grandalf

I made essentially this argument in the thread for the google announcement about beating stockfish and was down voted mercilessly.

I think neural nets and deep learning systems are misunderstood so profoundly because humans are bad at many kinds of reasoning and the explanation of the neural net being "smart" is so psychologically appealing.

Those are all valid points. I don't disagree at all. My comment was meant to present the hypothetical case where Bitcoin's governance model turns out to have better longevity than the USD governance model.

Of course, you can make a case for gold or similar because it could make easy run away to another place, but that it's not the argument they are pushing normally.

I think this is the aspect of it that applies to Bitcoin. All of the steps along the road to hyper-inflation in a fiat currency may be quite reasonable and may constitute the smartest move using the available tools.

There is also the question of whether currencies should be tied to governments. The risks that (frequent) government failures pose to one of the core purposes of money (storing value) are not costless. Society bears the costs of those risks even though they are hard to measure.

Of course many of the same problems could apply equally (or more) to Bitcoin depending on how the governance process proceeds.

I have no idea whether that will happen, just trying to express what I think the rational case is for investing in Bitcoin today.

Goldbugs / conspiracy theorists have a line of argument where they describe all the fiat currencies that have ultimately experienced corruption and hyper-inflation. So I think it's fair to say that running a fiat currency successfully for more than 500 years is something that is unprecedented in the history of the world.

So over a long time horizon this makes Bitcoin extremely interesting. It's not a question of whether 1 BTC will one day be worth millions of USD, it's a question of when. There is a good chance it will be hundreds of years from now if at all.

Much financial risk is in fact sovereign risk in one form or another. This doesn't mean it's rational to hoard gold or BTC, but for entities that have a long-term view of their own future, it makes sense to care a little bit and to diversify.

Even if 10% of the long-term entities diversify into Bitcoin, that alone will drive the price up substantially. It's far too soon for that to have happened.

We are also entering an era where politics are once again a bit part of international exchange, which adds additional sovereign risk for many areas of international business and financial planning.

But Bitcoin faces the same kinds of risks as governments for corruption, mismanagement, etc. The genius of it is that the governance model makes it a lot harder for one party to really control what happens with it.

True, but those arbitrage opportunities will stabilize the price and make other similar opportunities less profitable. I suspect that the real reason these haven't all been ironed out (exploited already) is because Bitcoin exchanges lack the infrastructure guarantee that transactions close when they are expected to, and thus the fee levels wash out much of the arbitrage (for now). But arbitrageurs operating outside the exchanges can use this to their advantage and probably harvest a bit of profit on the chaos for the time being.

These are all good points except for the idea that it won't be used like normal money. The speculative environment and price volatility resulting from that, is all by design. The mining incentive creates a "boom" environment to help bootstrap the currency.

Now, a few years later, BTC is blessed by regulators. The next phase of world domination is for the governance model of Bitcoin to start to seem far better than fiat governance models. This is just a matter of time.

Short term betting (for or against) Bitcoin is unlikely to result in much profit.

Any price is just the amount someone is willing to pay. This is why prices change even for things that do have intrinsic value like food commodities, oil, etc.

More specifically, price is a function of supply and demand. Bitcoin was created with a very specific bootstrapping plan baked into the design.

What people are missing is that the bootstrapping plan is well known and obvious to investors, and is meant to incentivize a speculative motivation for mining, which it has done successfully.

But think about it this way, the price of a currency is only loosely linked to supply and demand. Nobody really knows how many dollars exist, yet the currency has characteristics that make it trustworthy.

Bitcoin is the same phenomenon. The price is based on the success of the governance model and the appealing characteristics of the ecosystem.

Based on these appealing characteristics, there is the widespread expectation that Bitcoin will win market share from other currencies over the long term.

We know there will be a finite number of Bitcoin mined, what we don't know is how much market share Bitcoin will have in comparison to other currencies.

