# A LessWrong Crypto Autopsy

Wei Dai, one of the first peo­ple Satoshi Nakamoto con­tacted about Bit­coin, was a fre­quent Less Wrong con­trib­u­tor. So was Hal Fin­ney, the first per­son be­sides Satoshi to make a Bit­coin trans­ac­tion.

The first men­tion of Bit­coin on Less Wrong, a post called Mak­ing Money With Bit­coin, was in early 2011 - when it was worth 91 cents. Gw­ern pre­dicted that it could some­day be worth “up­wards of $10,000 a bit­coin”. He also quoted Mold­bug, who ad­vised that: If Bit­coin be­comes the new global mon­e­tary sys­tem, one bit­coin pur­chased to­day (for 90 cents, last time I checked) will make you a very wealthy in­di­vi­d­ual...Even if the prob­a­bil­ity of Bit­coin suc­ceed­ing is ep­silon, a mil­lion to one, it’s still worth­while for any­one to buy at least a few bit­coins now...I would not put it at a mil­lion to one, though, so I recom­mend that you go out and buy a few bit­coins if you have the tech­ni­cal chops. My fi­nan­cial ad­vice is to not buy more than ten, which should be F-U money if Bit­coin wins. A few peo­ple brought up some other points, like that if it ever be­came pop­u­lar peo­ple might cre­ate a bunch of other cryp­tocur­ren­cies, or that if there was too much con­tro­versy the Bit­coin econ­omy might have to fork. The thread got a hun­dred or so com­ments be­fore dy­ing down. But Bit­coin kept get­ting men­tioned on Less Wrong over the next few years. It’s hard to se­lect high­lights, but one of them is surely An­der’s Why You Should Con­sider Buy­ing Bit­coin Right Now If You Have High Risk Tol­er­ance from Jan­uary 2015. Again, peo­ple made ba­si­cally the cor­rect points and the cor­rect pre­dic­tions, and the thread got about a hun­dred com­ments be­fore dy­ing down. I men­tion all this be­cause of an idea, with a long his­tory in this move­ment, that “ra­tio­nal­ists should win”. They should be able to use their train­ing in crit­i­cal think­ing to rec­og­nize more op­por­tu­ni­ties, make bet­ter choices, and end up with more of what­ever they want. So far it’s been con­tro­ver­sial to what de­gree we’ve lived up to that hope, or to what de­gree it’s even re­al­is­tic. Well, sup­pose God had de­cided, out of some sym­pa­thy for our pro­ject, to make win­ning as easy as pos­si­ble for ra­tio­nal­ists. He might have cre­ated the biggest in­vest­ment op­por­tu­nity of the cen­tury, and made it visi­ble only to liber­tar­ian pro­gram­mers will­ing to dab­ble in crazy ideas. And then He might have made sure that all of the ear­liest adapters were Less Wrong reg­u­lars, just to make things ex­tra ob­vi­ous. This was the eas­iest test case of our “make good choices” abil­ity that we could pos­si­bly have got­ten, the one where a mul­ti­ply-your-money-by-a-thou­sand-times op­por­tu­nity ba­si­cally fell out of the sky and hit our com­mu­nity on its col­lec­tive head. So how did we do? I would say we did mediocre. Ac­cord­ing to the re­cent SSC sur­vey, 9% of SSC read­ers made$1000+ from crypto as of 12/​2017. Among peo­ple who were referred to SSC from Less Wrong—my stand-in for long-time LW reg­u­lars − 15% made over $1000 on crypto, nearly twice as many. A full 3% of LWers made over$100K. That’s pretty good.

On the other hand, 97% of us—in­clud­ing me—didn’t make over $100K. All we would have needed to do was in­vest$10 (or a few CPU cy­cles) back when peo­ple on LW started recom­mend­ing it. But we didn’t. How bad should we feel, and what should we learn?

Here are the les­sons I’m tak­ing from this.

