Month: March 2021

Categories
Decentralisation and Neutrality Real-World Crypto

Of bitcoin and asset bubbles

In an efficient financial market, high volatility is correlated with high expected returns. This is one of the most basic principles of finance. Volatility is the cost that investors pay to hold an asset that is likelier to yield them bigger rewards. Risk is the pain, expected return is the gain…

 Many people over the years have argued that Bitcoin is this type of trash asset. … But let’s assume it’s not. Suppose Bitcoin’s value is slowly rising to some long-term equilibrium. The existence of semi-regular bubbles and crashes every few years will tend to slow that process, because it keeps some people scared and keeps them out of the Bitcoin market. That depresses the price today. But then as the bubbles keep happening and the skeptics realize that this is just how Bitcoin works, they eventually lose their fear and jump into the market, and Bitcoin’s price rises.

– Triumph of the HODLers

The article goes on to make the point about bitcoin as a hedge not just against equities or bonds or a specific asset class, but against “system failure”:

 The system of governments, banks, financial regulations, etc. etc. that currently runs the world is not infinitely robust. In the places and times and future conditions in which that system fails, peer-to-peer financial solutions like Bitcoin are inherently very valuable. That gives Bitcoin fundamental value.

and then ultimately hazards a guess at what makes Bitcoin so political.

All around, an excellent read.

Related post:

Bitcoin as insurance
Categories
Life Design

Extreme negative incentives

If I did drink any alcohol between the beginning of October and October 28th, which was my wife’s birthday, I would have to donate $100 to the Trump campaign for every drink, and post a screenshot of the donation on Twitter. Since I didn’t really want to do that, and I knew it would not be particularly popular socially, it became a good motivator for the whole month and I was able to stick to my goal.

– The Health Stack – with Nat Eliason
Categories
Life Design

At some level, the details are not transmissible

We ask Warren Buffet why he invested in a company and he can try and create a mental construct as to how he thinks and how he invests in a company. But there are just as many details to Buffett’s activities, when he decides what to invest in and how he lives his life and how he thinks, as there are to Roger Federer’s body running around a tennis court, hitting a ball. At some level, the details are not transmissible. They’re not copyable.

[co-interviewer/ee] The things that you do greatest are the things that you know not how you do.

– Conquering the Mind, podcast with NavalR and KapilG

Engineers like myself value first-principles thinking. Following the path from observations back to first principles is useful. When it comes to building something back up from those principles, you’re best on your own.

Categories
Decentralisation and Neutrality Real-World Crypto

Single point of failure of imagination

I’ve been thinking about India’s will-they-won’t-they reckoning with the legality of cryptocurrency. Even a year after the Supreme Court ordered the RBI to rescind its ban on banks dealing with cryptocurrency-linked exchanges and directing the government to formulate a law instead, there isn’t one. Instead, there’s a bill that has wound its way through committee and is now awaiting tabling in the ongoing session of Parliament.

The one-line description of the bill makes a reference to the banning of “private cryptocurrencies”. As a consequence, the sword of damocles that has hung above India’s collective cryptocurrency ecosystem since the RBI ban in 2018 has gotten a little wobblier. Every week, for weeks, people in the ecosystem have parsed the odd statement by the minister of finance, and the governor of the RBI and other bureaucrats to glean some indication of which way the wind is blowing.

One day – no one knows when – everyone’ll refresh their feed and discover whether India’s entire industry lives free or dies or is condemned to a highly circumscribed life. That decision determines the access of one-sixth of humanity to something as transformative as decentralised ledger technology – someone in the industry draws comparisons with India’s mid-1990s decision to allow (extremely constrained) access to the Internet itself.

This is a terrible way to live.

Finally, what’s worse is that it’ll eventually be one person – whether an influential bureaucrat or an elected official – who’ll make the difference.

This isn’t unique to India. While in India the eventual lynchpin might be faceless, policy making in the US is transparently but routinely held hostage to a small handful of elected officials.

These are single points of failure. Failures of imagination. Failures that can and often do set entire populations and economies back by a generation.

Corporations make similar decisions at different levels in their hierarchy. The difference for people like you and me is one of choice. We can usually switch to another product, another provider, another subscription. There are switching costs, of course. But the costs of switching countries are many orders of magnitude higher.

Finally, corporations reverse decisions quickly as well. The feedback mechanism is tighter. Decision making is more agile than countries to begin with. It’s a lot harder to rescind an executive order and reverse a law: citizens have only the judiciary and the ballot box.