Market share is not a function of money supply as much as it is a function of the holders of the currency that rely on the currency because of its governance mechanism, fungibility, etc. Many countries hold USD in reserve because they find the governance characteristics of the USD appealing. Bitcoin is just a novel way of doing currency governance.

For all uses of currency other than holding inventory, the governance mechanism matters very little, since there is little risk exposure to price fluctuations or the risks associated with bad governance.

Critiques of Bitcoin get mired in an imprecise understanding of all of the above, but the most notable blind spot is that Bitcoin is a governance mechanism first and a currency second, and investors are pleased because the governance mechanism has been tested a few times and has (thus far) performed admirably.

Mine too. I am not attempting to let regulators off easy in this comment, merely pointing out that regardless of their specific motivations or their specific level of human integrity, systems that rely upon the good judgment of a small number of people often trend toward corruption... not necessarily through willful graft but due to human nature.

As others have pointed out, the actions taken by the financial firms' employees were not illegal. In hindsight some were harmful and perhaps should have been, but the question should be why weren't they illegal in the first place.

The answer is that regulators did an abysmal job of understanding the perverse incentives that plagued the industry. Among the biggest causes of bad judgment was the incorrect price signaling created by GSEs that were not following proper accounting and disclosure procedures.

On one hand the financial firms had significant regulatory capture and had been enjoying lots of profits due to their success influencing regulators.

But on the other hand, the entire system of "markets" that were most relevant to the crisis were the most heavily regulated and tied to specific policy goals.

It seems odd that we'd ever expect a system that is so politicized to ever be regulated in a rational and appropriate way.

Broadly viewed, we can see that the combination of regulations and areas loosely regulated and left up to the discretion of firms constituted a significant degree of centralized control, which turned out to be "corrupt" enough to result in a lot of bad decisions and the crash that ensued.

If we assume that all systems are prone to this sort of "centralization risk" we can better appreciate the benefits of decentralized governance that exist with some block chain systems.

Forget about jail for what happened in 2008, why should we ever trust financial regulators of financial firms again to regulate our financial system responsibly? Are we supposed to believe that the perverse incentives for regulatory capture, socializing risk, etc., suddenly ceased to exist?

I'd argue that we should not. We should realize that human institutions typically require participants to have some trust in other participants, but that the more trust is required the more vulnerable the institution is to the kind of problems that plagued the finance industry.

We trusted the GSEs to be acting responsibly even though no financials were released. Regulators trusted ratings agencies to apply disciplined processes to rating generation in spite of the profit motive not to do so, the public trusted regulators to ensure adequate underwriting of risk capital, etc., etc. All these things, many of them not even measurable due to the significant accounting slop involved, were vulnerabilities waiting to be exploited.

When a building has marble pillars outside and everyone inside is wearing expensive suits, what we are seeing is signaling of trustworthiness. When the banker is wearing $1500 Italian leather shoes and a $50K watch we can assume he's earned those things by being trustworthy over time. When we enter the high ceilinged room and see the marble we are meant to trust the institution itself. After all, how could this structure, meant to last thousands of years in the elements, not indicate the highest level of accountability and honesty?

We must realize that even the most well-intentioned institutions are vulnerable to centralization risk, aka the corruption of the inner workings and mechanisms in a way that is not at first noticeable but benefits insiders.

The finance industry used to be simply about risk, money and time. But in today's world it typically follows the pattern of taking money as an input, and producing as an output financial products that foist off some of the risk to society so that the owners can make a profit, with the downside risk being borne by society as a whole.

We see this process in action time and again, and it will continue to happen as long as our regulatory approach rewards massive firm size, prevents competition, and socializes losses.

Let's hope that we see an emergence of an alternative system that relies on a lot less trust and is much less vulnerable to centralization and corruption.

It's great to see Sam calling attention to this problem.

I'd argue that it's not really about ideas as much as it is about the public being much more accepting of authoritarianism.