1: Our epistemic ra­tio­nal­ity has prob­a­bly got­ten way ahead of our in­stru­men­tal ra­tio­nal­ity

When I first saw the posts say­ing that cryp­tocur­rency in­vest­ments were a good idea, I agreed with them. I even Googled “how to get Bit­coin” and got a bunch of tech­ni­cal stuff that seemed like a lot of work. So I didn’t do it.

Back in 2016, my father asked me what this whole “cryp­tocur­rency” thing was, and I told him he should in­vest in Ethereum. He did, and cen­tu­pled his money. I never got around to it, and didn’t.

On the broader scale, I saw what looked like wide­spread con­sen­sus on a lot of the rele­vant Less Wrong posts that in­vest­ing in cryp­tocur­rency was a good idea. The prob­lem wasn’t that we failed at the epistemic task of iden­ti­fy­ing it as an op­por­tu­nity. The prob­lem was that not too many peo­ple con­verted that into ac­tion.

2: You can only pre­dict the fu­ture in broad strokes, but some­times broad strokes are enough

Gw­ern’s ar­gu­ment for why Bit­coin might be worth $10,000 doesn’t match what ac­tu­ally hap­pened. He thought it would only reach that level if it be­came the world cur­rency; in­stead it’s there for...un­clear rea­sons. I don’t count this as a com­plete failed pre­dic­tion be­cause it seems like he was mak­ing sort of the right men­tal mo­tion—calcu­late the size of the best-case sce­nario, calcu­late the chance of that sce­nario, and re­al­ize there’s no way Bit­coin wasn’t un­der­val­ued un­der a broad range of as­sump­tions. 3: Ar­gu­ments-from-ex­treme-up­side some­times do work I think Mold­bug’s com­ment aged the best of all the ones on the origi­nal thread. He said he had no idea what was go­ing to hap­pen, but recom­mended buy­ing ten bit­coins. If Bit­coin flopped, you were out$10. If it suc­ceeded, you might end up with some crazy strato­spheric amount (right now, ten bit­coins = $116,000). Sure, this de­pends on an as­sump­tion that Bit­coin had more than a 110,000 chance of suc­ceed­ing at this level, but most peo­ple seemed to agree that was true. This re­minds me of eg the ar­gu­ment for cry­on­ics. Most LWers be­lieve there’s a less than 10% chance of cry­on­ics work­ing. But if it does work, you’re im­mor­tal. Based on the ex­traor­di­nary na­ture of the benefits, the gam­ble can be worth it even if the chances of suc­cess are very low. We seem to be un­usu­ally fond of these ar­gu­ments—a lot of peo­ple cite the as­tro­nom­i­cal scale of the far fu­ture as their rea­son for car­ing about su­per­in­tel­li­gent AI de­spite the difficulty of any­thing we do af­fect­ing it. Th­ese ar­gu­ments are weird-sound­ing, easy to dis­like, and guaran­teed to leave you worse off al­most all the time. But you only need one of them to be right be­fore the peo­ple who take them end up bet­ter off than the peo­ple who don’t. This decade, that one was Bit­coin. Over­all, if this was a test for us, I give the com­mu­nity a C and me per­son­ally an F. God ar­ranged for the perfect op­por­tu­nity to fall into our lap. We vaguely con­verged onto the right an­swer in an epistemic sense. And 3 − 15% of us, not in­clud­ing me, ac­tu­ally took ad­van­tage of it and got some­what rich. Good work to ev­ery­one who suc­ceeded. And for those of us who failed—well, the world is get­ting way too weird to ex­pect there won’t be similarly in­ter­est­ing challenges ahead in the fu­ture. • This post has been a clear ex­am­ple of how ra­tio­nal­ity has and has not worked in prac­tice. It is also a sub­ject of crit­i­cal prac­ti­cal im­por­tance for fu­ture de­ci­sions, so it fre­quently oc­curs to me as a use­ful ex­am­ple of how and why ra­tio­nal­ity does and does not help with (in ret­ro­spect) crit­i­cal de­ci­sions. • This post dis­t­in­guishes be­tween the suc­cess of the LW com­mu­nity on iden­ti­fy­ing crypto and the rel­a­tive failure on act­ing on crypto in a way that re­minds me of how im­por­tant it is to ac­tu­ally act on in­for­ma­tion in­stead of just pro­cess­ing it men­tally. I think this failure mode of un­der­stand­ing a prob­lem but failing to act on that un­der­stand­ing is a very com­mon one for me and I would ex­pect for other read­ers. I think both em­pha­siz­ing that this is a part of the prob­lem to be solved, and illus­trat­ing spe­cific benefits from solv­ing that prob­lem in a his­tor­i­cal con­text, where you can ac­tu­ally as­sign mon­e­tary value to those out­comes, is a great way to em­pha­size the spe­cific value in­volved in ra­tio­nal­ity. Also the dis­cus­sion quickly con­verges on a rel­a­tively cheap solu­tion of writ­ing up tu­to­rial