing we always create positive pressure on our exchange rate. The sad part about this of course is while young people can't afford houses, the goods they may substitute for this (cars, holidays, gadgets) are all underpinned by the debt used to bid those houses higher via a higher than otherwise FX rate.
Do they mean decreases in life expectancy? Student debt? Homeownership? Disease prevalence? Violent crime?
It's continually stated as an axiom, but poor writing such as that really weakens their argument.
When Hobbes coined the idiom "nasty, brutish and short" he was thinking of a lifestyle with next to no guarantees. You might be dead at any moment.
Compared to that, I can't really see how first worlders being a bit less comfortable than previous generations is a valid use of the phrase.
He was working from the axiom that laws are what create societies, that “nature” without laws makes the life of man “solitary, poor, nasty, brutish, and short.” It’s interesting how the first two are almost always dropped, isn’t it?
Anyway, this is a false premise. Nature abounds with examples of cooperation at the same rate as those of competition, from communal species banding together to mutualistic interspecies relationships. We keep finding more and more of them. My own suspicion is that what we find in nature broadly reflects our own ideals, because those are simply what we are most likely to look for, and so Hobbes’ society reflected more nastiness than ours does today.
(Also, as predicted by complex systems theory, when brutal behavior does erupt, it is much more catastrophic - the 2 world wars are good examples)
What I did there-- and what you are doing-- is referred to as "one-downmanship." Essentially, attempting to ignore or downplay suffering by talking about a case of worse suffering that you have experience with.
When not part of comedy sketches[1], it's usually considered disruptive.
I understand that "one-downmanship" can be used to dismiss legitimate claims, but the existence of such tactics does not automatically validate anyone who claims their lives are hard.
The original article used a line from Hobbes regarding existence pre-society, which does not apply. The author could have used many valid other things in the US (homeownership and marriage rates, opiod addiction, savings rate) that would have made that part of their argument valid, but decided to go to the rhetorical extreme.
As far as one-downmanship-- it can make sense in personal situations where trust is high and someone opens up about suffering. Perhaps in other high-trust instances, where it's likely to be interpreted as bonding/guidance and not muscle-flexing. But even in those cases it can quickly become unhelpful, hence the Python sketch getting lots of laughs.
In the case of political rhetoric, do you know an example of one-downmanship that isn't mere muscle-flexing? Just look at the example here-- OP said they find it "funny" that a generation of people are frightened by decreasing opportunities and the dangers of climate change.
Perhaps pre-internet this was a way to at least get a dissident message out before one got cut off in a live interview. A kind of "sign of life" to sentient beings in the audience. But on HN-- where those constraints don't exist-- it looks to me like the kind of low-effort disruption on par with asking, "What about Visa/Mastercard monopoly, or the telcos," on the next thread that discusses the Google monopoly case.
Edit: clarification
I say so being a third world inhabitant who has spent some time in the first world and noticed people there simply do not know how much they have it good.
You're conflating two unrelated things:
1. American's poor understanding of conditions in the wider world, and of history.
2. How Americans feel about worsening conditions of poverty and health in America, or-- frankly-- how Americans feel about anything they feel is missing in their lives.
The times when Americans have implicitly conflated those things-- e.g., after WWII when a steep increase in depression among middle class women accompanied unparalleled prosperity in the middle class-- Americans actually prolonged their own suffering instead of ameliorating it. AFAICT, trying to "jolt" oneself out of depression by convincing oneself there's no good reason to be depressed is similar to trying to drink oneself out of alcoholism.
In fact, the idea, "You don't know how good you have it," is so hammered into the American psyche that one of the most popular Netflix series-- The Queen's Gambit-- is essentially an 8-hour long refutation of that idea from exactly that same time period. I'll save you the time-- that idea does not work.
Communicating with ignorant people by telling them about your experiences can be fruitful. Teaching your own coping strategies to people even though they are only experiencing first-world problems is graceful.
One-downmanship is simply not an effective tool to achieve either of those goals.
I don't think the author has a point here. I think he's appealing to the fact that, on an emotional level, humans think they're entitled to always have their standards of living be equal or better to what they were before to make people think they live in uniquely hard times.
Looking to the world outside of the US might provide some badly-needed perspective as to why that is not true.