The broader values of free speech and free expression come not from an aesthetic judgment of particular acts of speech, but from a desire to limit the power of authoritarian governments to suppress speech/expression.

We're seeing in both parties an amnesia about the downside of authoritarianism, and this filters down to things like office culture, university culture, and the perception of the trade-offs associated with various freedoms.

Apparently this story is one such thing, as it has been flagged.

I was going to make this point in a post, but saw that you had already done so.

Using the pan repeatedly as a griddle will result in a superbly seasoned pan that does not need much attention or cleaning.

Once in a while if the pan is used for something too gooey or saucy, or if it gets put through the dishwasher, I simply do a quick seasoning as follows, before resuming its typical use as a griddle:

1) Rinse or wash the pan, use a scouring pad or steel wool if there are any burnt bits of food stuck to the surface.

2) Wipe cooking surface of the pan with a thin layer of olive or vegetable oil. Wipe it in with a paper towel and do not leave any excess in the pan.

3) Heat the pan over a burner at medium heat, so that it gradually warms up, then becomes hot enough to produce a small bit of smoke.

4) Pour in a bit more (room temperature) oil, and once again wipe/rub this around the cooking surface of the pan.

5) Let the pan heat for another minute or two until it is once again at the smoke point, then turn off the burner.

This quick process takes about 5 minutes. It thoroughly dries the pan after washing, which prevents rust, and it gives it enough initial seasoning to bootstrap the seasoning process for subsequent uses of the pan as a griddle.

I wish more science were taught using this kind of thing as a starting demo to provoke a lot of wonderment.

Maybe we learned that coinbase can't scale its website, but that has nothing to do with the ability of BTC to scale.

Wouldn’t the companies offering flight searches have a strong incentive to include this information? I’ve been burned a few times after booking a flight that did not disclose the hefty additional fees.

I've noticed that the automated buys I have set up typically fail when the price is low and succeed when the price is high... according to Coinbase this is due to my bank.

But now when the price is high Coinbase can't manage to scale the website so that people can sell?

It would not be hard for coinbase to engineer a meta-strategy using targeted service failure to extract additional profits from the ecosystem's obvious trends. Not saying this is going on, but there are now to indications that this could be happening.

Someone is intending to buy at $12K so you fail the transaction for 3 hours if your simple model expects a higher price tomorrow (meanwhile buying some coin at market to use later when you succeed the transaction).

It's interesting to consider what it means when the AI can succeed without using brute force.

Suppose at every turn there are n possible future states of the game based on the rules. To avoid "brute force" the AI must be able to ignore many of those states as irrelevant. In effect, the AI is learning what to pay attention to, not just considering what might happen, thereby conserving computational resources.

Chess and Go are interesting for two nearly opposite reasons: 1) because they are too large for humans to consider the reasoning obvious, and 2) because the input to the reasoning is simply a small (and easily perceived by humans) grid of rule-constrained pieces.

But when you think of AI in an information theoretic way, so that given representative training data the system (if large enough) will always "learn" perfectly, it's not really all that remarkable. It's just a different computational way of doing the same transformation from input states to moves. Given a problem (chess, go, etc.) the researchers must simply learn what network structure and training regimen will do the job with the least computational cost.

To see why this is relevant, consider a deep learning model that could continually generate successive digits of pi (or primes) without having the concept baked in already. Would the result be computationally cheaper than highly optimized brute force algorithm? No, because what it would "learn" would be something already known by humans. Perfect chess is simply a function from input states to moves that humans do not already know the definition of. Most humans do know the definition of this function for the game of tic tac toe by the time they reach middle school.

I'd argue that while this is useful it's ultimately not hard. Comparing it with Stockfish mainly demonstrates how chess is hard for humans to reason about and hence hard for humans to write non-brute-force algorithms to solve.

Thus, I think this is an example of "weak AI" even though humans associate chess with high degrees of exceptional human cognition. Chess data contains no noise, so the algorithm is dealing only with signals of varying degrees of utility.