style doc­u­men­ta­tion for pro­cesses like this that you’ve found to be high value. That kind of in­tro tu­to­rial is one of the most valuable things to read for ex­actly this rea­son, be­cause it can close that “un­der­stand­ing->ac­tion” gap and I would love to read more ar­ti­cles in­spired by this no­tion that there are plots of value ready to be grasped. • It is im­por­tant to un­der­stand why we fail • Many peo­ple pointed out that the real cost of a Bit­coin in 2011 or when­ever wasn’t the cou­ple of cents that it cost, but the sev­eral hours of work it would take to figure out how to pur­chase it. And that costs needed to be dis­counted by the sig­nifi­cant risk that a Bit­coin pur­chased in 2011 would be lost or hacked—or by the many hours of work it would have taken to en­sure that didn’t hap­pen. Also, that there was an­other hard prob­lem of not sel­l­ing your 2011-Bit­coins in 2014. I agree that all of these are prob­lems with the origi­nal post, and that they sig­nifi­cantly soften the parts that de­pend on “ev­ery­one should have bought lots of Bit­coins in 2011”. Ob­vi­ously in ret­ro­spect this still would have been the right choice, but it makes it much harder to claim it was ob­vi­ous at the time. • I wrote about this post ex­ten­sively as part of my es­say on Ra­tion­al­ist self-im­prove­ment. The gen­eral idea of this post is ex­cel­lent: gath­er­ing data for a clever nat­u­ral ex­per­i­ment of whether Ra­tion­al­ists ac­tu­ally win. Un­for­tu­nately, the anal­y­sis it­self is very lack­ing and is not very data-driven. The core re­sult is: 15% of SSC read­ers who were referred by LessWrong made over$1,000 in crypto, 3% made $100,000. Th­ese quan­tities re­quire quan­ti­ta­tive anal­y­sis: Is 15%/​3% a lot or a lit­tle com­pared to matched groups like the Sili­con Valley or Liber­tar­ian blo­go­sphere? How good a proxy is Scott’s se­lec­tion for peo­ple who were on LessWrong when Bit­coin was launch­ing and had the means to take ad­van­tage of the op­por­tu­nity? How much of a con­sen­sus on LessWrong was the ad­vice to buy cryp­tocur­ren­cies? Th­ese are all ques­tions that one could find data on (I did a bit of it in my own post), but the es­say does no such thing. Scott de­clares by fiat that 15% earns the com­mu­nity a C grade, with very lit­tle jus­tifi­ca­tion pro­vided. This con­clu­sion al­igns perfectly with what Scott pre­vi­ously opined on the util­ity of Ra­tion­al­ity to things like mak­ing money, which doesn’t en­gen­der con­fi­dence in the ob­jec­tivity of his eval­u­a­tion. The idea be­hind this es­say is very ad­mirable; one of the main things we fail to do more as a com­mu­nity is to test our­selves against real world out­comes. And the fact that Scott gath­ered the data him­self is laud­able as well. But the es­say in it­self is more of a sug­ges­tion for a good re­search post than a good work of anal­y­sis in it­self. • When this ar­ti­cle came out, I put a bit of money into al­ter­nate cryp­tocur­ren­cies that I thought might have up­side. They are now worth less than I in­vested. I think it’s good to re­view how you did in the past, but it’s im­por­tant not to over­learn spe­cific les­sons. In ret­ro­spect, I think that this ar­ti­cle should have put more em­pha­sis on that point. • I do not think this is a strong anal­y­sis. Things were a lot more com­pli­cated than this, on many lev­els. An­a­lyz­ing that in de­tail would be more in­ter­est­ing. This post seems more in­ter­ested in the ques­tion of ‘what grade should we get for our efforts’ than in learn­ing from the situ­a­tion go­ing for­ward, which is what I think is the far more in­ter­est­ing prob­lem. That’s not to say that the ac­tual eval­u­a­tion is es­pe­cially un­fair. I give my­self very low marks be­cause I had the trad­ing skills to know bet­ter, or I should have had them, and the spare cy­cles to deal with it as well, with the key in­sight be­ing that the fact that it was su­per hard to deal with was ac­tu­ally a rea­son to buy, not a rea­son to avoid buy­ing. But it wasn’t un­til I worked with much bet­ter traders (who also, of course, all failed to bother act­ing de­spite know­ing about it, the desk head said BTC was a “scream­ing buy” at$1 long be­fore I got there, then ev­ery­one did noth­ing) that I figured out what the real mis­take here was. Any good anal­y­sis, to me, has to say why we should have be­lieved BTC but not fallen for countless other things, even if it turns out that BTC did so well that it would have fine to fall for 100 (or 1000!) other similar things at the same time, in some sense...

