Hacker News Reader

Comment by ohazi | Hacker News Reader

Like many people back then, I also found the whole proof-of-work / blockchain concept to be interesting from a theoretical computer science / distributed systems perspective.

But these days, I can't help but think that we've inadvertently created a paperclip maximizer without even bothering to create an AGI first. Humans are the AGI, and we're going to happily use more and more energy to play this stupid game for as long as it looks like there's a profit to be made, even if the global outcome is to our own detriment.

If we want this mess to go away, we need to find a way to change the incentives globally.

View on HN

The leviathan is loose and it's never going back in a pen until the whole thing collapses under the weight of the fraud. Even legal restrictions on it will only help a little bit as enough moneyed interests are invested in keeping the hype train rolling.

I've consulted for several companies trying to do blockchain based non-money things and can't emphasize to them enough that no one outside computer science and math fields will ever associate them with anything but cryptocurrency (and thus scams) for the rest of our lifetimes.

> can't emphasize to them enough that no one outside computer science and math fields will ever associate them with anything but cryptocurrency (and thus scams)

How so? "Private blockchains" (with no general access + cryptographic proof of commitment) are practically indistinguishable from plain old Merkle trees, and yet I don't see many people arguing that git is some sort of "scam" even outside the CS and math community.

No one called git a “blockchain” until the cryptocurrency fad. The point is that the zero-trust aspect is useless if you can control the source of truth.

It’s it a blockchain one any definition. The current commit does not have a hash of the previous commit.

See that's my point. People who understand what Merkle trees are mostly understand the various utilities in using them, but that has very little to do with what "normal people" think of when they hear blockchain.

Anecdotal, but I hosted a friend and her husband at my place a few months ago (Facebook Product Manager). She was telling me that her team of brilliant engineers are all either leaving to go to TikTok or crypto startups.

Don't kid yourself, people follow the money.

Well FB is the new Phillip Morris so it's relative

Following the money does not mean success. Without market adoption they may well be just destroying their careers.

Capital in general is a paperclip maximizer, not just Bitcoin. All investors are slaves to their capital that takes a mind of its own, a sort of real-world Egregore.

Bitcoin is a flagrant example of this property of capital.

I will risk taking downvotes for not meaningful post, but thank you for this message, really. It is a good connection (the paper clip maximizer <-> capital, I will have to familiarize myself with Egrogore still :)

up: Oh my god, capital as an emergent bigger entity, ok, ok, now I'm scared, thank you :)

up2: So you either fuel it or not, choices choices

up3: This is such a beautiful thing we are all mixed up in, don't you think?

Isn't this statement trivially true for any sort of social system, where you can stand in social capital for Capital.

Capital has tended to trump social capital in the long term, particularly since sufficient capital can shape the public discourse.

Economic capital is interesting because 1) it's not a zero sum game. Most exchanges of economic capital result in the betterment of both parties. 2) in order to get some, you usually provide a good or service to someone else. These things are not necessarily true of other forms of social capital; you can definitely accrue political capital by killing people (or in a less dramatic sense, by being feared by people).

> Most exchanges of economic capital result in the betterment of both parties. 2) in order to get some, you usually provide a good or service to someone else.

It's easy to misread that as something like everybody wins, but it's worth noting that such exchanges can still be extremely exploitative.

Exploitativeness is extremely ill-defined and often used to push an agenda that is not really aligned with the interest of the party "being exploited". In any case, acknowledging that exchanges can be "unfair" for some definition of "unfair", I did use the word "Most". Capitalism/free markets do not guarantee that humans are not shitty but I challenge you to find a social system that does.

Exploitativeness is not necessarily ill-defined. It's just that when you define it rigourously, it either never happens or happens too often for the definers' ideological persuasion.

And by the way, your statement is also extremely ill-defined. If you say that most transactions are not zero-sum, you are presupposing some kind of value system, which you didn't specify, and the value system for which that is true are also very ill-defined.

It's also true that a positive sum interaction could absolutely be exploitative. So the actual amount of exploitative interactions is strictly higher than the number of zero sum or negative sum interactions.

> Exploitativeness is extremely ill-defined and often used to push an agenda that is not really aligned with the interest of the party "being exploited".

One could say something similar about "betterment" in your original statement.

> Capitalism/free markets do not guarantee that humans are not shitty

Obviously.

> but I challenge you to find a social system that does.

We shouldn't let the perfect be the enemy of the good. It irks me when "capitalism/free markets" is presented as some kind of "best possible economic system," or that it cannot be challenged unless the challenger is perfect. It's a set of trade offs (advocated by people with their own agendas), and I see little reason why different people shouldn't advocate different sets of trade-offs.