In the coming face-off between corporation-states and nation-states, this agility will be a big competitive advantage.

Categories
Investing Real-World Crypto

Another 100+ year old institution adopts cryptocurrency

Less than a week after Christie’s sold a digital collage to an investor who paid $69 million in cryptocurrency, rival auction house Sotheby’s said it was considering an option to eventually let bidders use digital currencies to pay for physical artworks—from prints to Pablo Picassos—as well as digital works.

– Sotheby’s Enters NFT Digital Art Market, Considers Broader Cryptocurrency Options

Sotheby’s is 276 years old. Christie’s is 254.

We saw last year how other century-old institutions had begun investing in, parking money in and/or getting into the business of cryptocurrency. That list included Mass Mutual, State Street and the SEC:

Crypto: mainstreaming, one boring institution after another

That’s why its hard to witness the finance ministries and central banks of young countries – China, India, Nigeria – take a hard stand against it.

These countries are roughly sixty and seventy years old, but China was reborn economically just forty years ago; India ten years later.

Their institutions should be among the least protective, most imaginative and most welcoming of new technology.

Categories
Uncategorized

Apple / Taiwan / China / India

In the context of Apple lobbying the Indian government to improve incentives for moving some manufacturing there:

Apple assembles a bulk of its iPads in China, but is fast diversifying production to markets such as India and Vietnam to minimise the impact of the U.S.-China trade war and the coronavirus crisis…

It was not immediately clear which of Apple’s three contractors in India – Foxconn, Wistron and Pegatron – would assemble iPads.

– Apple lobbies for India incentives as it plans iPad assembly: sources

It’s interesting that each of these three companies is an Indian subsidiary of a Taiwanese manufacturer. And that each of these companies has had factories in China for a long time now. And that China and Taiwan have a strained relationship, to put it mildly.

It’s going to be interesting watching corporation-states and nation-states interact this century.

Categories
Products and Design Real-World Crypto

“Crypto can’t contribute anything further” and the failure of imagination

This article in The Ken newsletter isn’t very hopeful about crypto’s ability to make much of a difference to India. There are a couple of strong downsides to allowing unfettered access to crypto, but the article doesn’t make those. I think I’ll write about them on this site in a future post.

This article, unfortunately, makes claims like this regarding the “tens of billions of dollars coming to the country from remittances and remote work”

the contention that crypto will serve as a catalyst is moot. India already has a robust banking system to support inward foreign remittances and crypto can’t contribute anything further.

I wish the writer had chosen a different hill to make a stand on. I really do.

Cross border remittances are infamous for few options, very high processing fees and currency markups. Here’s the World Bank lamenting the state of remittances [PDF report].

Providers of remittance services in the formal sector typically charge a fee of 10–15 percent of the principal amount to handle the small remittances typically made by poor migrants.

For every INR 100 a migrant ends back, if their family receives just INR 85, that’s INR 15 worth of that migrant’s labour wasted. Lost. In moving electronic records from a computer system to another. In 20201.

This is unconscionable.

And as regard the robust banking system, look no further than this:

I am myself, as of Monday, waiting for an overseas payment that was made to me on Thursday. I have no idea where it is in my bank’s systems. When I wanted to remit money overseas late last year, my bank had me pull records from 2014 to prove that the money I was sending was in fact mine.

There exist many startups, both Indian and otherwise – Remitl.y, Remit2India, RemitGuru, Azimo, Xoom, Transferwise – that choose to tackle the problem of remittance in India.

Remittances is broken.

To say ‘crypto can’t contribute anything further’ is to accept the current state of finance: payments, investments, even inflationary money.

This is an example of failure of imagination –the worst sort of failure.

Categories
Uncategorized

Is crypto mining the killer app for renewable energy?

It seems to me that the most aggressive use of renewable energy is actually is going to be to mine cryptocurrency.

The author of this twitter thread cites a number of sources to show that renewables account for ~78% of the energy used to mine bitcoin:

As this article in an oil-industry-focused website says,

Gazpromneft recently began a cryptocurrency mining operation based in one of its Siberian oil drilling sites, “unlocking the power of Russia’s oil and gas resources for the needs of bitcoin mining”… Instead of paying a premium to use energy from the grid, locating the cryptocurrency mining on-site at an oil field means that a steady supply of natural gas is virtually free.