I think it is important to differentiate people's subjective feelings of being let down from there actually being a problem, or their lives being "nasty, brutish and short".
My understanding was that this is the opposite. In the US, the standard of living is pretty high, but not improving. In most of the world, standards are lower but improving. I think your point is that people should focus on what they have compared to the rest of humanity and the world, rather than compared to the generation before.
Feel free to correct me if I misunderstood you.
I agree that the distribution of wealth could be a lot more equitable, but I fundamentally disagree with this idea that "If some people have little, that is only because evil/stupid people don't want them to have more". The world is a lot more complicated than that.
I live in a country with crushingly high taxes. Our public services suck. If it were just a matter of raising taxes, we'd have no issues.
Let's look at an example of where life is zero-sum, which also happens to be an important battleground that leads to more macro effects: wage negotiations. Clearly it's zero-sum: the firm produces some wealth, and many dollars that aren't paid to wages end up paid to someone with more power in the firm, such as an owner, major shareholder, or executive.
Now, when it comes to negotiating wages, in an oversaturated labor market, workers without a union are in a terrible bargaining position, as they basically have the choice: work or die. This leads to what we see today: horrible exploitation of the people with the least power in society. Lawmakers have, over the years, stripped unions of relative power. This is one of the choices I mentioned, where one group is immiserated precisely in order to let another group hoard more and more money. Now, sure, unions have downsides, and they can be corrupt, but on the whole, US wages have stagnated while production has increased since the 70s, when the US began its forceful destruction of labor power.
The only argument you can make in response is that the system as a whole has to be this way, or else, for example, talented executives won't step up to difficult tasks and things won't get done. I'm sure that, in some cases, this is true, but it's a trade-off, like most other things in economics, and the absolutist way that many people hold this, so that a lot of exploitation is justified to retain this, is murderously excessive, and not based on empirical evidence.
I agree, life is more complicated than a zero-sum game, but can you argue that it doesn't behave like it is for most people?
This kind of overly dramatic phrase is not accurate nor conducive to productive debate. Its only reason for existing is to make people indignant and unaware of their own privilege in order to make them support your cause of choice - or, more frequently, in order to make them fight the people who you designate as the "cause" of their "suffering".
There's also a personal aspect to my comment, in that I live in a country where, even if the USA's living standard keeps falling for the next 50 years, it will probably be just about comparable to here. Watching the most privileged people in the world be all "woe is me, I might not be as rich as my dad!" is not something I'm very able to take seriously.
I disagree. So what if he misused the quote. His overall point is valid. And other people have it worse, that's unfair, we should do everything in our power to improve everyones lives. And all backsliding should be protested.
But why? Why can't more kids get into STEM fields? Why aren't there more decent jobs, say manufacturing jobs? Why are American kids so bad at basic reading, critical thinking, and basic arithmetics? Why is there an apparent bifurcation in the K5 system, where a large number of perfectly capable kids get misled and tortured by craps like Common Core, while a small number of kids are ready for algebra or more advanced maths? Why do we have kids who get straight A in high school yet can't pass placement test in a community college? Why do we have so many kids who ace through high school think entry-level courses like introductory calculus or organic chemistry are too hard? The questions can go on.
And I certainly don't hope that the answers are what Seattle and California public schools have started to teach: https://equitablemath.org/
Because not everyone is predisposed to be a programmer, engineer or statistician. Not everyone can become a whitecollar worker. This is reality of the world we live in, no amount of though experiments will change that.
What you are really doing is blaming victims of a system set against those people.
Our society should be built so those people can have decent lives too. Ie minimum wage should provide you with above poverty life. Currently in some cities 3 minimum wages are barely that.
I am not talking about giving poor people money for palm beach holidays twice a year. Working in McD should be enough to pay for an small apartment bills and food and sending you kids to school.
What current situation created is that middle class has to subsidize the social welfare for working class people - WORKING people. Ie middle class pays part of wages of minimum-wage workers because they are in poverty while holding a full time job(s).
Also in China art graduates make more than STEM graduates since a STEM grad is a dime a dozen.
Saying arts major earn better than techies is like saying professional sports are more promising than tech jobs. Both are gross negligence of stats.
The problem inherently lies with the assumption that the free market will fix all and assuming that some entrepreneurial person is going to lead the charge and redevelop our country. What a joke.