For social capital, the statement is tautological and has no meaning. Social capital is generally defined as the set of all interpersonal relationships and shared or individual ideas. This isn't a paperclip maximizer nor is it meaningful that groups of people are compelled to act in ways that follow what people in that group believe, do, and how they interact with each other; it's a tautology.

I think that the fact that this applies to capital in general and to abstract SHA256 capability in particular is much more interesting. After all, a bitcoin ASIC is not an interpersonal relationship or a goal of anyone or any group of people.

If you don't think that maximization of social capital doesnt lead people to do dumb shit things allow me to introduce you to real stuff with escalating degrees of real consequence over millennia like TikTok, eating competitions, luxury yachts, most of Hollywood, Jeffrey Epstein, various wars over the course of milennia like Assad murdering his citizens in Syria to dumb wars in Europe for centuries, crusades, pol pot, e.g.

Yeah I just don't understand how any of those things are bizarre or non-obvious. People want to be entertained, have power over other people, have more resources, etc...

I also like to think of it as something analogous to drug addiction with the dopamine positive feedback loop.

Crypto is the crystal meth of finance. Capital completely divorced from labor.

In that sense, crypto is exactly the same as forex, money markets, equities markets, futures markets, derivatives markets, etc. We haven't been coupling markets with labor for like 300 years now.

Not at all.

Forex yes, futures yes, derivatives yes - these are speculative or hedging instruments. Not investments. I've never heard anyone advocate people HODL /NQ futures in their investment account and borrow against them as an investment strategy. Let alone calling them "the future of money." But this is basically what crypto is.

Money market funds aren't investments, they're cash equivalents, but they still facilitate lending. They're the present of money.

Equities are positive-sum instruments where you purchase a fractional ownership stake in a business that employs people and uses the revenue from their business to return capital to investors in the form of dividends, buybacks or intrinsic value appreciation. Their performance is inherently tied to labor.

These are not at all the same thing.

> Not investments.

The idea that there's any viable technical reasoning behind TSLA trading as high as it is, or behind what happened with GME and AMC last year is simply fanciful. It's like you've never seen an IPO pump and dump. It's literally the exact same market behavior you saw with ICOs; side-note: it's even worsened now with the advent of SPACs.

Yeah, you can argue until the cows come home that "equities are positive-sum instruments where you purchase a fractional ownership stake in a business," but that doesn't mean that hedge funds won't treat them as speculative instruments, particularly around earnings calls. Or that hedge funds won't try to spin the narrative to justify their risky positions (e.g.: the short squeeze on GME).

Again, just to reiterate: the markets are almost completely decoupled from labor (for better or for worse). It's all speculation (to certain degrees).

Again you're conflating a bunch of unrelated concepts.

Equities may trade above a fair valuation - individually, or as a group. That doesn't mean they're not as a group positive-sum instruments. You may lose money on a positive-sum instrument. They're also not money, and never claimed to be.

You're forcing a narrative around short timeframes. Equity markets are tied to the performance of the business in the full course of time which is tied to labor.

Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. It's just trading bags of air back and forth.

> Equity markets are tied to the performance of the business in the full course of time which is tied to labor.

They're not though, and they haven't been for centuries. I gave you 3 examples off the top of my head. Markets are tied to sentiment; let me refer you to the Keynesian beauty contest[1]. This is very basic economic theory.

> Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference.

There is no "rake" in crypto, so I'm not even sure what you mean by that. Second, every dollar in appreciation on a decentralized exchange (say, SushiSwap) is a result of the automated market maker's supply and demand response. This is functionally exactly the same as what happens with order books (like on the stock market) but it just happens to use liquidity pools to facilitate this (because volume is much lower). For every seller, there's a buyer, and for every buyer, there's a seller: that's how markets work. Third, crypto is actually not at all like options because whereas option contracts can expire worthless (e.g. they run out of time and can no longer be exercised), if you buy some poopcoin, even if it tanks, you'll still own said coin (kind of like a penny stock).

> It's just trading bags of air back and forth.

This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.

[1] https://en.wikipedia.org/wiki/Keynesian_beauty_contest

Markets are tied to sentiment in the short term, but to labor performance in the long term - this is the distinction I was trying to make. I'm just re-stating the adage that in the short term the market is a popularity content but in the long term it is a weighing machine. You called out AMC and GME. AMC was trading at like $8 in 2020. It spiked to $60, and its back down to $15. Which honestly I could make a case for since they took advantage of the speculative mania to clear a bunch of debt off their books.