• It is a lit­tle bit un­fair to say that buy­ing 10 bi­coins was ev­ery­thing you needed to do. I owned 10 bit­coins, and then sold them at a mea­ger price. Noth­ing changed as a re­sult of me merely un­der­stand­ing that buy­ing bit­coins was a good idea.

What you re­ally needed was to sit down and think up a strict sel­l­ing sched­ule, and also com­mit to fol­low­ing it. E.g. spend $100 on bit­coin now, and later sell ex­actly 10% of your bit­coins ev­ery time that 10% be­comes worth at least$10,000 (I didn’t run the num­bers to check if these ex­act val­ues make sense, but you get the idea).

Up­stream of not tak­ing effec­tive ac­tion was un­will­ing­ness to spend a few hours think­ing hard about what would ac­tu­ally be smart to do if the hy­po­thet­i­cal proved true.

• A good gen­eral rule here is to think in terms of what per­centage of your port­fo­lio (or net worth) you want in a spe­cific as­set class, rather than mak­ing buy­ing/​sel­l­ing a bi­nary de­ci­sion. Then re­bal­ance ev­ery 3 months.

For ex­am­ple, you might de­cide you want 2.5%-5% in crypto. If the price quadru­pled, you would well about 75% of your stake at the end of the quar­ter. If it halved, you would buy more.

The ma­jor benefit is that this moves you from mak­ing many small de­ci­sions to one big de­ci­sion, which is usu­ally eas­ier to get right.

• I agree that this is the ap­pro­pri­ate strat­egy to use when adding an in­vest­ment to your port­fo­lio, but note that if ap­plied to Bit­coin it did not yield the sort enor­mous gains that mo­ti­vated this post. So if you think the Bit­coin ex­am­ple should lead us to up­date away from out­side-view-mo­ti­vated be­liefs about our abil­ity to spot mar­ket in­effi­cien­cies/​in­vest­ment op­por­tu­ni­ties, you should prob­a­bly also en­dorse up­dat­ing away from out­side-view-mo­ti­vated port­fo­lio strate­gies like pick­ing an al­lo­ca­tion and re­bal­anc­ing.