The boom after the Great Depression that made the US into a superpower was driven entirely by government dollars.
My solution would be: * Raise minimum wage to $30 an hour. * Implement land value tax + higher capital gains taxes in order to stem inflation. * Hire 10x the amount of construction workers, civil engineers, etc and provide them with the funding for projects.
Get to work. It's laughable that someone working at Snapchat can make 1M a year while the jobs that literally build our country are paying dogshit.
We need wealth redistribution but not via UBI, via actual development. Let's raze the slums and rebuild with shiny skyscrapers. It's possible. We just have to get away from capitalists getting increasingly rich while the rest suffer.
Also as an aside, my bet is that "programming" reverts to the mean within 10 years as a career. 20 years ago programmers were paid peanuts. Most of the heavy lifting of building software has already been done, AI, low-code, etc. is going to make it increasingly easier. Be ready.
All of this is GOOD, why does it cost 5 million dollars to build a site so that I can reserve a place in line at the DMV (made up example). The tech industry has enjoyed a monopoly on transmitting data. Building an app or a website should be as easy as opening an excel spreadsheet or a word doc. That is coming and your UI coding skills are going to be essentially useless very soon.
I can go work for any company and help get rid of their employees or maximize efficiency. A simple program can save hundreds of man hours.
People who think building a website is cheap have no idea what they are talking about. Sure, a static site is easy. However, once you are building a site that needs to work with a system from the 1980s, you start to hit road blocks....and many many large business run on stuff from 80s. Places like costco, banks, etc.
Systematically, the average American will and must confront quite the bleak future.
Working for someone else has been the "easy" route (mentally) for a long time, and easy things never pay well.
Much like the GP comment, if more people start their own businesses then expected returns from running your own business will regress to the norm.
I'm grateful that STEM pays so well nowadays, but I don't mind if my pay goes back to norm in exchange for many people having a better future. I don't see the current K12 system will help, though.
The way things are going, the norm is trending towards pretty bleak, yeah.
I live in Austria now and the market is flooded with STEM grads due to very good schools and free education to the point where, in my college town, I can't throw a rock out the window without hitting someone doing a PhD in ML, but that doesn't translate to an abundance of jobs due to the lack of VC funding in this area.
This leads to massive academic title inflation where, unless you already have job experience, most companies can afford to throw your resume in the bin if you don't have a MSc and stil have enough candidates to fulfill their demand, so your only choice if to pursue at least a MSc if you want to be employed.
Friends in Denmark have told me the same, you can easily find an Architect but good luck finding a plumber.
On the maximum, they are determined by value, in that your employer will never pay you more than the value you create (otherwise, why hire you?)
Unionization will fix this. A glut of STEM candidates will not.
I myself enjoy having choices for myself and my children but that is a consequence of money. This is why I support school vouchers - let parents determine how to spend their money, and let schools compete for students.
The problem (US) is we've been steadily decreasing the relative cap on public school spending.
If the spending wasn't so little, you'd probably be a lot more adamant about that voucher.
That 10K doesn't fix it overnight, but it does raise salaries which would increase competition in the talent pool.
Where are you from?
Things cost more in the US. Look how much we spend on the military. The fact we can and should spend more on edu isn't even debatable.
What needs to be debated is how do we stop the squanderers?
It’s not about kids and education anymore. Just look at how all teachers unions and most teachers are opposed to opening schools. They know the joke in the system and just want to ride out the COVID plan forever.
Teaching kids about anything, especially difficult STEM subjects, are very difficult and requires excellent teachers. The teachers unions don’t care about that, they just run the kids through the system. That’s why good education is lacking in US.
This completely ignores the fact that the stock was shorted over 100% of float, and people knew it was going to squeeze so they bought in hoping to ride the wave. And that did in fact happen, although timing is everything.
I could go on, but this philosophical piece is incredibly lazy with its historical accuracy.
> Goldman Sachs, Citadel, Andersen Horrowitz those guys are making transaction fees
"Andersen Horrowitz"? Does the author have any idea who he is criticizing or what industry they're in?
> Failing microcap stock
GME is not a microcap stock, and it was not a microcap stock, even before this entire saga
> I make no pretense that I don’t despise the bitcoin philosophy
Erroneous double negative here, does he even proofread his own work?