Give GME a hot minute and the same thing will happen - it has already started. Peaked at $500 and is sitting at $98.50.

> There is no "rake" in crypto, so I'm not even sure what you mean by that.

There's a few different rakes. The overwhelming majority of crypto trading takes place on centralized exchanges where they take a commission on each trade. Off exchanges, in PoW currencies, new coins are issued which are then sold on these centralized exchanges to pay the bills. This exerts negative price pressure socializing the cost of running the network - another form of rake. In a PoS currency new tokens are issued to validators where non-stakers are diluted - another form of rake.

In each case (exchanges, miners, stakers) a commission is taken by the folks operating the game, which is exactly what a rake is in poker.

Expiry is not why options are the same as crypto. It's the zero-sum nature that's the same. Winners pay the losers, no new value is created in the options market. Ditto the crypto market.

> This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.

For sure, but Pokemon cards aren't claiming to be money and aren't legal tender in one of the poorest countries on earth. It's an issue due to scale, not due to its intrinsically being dumb, which to be clear, it also is. We cannot allow it to get to the point where its stupidity represents a systemic risk to the rest of us who choose not to treat Pokemon cards as money.

People in general are paperclip maximizers, not just Capital. All people are slaves to their desires that takes a mind of its own, a sort of real-world Incentives System.

Chasing power (be it financial, social, political) is a flagrant example of this property of People.

TL;DR: The problem isn't capital. It's humanity as a whole.

I think that this is just devolving the concept of "paperclip maximizer" past the point of absurdity. As I understand it, a paperclip maximizer is a device which has some utility function that it maximizes to an extreme point that it actually ends up providing negative utility to whoever built it or society in general.

I don't see how humans doing what they want fits in there. People aren't slaves to their desires that have a mind of their own, people are the minds which make up desires and destroy them. On the other hand, a paperclip maximizer - or, I think, capital - has a singular desire, which is to make as many paperclips as possible or as much profit as possible, everything else be damned, forever.

Cryptocurrency started as a challenge to financial capitalism and ended up becoming an absurdist parody of it.

Incentives are key to bring the technology back into the realm of usefulness (in the grand scheme of things). Externalities need to be priced into energy costs. In principle there is no problem with using the electric power of a small country for proof of work purposes, as long as the production of that energy is not harmful to everybody via global warming or pollution.

In the end, more efficient ways of achieving the same result will prevail in a well functioning market. Currently everything is skewed because crypto is mined with cheap coal power that the global society is subsidizing by paying for externalities.

I don't think crypto is unique in this. Gold and diamond production is also pretty expensive and useless (apart from their industrial applications, which are limited in comparison to their use to store value).

> Incentives are key to bring the technology back into the realm of usefulness (in the grand scheme of things). Externalities need to be priced into energy costs. In principle there is no problem with using the electric power of a small country for proof of work purposes, as long as the production of that energy is not harmful to everybody via global warming or pollution.

I disagree. Pricing externalities into energy costs isn't sufficient, because proof of work is basically pissing massive amounts of irreplaceable energy resources into the wind in order to play a stupid, unnecessary game. I think it's better those resources stay in the ground or be used for a more productive purposes, and making miners pay more for energy isn't going to change the fundamental wastefulness of their activity.

You convinced me. Eventually it should be forbidden (or made prohibitively expensive) to use fossil fuels for energy generation or transportation purposes because the reserves that are left should be used in the chemical industry and others. I didn't want to defend mining (it is wasteful, even when powered by 100% renewables), just wanted to point out that most of the current harm to society is caused by its fossil fuel electricity generation needs.

> we need to find a way to change the incentives globally.

We are spitting distance from post-scarcity in the developed world. The problem is that we are addicted to power and status (which both feed on scarcity).

> we've inadvertently created a paperclip maximizer without even bothering to create an AGI first

that's a perfect way to describe it. thanks. sigh.

> If we want this mess to go away, we need to find a way to change the incentives globally.

I think there should be more political pressure behind banning crypto currencies and companies that deal with them should be cut out from banking system.

I would be even okay with just doing it for proof of work coins, if people want to keep doing their libertarian experiment it's okay for me, but at least remove this insane incentive to use more and more resources.

> "we need to find a way to change the incentives globally"

Shameless plug: basex.com

> BaseX measures "triple bottom line" - People Planet Prosperity - new definition of value - accounting for environmental impact and wellbeing.

It's is all about incentives.

TIL: https://www.lesswrong.com/tag/paperclip-maximizer

You need to define AGI.

https://www.acronymfinder.com/AGI.html

Reply on news.ycombinator.com