I'm looking forward to AI that can be useful in the midst of lots of noise, such as AI that analyzes peoples' body language to predict interesting things about them, analyzes speech in real time for deception, roulette wheels for biases, and office environments for emotional toxicity.

Chess is interesting because we can't introspect to understand what makes humans good at chess (other than practice). So many human insights and intuitions are similarly opaque yet the data is noisy enough that it will take significantly better AI to be able to do anything that truly seems super-human.

More evidence that Google is hurting financially.

Thus far, Google's major platforms have had roughly the same longevity as a typical series C startup. I will keep this in mind the next time Google announces a promising platform technology.

Ironically, both of these firms are strong advocates for "net neutrality" while they practice such childish behavior.

My personal view as a user of both companies' hardware and software is that Amazon is taking the lead. I bought a Fire TV a few weeks ago and it comes with a remote and turns any monitor into a useful, standalone entertainment device.

I also have a chromecast, which requires an app to stream (and the streaming tends to freeze or hang and frequently gets confused if you try to stream something from a different app while another stream has hung).

I also bought a $29 Kindle Fire that strongly outperforms my $200+ Nexus 7. When Google started getting into the hardware market I was hoping we'd see affordable, subsidized hardware, but instead we're getting high priced "luxury" phones which happen to be a bit cheaper than those sold by the market leader.

Of the two companies, I think Amazon has a strategy that is poised to take the lead in hardware. I say this after also buying a BLU Amazon ad-supported phone for $59 that has a super large screen and performs somewhere between an iPhone 5 and iPhone 6+ (I bought it a year ago).

One nice thing about the Alphabet reorganization is that we can see how hard this sort of competitive landscape is really hitting Google. We've already seen lots of free tier services getting taken away and many other signs of lower margins, and so the threat to block Youtube feels like an admission of weakness.

Also, FWIW, the minute Google blocks the Fire Youtube app, Amazon can simply make the icon load Youtube in the web browser.

This story is meant to make the American public more willing to support an attack on NK. Americans are generally happy to support strikes that we view as high tech and not targeting/harming civilians directly.

But in reality any strikes with RF weapons will be accompanied by significant conventional strikes.

I think there is still zero chance that there will be any sort of war between the US and NK. NK holds all the cards and has played them quite effectively. The only question is how much longer our president will continue to bluster embarrassingly before he realizes his actual strategic reality.

One other possibility is that the US would be willing to undertake a strike on NK even if there was a decent chance of NK launching a successful attack on Seoul. In that scenario, the goal of the PR is to help Americans feel that every "high tech" thing possible was done to stop NK and that the casualties were sad but ultimately worthwhile.

US bluster over NK reveals both the failure of power projection toward China and China's full knowledge that the US has more to lose from failed negotiations than China does. China will let this play out slowly and let our leaders act foolish as long as they wish.

It's funny how even in spite of the widespread mockery of our president, there is much less mockery of the foolishness underlying US "tough talk" aimed at NK. I think we believe that the tough talk is aimed at NK and not at the American people.

There are two relevant things to realize about this:

1) Student debt is much different than normal consumer debt in that it is not dischargeable if the holder declares bankruptcy.

2) For years, many politicians have been calling for the massive increases in the issuance of student loans, presenting the issue as though the only hope for many people to obtain education is to take on massive amounts of debt.

If there weren't lots of bankers, politicians, and lobbyists getting rich off of this bubble, it might be possible to believe that they genuinely think that saddling teenagers with massive amounts of non-dischargeable debt was a good thing for society.

Student loans are the biggest handout to the financial services industry in decades, and both parties are reaping the spoils of these deals.

Dai seems like a clever idea, but I'm not convinced it will ultimately be necessary.

For one thing, the idea that dollars are stable is illusory. And the volatility we see in BTC these days is largely due to the ratio of speculation to storing value in its usage pattern.