Somewhere in here he states that "Bitcoin doesn't work". I've seen a lot of lazy criticisms of Bitcoin, but this one just falls flat -- of course it works. Say what you will, but the entire system works with continuous uptime, the ability to transact, etc. etc. That's why it's worth a trillion dollars.
Saying that you don't understand how bicycles stay upright doesn't make them fall over. And similarly, saying that Bitcoin doesn't work, well, doesn't make it stop working.
Once I saw this obvious error and realized the author doesn't even understand that VCs are different from a stock exchange, and can't even spell their name properly, I realized how ridiculous this blog actually is. His Bitcoin argument cemented it.
I want the 5 minutes of my life back that I spent reading this drivel.
> Erroneous double negative here, does he even proofread his own work?
I think he got this part right.
I make [no] pretense that I do [not] despise the bitcoin philosophy ---> I {admit} that I do despise the bitcoin philosophy.
Unfortunately, this is one of those weird English phrases where the more you look at it, the weirder it is. I'm actually less confident of this now having written it out and reread it multiple times.
"I make no pretense..." means "I don't claim to..." For example, "I make no pretense at being an bitcoin expert" means "I don't claim to be a bitcoin expert."
So here's some more helpful analysis:
"I don't claim to despise BTC" means I like it.
"I don't claim to not despise BTC" means I don't like it.
Thus, "I make no pretense to not despise BTC" means I don't like it.
I make no pretense that I respect the bitcoin philosophy.
Edit: I made an bad logical leap here. The statement can only be interpreted about how the author pretends, and not the author's actual position. So everything after this edit is suspect. All we can say is that the author does not pretend to like bitcoin. The statement doesn't say anything about the author's actual opinions of bitcoin, though that is very clear from the article.
I make a pretense that I despise the bitcoin philosophy.
I admit that I don't despise the bitcoin philosophy.
I admit that I respect the bitcoin philosophy.
Part of the problem with your analysis is that "I make no pretense" is itself a phrase actually is a single negative in use. It means "I don't claim."
"I make no pretense of liking BTC" could technically mean "I am not pretending to like Bitcoin" as in "I'm not pretending to like BTC. I really do like it." But that's not what it means in practice. It means "I don't like BTC, and I like it so little that I'm not even going to pretend to like it."
> Erroneous double negative here, does he even proofread his own work?
Do you? The double negative stands.
He has previously written extensively on his dislike of Bitcoin. Far from lazily.
Except the squeeze failed at $400, and short interest was still above 100% as GME dropped below $50 by my understanding.
As such, the short-interest story seems to be a weak argument for anything. Clearly, short interest > 100% is meaningless: the stock can go up, or down, no matter what its short interest is.
It doesn't take into account that at 400 shorting GME became a much more appealing idea than even at 20/share. Everyone knew 400/share was unmaintainable.
% Short float is public information. And based on the discussions I've had online, it seems people are confused between %short float and %short outstanding.
> Everyone knew 400/share was unmaintainable.
Clearly not. My friend was buying in at that time, despite me arguing with him that he shouldn't. There's also plenty of retail-buys that occurred at $300 to $400: millions and millions of shares bought.
So plenty of people were buying at $300 and $400. That's just a fact. Retail purchases and retail volume by the way, is also public information. (Along with other indicators of volume: open interest to options for example)
My understanding of this is that it's released on a bi-monthly basis. So the active count is not reported. There are people who try to track it based on the outstanding shorts by watching the stock market and predicting what the current daily short percentage is, but I don't think they have verifiable data until the publication comes out. https://nasdaqtrader.com/Trader.aspx?id=ShortIntPubSch
Any short before the surge was probably shorting the price below 20/share. Say there are 100% shorts at 20/share. Then it goes up to 50/share and now it's 80% at 20/share (because 20% of those closed out) and 20% at 50/share.
When it was at 400/share, no one knows if those were shorts at 20/share, 50/share, or 400/share or when they expired. If I was a savvy investor who was being squeezed, I'd have cleared all my shorts at 20/share at a loss and then shorted the stock again at 400/share keeping the percentage around 100% of the market. I have no way of showing this and unfortunately very few people do (to my knowledge). If I'm wrong please show me I'd love to learn more, I find this incredibly interesting.