Also, generation of renewable energy is independent of demand: the sun shines regardless of whether there is demand or not. Similarly, there will be unusually windy days or stormy seas.

Now, humanity hasn’t yet cracked the problem of large-scale energy storage as of 2021. Which means at times when energy from renewable sources outstrips demand, energy is simply ‘wasted’.

People quickly figured that mining cryptocurrency is an excellent way to harness that excess energy. Indeed, as the well-argued shareholder letter of the new Norwegian crypto investment company Seetee says, [PDF]

Seetee will establish mining operations that transfer stranded or intermittent electricity without stable demand locally—wind, solar, hydro power— to economic assets that can be used anywhere. Bitcoin is, in our eyes, a load-balancing economic battery, and batteries are essential to the energy transition required to reach the targets of the Paris Agreement. Our ambition is to be a valuable partner in new renewable projects.

Categories
Uncategorized

Sustainable iPad accessories – Part 2

(Part 1 – what I mean by sustainable accessories)

From yesterday’s post,

Three, it needs to be long-lasting. Specifically, I’m not a fan of accessories that need proprietary software to work… need to connect to the internet to work… have built-in batteries in them.

It’s this constraint (can you really call it that?) that leaves no good options today.

  • Mice with proprietary bluetooth dongles don’t always work with the iPad. And it’s not clear which ones support multitouch at all, and even when they do, which multitouch gestures
  • Apple’s own second-generation Magic Mouse and Magic Trackpad, which – unlike the first-generation ones – support multitouch, have a built-in battery, and as this iFixit teardown shows, it’s really not easy to get to it, leave alone replace it.

That leaves my ancient (by computing standards) IBM optical mouse from 2005.

This is from before IBM sold its consumer hardware division (including Thinkpads)to Lenovo.

The mouse plugs into an external powered USB hub that itself connects to the iPad via the USB-A port of the multi-port dongle. This way the mouse doesn’t draw power from the iPad.

The mouse has no power source or battery. It is wired and needs no software to work. Its LED will be one of the last components to fail – one of the buttons or the scroll wheel will likely go first.

Now it doesn’t support multitouch per se, but I can simulate swipe up and down with the scroll wheel, and swipe left and right with shift + scroll. And I can manipulate split view with the grab-bars on the top of the left and right windows, resize with the vertical grab-bar. Along with left and right click, it’s brought down the need to use the touchscreen down to a minimum.

But it’s still nowhere close to the slick multitouch experience of the first-generation Magic Trackpad on Mac OS, or the iPad’s touchscreen itself.

End note: It’s unfortunate that more manufacturers – and Apple in particular – don’t make either wired versions of their products or wireless versions with replaceable batteries. Most computer accessories don’t need to be any thinner or lighter. They do, however, need to last much longer than they do today. With Apple’s build quality, its accessories should last a couple of decades at least. It’s too bad the battery is the limiting factor.

(ends)

Categories
The Next Computer

Sustainable iPad accessories – Part 1

I’m thinking about sustainable hardware again today.

My iPad is effectively my primary computer.

My setup in December 2019. Hasn’t changed that much. A mousepad has set my iPad 3 free.

Despite the excellent keyboard shortcuts setup, I don’t want my only pointer to be my finger on the touch screen.

In other words, I want an external pointing device. It needs to fulfil three conditions:

One, it shouldn’t be built into a case. I already have the Smart Keyboard Folio I bought along with the iPad. It’s relatively light, the keyboard is good, and detaching the iPad is trivial.

Two, it needs to support multitouch. I have the first-generation Magic Trackpad, but it doesn’t support multitouch. That’s quite unfortunate, because it really is a beautiful piece of hardware that’s lasted me nearly seven years and it still going strong.

Three, it needs to be long-lasting. Specifically, I’m not a fan of accessories that

  • need proprietary software to work, because their lifespan depends not on their own hardware but on that software continuing to be maintained
  • need to connect to the internet to work, for much the same reasons above. We’ve discussed the perils of smart devices often on this site
  • have built-in batteries in them. The lifespan of the hardware is now linked to that of this battery. Few manufacturers make it easy to replace built in batteries (typically Li-ion ones). And even if they could, there are no standard batteries that one could buy from third parties. On the other hand, accessories that use external batteries like AA or AAA cells are far more reliable – those are standard batteries and (while they’re not great for the environment) will likely be produced much longer than I expect the hardware to last.

(Part 2 – what my options are)