So if you buy 500 Dai with Bitcoin today, and the price of Bitcoin goes up, you simply have more Dai to spend, and if the price goes down, you have less to spend, but all the while Dai was pegged to USD and the exchange was going on behind the scenes.

Two factual quibbles with the article, in case you can offer insight:

The example about doing a bet using Ether does not make sense, because chances are the smart contract would collect collateral for the bet at the time it was made, with the idea that upon resolution of the outcome the collateral would be used to pay off the bet. So if I bet 1 ETH on the superbowl outcome, 1 ETH is collected from me and from my counter-party, and then after the game finishes the smart contract awards 2 ETH to the winner.

The other issue has to do with commerce. What's the difference between a store marking prices in USD and also accepting payment in BTC vs marking prices in Dai?

During checkout, if I'm paying with BTC I'll see how much BTC my purchase will cost. If the price in dollars is more useful to shoppers than the price in BTC, then merchants will denominate in dollars. Dai would seemingly just involve a predefined method of doing the exchange rate math (and fees), but I'm not clear on why this is really a significant advantage.

China has been bravely dealing with a rampant "fake news" problem for decades, and should serve as a model for US regulators and social media companies.

I think you could equivalently argue that the long-term effect is that the toddler learns to tune out all the noise and focus on one thing.

Uh, it says intentionally concealing, not owning.

Income from investments is supposed to be reported to the IRS. It’s silly that anyone would expect crypto currencies to be an exception.

This would be one of the few cases when the title should be updated.

The moment you take incentive (bitcoin) out of the equation, whole blockchain will lose its strength.

This assumes that the compute power of the miners who are left after the incentive is gone will not be sufficient to prevent attacks.

It also assumes that the miners who quit, whose hardware would seemingly be ripe for use in attacks, would have no other purpose to use it for, such as another cryptocurrency.

FWIW I'd also point out that I would not be surprised if a fork were to occur that prolonged the incentive. Consider the finite incentive something that was necessary to create the initial coordination among participants in Bitcoin, but once it reaches sufficient scale if continuing to have an incentive benefits the ecosystem then surely it will (by then).

The problem is that wealth redistribution policies have irresistible appeal, and no regulatory system that is freedom-oriented adequately addresses the aspect of luck that impacts one's lot in life.

For instance, if the initial population of such a country all sat down together and agreed on what level of social support they would want if they happened to be born with below-average IQ, having some severe physical disability, being suddenly unable to work, having a special needs child whose care cost more than their own annual wages, etc., then the rules of the game could be set up in a sustainable way so that generation after generation there would not be the same sort of market for social entrepreneurship intended merely to achieve after-the-fact wealth redistribution, since a fair system would have been baked in from the start.

I don't think this is so much a classic market failure as it is a failure of human brains to perform counter-factual reasoning.

Also, values change over time. What is viewed as a fair system now might be viewed very differently in a 50 or 100 years, all else being equal.

The strategic decline of the US relative to China and Russia over the past few decades has been due mainly to the massive cost of the American bureaucratic state. Both nations spend pennies on the dollar and cause our hawks to bluster embarrassingly as they flush our prosperity down the drain.

At least in the case of Russia, this was the objective from day one. The US is strategically weaker today (in terms of alliances, power projection, public support for wars and ability to handle multiple fronts) than it has been at any time since achieving superpower status.

We've seen a massive slide toward authoritarianism over the past few decades as well, with an emphasis on "us vs them" beliefs and other childish mental habits that have become mainstream.

Not isolationism, simply democratic approval for the scope, budget, and success criteria of military action, and an honest discussion of national interest that doesn't involve fear mongering or appeals to xenophobia or racism.

And while I personally view the doctrine of American Exceptionalism as a sort of evil religion that causes much worldwide suffering, I could tolerate it if there was a corresponding definition of national interest that could be used to assess the claims of our political leaders.

Its not a choice between the modern massive federal\military bureaucracy and serfdom.