That's what I mean is not public information, no one knows what the breakdown of the short value is.
>Clearly not. My friend was buying in at that time, despite me arguing with him that he shouldn't. There's also plenty of retail-buys that occurred at $300 to $400: millions and millions of shares bought.
They thought it would go up to 1000. Which it might have, but they thought it would surge up and they could sell off at 1000.
That doesn't mean the price is maintainable. Everyone was passing around the last Short chart and it wasn't a maintainable boost. You can't even see the jump on a 5 year timeline of the market.
EDIT: Sorry I keep saying everyone. Everyone who was on WSB during the mania. I am sure there were individuals who didn't fit this. But I assume your friend thought the price would hit 1000/share and then they'd sell there. Or they were sold on buying the dip. Either way, they had an exit strategy (I assume) and it wasn't 10 years from now it was in a few days or weeks. Which is why I said isn't maintainable.
It's likely that as the price rose, the funds and investors that were shorting at the pre-squeeze prices were forced to close their positions at a loss. Then, they (or other investors) opened new short positions at the inflated higher prices, thus keeping the overall ratio high.
It was shorted to below 2/share at some point which is imo insane given what we've seen EVERY SINGLE CONSOLE RELEASE EVER.
The media saw an opportunity to make this about populist rage, and we all bit it. But this was started as a short squeeze and a very effective one at that.
EDIT: Just to clarify. There was obviously a short squeeze. That short squeeze could have stopped at 20/share and been a GREAT short squeeze. I have friends who got off the ride at that point thinking the squeeze was over. The frenzy that happened that pushed the stock to 400 was insane, and wouldn't have happened if this stock didn't start trending. You don't have a subreddit go from 2m to 8m in 2 weeks unless there's some serious frenzy.
I think the stock is between a 10/share and 30/share stock but I'm not a professional. Honestly the professionals aren't professionals and that's backed by some studies but I won't get into that right now.
The idea that you can cover this story without mentioning the short squeeze is lazy or dishonest. While it's an artificial boost to a stocks price it's a completely valid boost to that price too.
I use the PS5 as an example. How expensive is it? 500? Wrong. It's 500 if you put in time and energy, but if you value your time and energy over that of the retail price you can get one on ebay for 1000. Is it worth 1000? Only if you are impatient.
What's GME price? 2/share 15/share doesn't matter. If I have 1000 of something and I know that 1400 people MUST buy it by the end of the month, I can be sure that I'll make some money there. Was 400/share reasonable? I don't think so, that was mania and the fact that this short squeeze got mainstream and people had FOMO.
All 1400 buyers could be satisfied with just 1 share that gets resold 1400 times. At even 20/share, some of the people who loaned out their shares to short-sellers are going to sell their shares when they get them back to cash in on the 1000% gains.
They could even be satisfied with 0 shares if someone is willing to short-sell. At 400/share, there were certainly plenty of people willing to short-sell.
This has very strongly increased during that year of pandemic. In my country a vast amount of money is spent on protecting old people that future generations will be liable for.
If you don't see what's happening, then quite bluntly, you need to broaden your circles to familiarize yourself with people that aren't privileged enough to be able to continue working remotely.
I'm not defending the current system/situation, but this seems to mischaracterize the article it links to.
Wealth wasn't redistributed, because millenials (more generally, younger generations) didn't have it to begin with. What happened was that older generations were able to - and did - capture almost all of the surplus that was generated.
I'm not saying that the author intentionally mischaracterized this. I'm saying that you can't solve a problem if you don't understand the nature of the problem. You can't solve a problem by focusing your efforts on a different problem (possibly the wrong problem, at least in this context).
This is great.
Sums it up.
"Buying lottery tickets and trading manipulated crypto assets are both a tax on the poor and disenfranchised."
Feel free to short Bitcoin in a futures market, and keep all your wealth allocated in assets associated with the US dollar.
We'll talk again in 5 years time.
> Bitcoin doesn’t work, it’s a naked speculative bubble based on a technology that doesn’t scale can’t and can’t replace any existing financial service
When you say Bitcoin doesn't work, what are you referring to? As a medium of exchange, you're correct: it doesn't work. But the narrative in crypto communities is that Bitcoin is becoming a store-of-value. Under that narrative, Bitcoin is "working": it's replacing gold as a store of value. We're seeing institutions expand their portfolios to include BTC. There are additional arguments for why Bitcoin may be a better hedge against inflation than gold or oil. Here is an interesting analysis by Winklevoss twins [1]
There's more to cryptocurrency than Bitcoin. Today, there are over 4,000 crypto tokens out there and they're each solving various use cases with varying success. One particular thriving area is Decentralized Finance (DeFi) which creates decentralized exchanges, market makers, lenders/borrowers that aim to disrupt traditional (centralized) financial structures. As proof that there's something here, decentralized exchanges are taking market share from centralized ones - which are valued at $100B.
Or consider the more visionary take on cryptocurrencies: decentralized computation networks that create economies for network participants. Centralized businesses must act in the interest of shareholders and are built to extract as much value from their product as possible. Decentralized computation networks, on the other hand, do not. They can (and are) constructed to be minimally extractive, taking only what is needed to reward network participants & secure the network. Thus, the value capture is distributed across all network participants, enabling new forms of humans organizing together to achieve a common goal. Check out [3] if you're interested in learning more.
I hope this spurs your curiosity to dig into cryptocurrencies beyond just the surface. Thanks for writing the article!
[1] https://winklevosscapital.com/the-case-for-500k-bitcoin/ [2] https://defipulse.com/ [3] https://smartcontentpublication.medium.com/the-purpose-and-v...
I'm reminded of an advert campaign slogan that New York State ran for it's lottery: "All you need is a dollar and a dream". Spot on.
An astute friend's comment was: "We'll keep the dollar and you keep the dream".
I've long agreed with the author that lotteries are an innumeracy tax. His insight that BTC is also largely the same is spot on.
https://saito.io/saito-whitepaper.pdf
The network pays the nodes that run infrastructure rather than miners or stakers. Cost-of-attack is generated by the same nodes, so paying for infrastructure does not defund consensus. Security scales with fee-throughput of the network, while fee-throughput pays for scalability.
With a chain like Bitcoin's, if you want to perform a 51% attack, you would have to purchase a large amount of SHA-256 ASIC mining hardware. After the attack, public confidence would be shaken so severely that the market price would crash, and might never recover. So afterwards, the attacker is left with a pile of ASIC hardware that's nowhere near as valuable as before.
If the PoW algorithm were based on something more "useful", then after a 51% attack, the attacker would have a large amount of hardware that they could easily repurpose, so it would retain a lot of its previous value. That makes the total cost of the attack much lower.
Socialism provides a "yes" to every "no" in this article. Authors critiques are good, but author too lapses into nihilism.
Even cryptocurrency is not beyond rescue, it is only beyond rescue under a capitalist mode of production. Technology is the cause and effect, but we _do_ have agency.
That is pure irrationality. IMO The real issue is a crap education system which gives neither opportunity, nor good advice-- instead of training rational actors w/ valueable skills it focuses on building activists before they have any life experience and smacks of marxism.
What's the path out? Free education for socially profitable degrees might be a fix (ie STEM). Not wasting the first 18 years of a person's life might be an alternative (eg: why are we memorizing dates permanently recorded online, why arent we teaching (personal) financial and programming expertise?).
Edit: by financial I meant personal financial skills, not wall street skills. My apologies for the imprecision.
It's not an alternative, it's strictly necessary. People look around and wonder how 70 million Americans voted for a certain someone, and the clear-cut answer isn't farther than their local public high school.
A system designed from the ground up to mold nearly everybody into obedient manufacturing drones in a economy that doesn't rely on manufacturing anymore is bound to create huge issues.
The nihilism of YOLO has little to do with schooling. A broken education system is well after the fact of the economic and social reality constituting their environment. The young today have impossible economic hurdles: unaffordable shoebox apartments, high student debt, no incentive to save, no good jobs for modest tasks. And society is generally incoherent: "communities" are activist and political minority groups, or online, and not your actual neighbourhood; in-person communities are fractured by many different spoken languages; plus the cultural promotion of pornography, sex, and drugs.
I highly disagree with this. The S&P 500 has returned 400% since the crash in a mere 12 yrs. If doubling your money every 6 years does not sound excellent to you, the it's a financial education that is lacking, not real opportunity.
> in-person communities are fractured by many different spoken languages
I actually have found this really enjoyable, to have lots of opportunity to speak/learn Spanish.
> cultural promotion of pornography, sex, and drugs. Given how these affect the reward centers of the brains, IMO these should all be reserved as post success rewards. If someone wants to smoke weed all day and do nothing, that sucks. But if they're high achieving and want to relax _after_ killing it, who are we to tell them no?
This is rich in hindsight bias and selective reasoning. Picking returns since the minimum is intellectually dishonest. Also the inflation fueling this is also fueling the economic disillusionment of the YOLO Gamestop "investor."
The greater problem I have with your comments is you are focused only on potential high achievers, and seem to have little sympathy for the common man. We don't only need a nation of high achievers with the good education you advocate. We need a nation where the average (really median) person has a future to look forward to, and can achieve at least a modicum of accomplishment and self-respect, if not wealth and prosperity too. YOLO investors as per Gamestop are not the people you are discussing. They are very average people who have very little to look forward to.
Why does it suck? If people want to self-medicate, why judge them? A society where everyone must be “high achieving” sounds like a dystopia. We’re practically already post-scarcity on a lot of goods and automation is going to further eliminate the need for workers.
Investment can be powerful, but you are cherry picking.
Programmers and financiers are not the best at shaping childrens minds, its not like those fields teach about childhood development.
I agree, Pedagogical science fits in STEM and I think it's very important we deeply invest in childhood development. I mostly think the subject matter of school is questionable, not the fact we go to school (hence why I suggested we also fund STEM degrees for anyone smart enough to finish it)
People I talk to who dont have the range of wide education miss a lot of context for the world they are living in, temporaly, politically, and socially. And would push to keep it a necessary part of that stem education.
Bitcoin is like the lottery? It's up thousands of percent over the years. Many, many people have made real money and/or are sitting on massive gains. Regardless of if you think Bitcoin has actual utility (I think it does in spades), labeling it a "failure" means your argument is instantly ignored by every person who's up on their investment (aka every person who's held Bitcoin over the past 10 years).
> [Bitcoin is] a naked speculative bubble based on a technology that doesn’t scale can’t and [won't] replace any existing financial service
So that Bitcoin is a Ponzi scheme, and provides no financial service of value. I don't think it's fully true, because Bitcoin facilitates underground transactions and is a practical asset in countries with high inflation and currency restrictions, but the fact that "some people made a lot of money" is no counterargument.
1) Ransomware
2) Electricity usage
3) International reserve currency for bad actors such as North Korea, terrorist cells, and drug cartels.
I don’t see any of these three as a positive; certainly not the greatest financial innovation of all time. I also don’t see other use cases having the size of these three. (Ignoring speculative investment as a use case)
is gold not one of these?
Do you really think the people buying gold are buying it so that they can sell it to industry, as opposed to buying it so that they could potentially sell it to someone else who does the same thing? If gold price were based on industrial uses alone it’d be worth a small fraction of what it’s worth now. Is gold a Ponzi scheme?
For me, Bitcoin has value because it can't be inflated, and I can carry it on my head over any country's frontier without governments harassing me because of it.
Sure, Bitcoin is a means to an end, I can only "use" it by exchanging it for something else, but so is any other currency.
BTC will continue to be inflated for another 100 years. Inflation of BTC is currently higher than CPI in the US.
I think this completely misses the point. This isn't just a plain pump-and-dump scheme. Before /r/wallstreetbets got involved, the price of GameStop was being artificially held low by over-zealous shorts. So some investors figured out the shorts were in an untenable position and called their bluff. The extreme high prices are as far as I can tell just part of the process of the stock price returning to a regular equilibrium, whatever that is. Blaming WSB for a valuation that wasn't based in reality is a bit silly when it wasn't based in reality to begin with. Without the shorts, the stock couldn't have spiked as high as it did.
And in the end, GameStop will survive a bit longer (or even thrive, if it can figure out a successful model), and the people it employs will continue to have jobs.
I stopped reading the article when it turned into a rant against Bitcoin. I mean fine, you can criticize Bitcoin if you want but there's more to it than just people investing in currency speculation. If you don't think Bitcoin has any legitimate uses you're just not paying attention.