I just ran some num­bers on this. Sup­pose you had $100k in sav­ings, read the 2011 LessWrong post and were con­vinced to adopt a 95% cash 5% bit­coin al­lo­ca­tion at the end of Q1 2011, and there­after re­bal­anced on the last Mon­day of ev­ery quar­ter. (As­sume for sim­plic­ity that your non-Bit­coin hold­ings earn zero in­ter­est, that you don’t add or re­move any money from your to­tal sav­ings dur­ing the pe­riod, and that you suc­cess­fully avoided hav­ing your BTC stolen in MtGox etc.) If you ig­nore taxes, then at the end of 2017 you’d be left with$414k, which is de­cent but not life-chang­ing. Fur­ther, since you’re re­bal­anc­ing ev­ery quar­ter you’re pay­ing a lot of taxes if you’re in the US; as­sum­ing a fed­eral+state short term cap­i­tal gains rate of 30% you’d end up with $284k. (By only re­bal­anc­ing yearly you can de­crease your tax li­a­bil­ity but you miss out on some of the big ral­lies; as­sum­ing a 15% long-term cap­i­tal gains rate you end up with$258k.)

By con­trast just buy­ing the same $5k of BTC in Q1 2011 and hodling un­til the end of 2017 would leave you with around$75M (per­haps $60M af­ter tax), which is more like the sort of “win­ning” Scott seems to be think­ing about here. But how would you know to do that rather than, say, sel­l­ing in mid-2011 for$100k?

• A plau­si­ble strat­egy would be to buy say 100 bit­coins for $1 each, then sell 10 at$10, 10 at $100, and so on. With this strat­egy you would have made$111,000 and hold 60 bit­coins.

• I think this seems cor­rect and is also what I have set­tled on. In the­ory you can use the Kelly Cri­te­rion to work out bounds on the per­centages to use. In prac­tice that seems hard.

• I strongly agree. De­spite ap­pear­ances, I wouldn’t say some­one with 10 bit­coin to­day has “won” at all. Win­ning means get­ting more of what you ul­ti­mately care about, like goods and ser­vices. You only win if you con­vert your bit­coin into goods or dol­lars at the right time. I am re­minded of “buy low, sell high”: an empty phrase that can sound de­cep­tively like good in­vest­ment ad­vice.

• In my case, it was about not-so-triv­ial in­con­ve­niences. Like Richard, I couldn’t in­stall the soft­ware and didn’t know a re­li­able place to buy. A few months ago, when a friend sent me a link to BitS­tamp and ex­plained what to do, I bought some BTC, which are cur­rently at triple the price I bought them. Nice, but not as nice as if the same thing would have hap­pened a few years sooner.

(I am in a similar situ­a­tion with in­dex funds right now. I agree that it is a good idea to buy them. I just don’t know where ex­actly to go, what ex­actly to do, and what ex­actly will be the con­se­quences for taxes. I am not an Amer­i­can, so I would need spe­cific in­for­ma­tion for my coun­try.)

But it is also my fault for not pay­ing enough at­ten­tion to this spe­cific topic. Not re­al­iz­ing that this ar­ti­cle is not the same as 99.99% of the rest; that this is the right mo­ment to stop read­ing web and ac­tu­ally do some­thing.

Some of us were smarter than oth­ers. Good for them! But if we want to help each other, and avoid hav­ing the same thing hap­pen the next time, next time when you see an ex­cep­tion­ally im­por­tant ar­ti­cle, don’t just think “oth­ers have read the same ar­ti­cle, and they are smart peo­ple, so they know what to do”. That’s an­other form of illu­sion of trans­parency; af­ter read­ing the same text, some peo­ple will jump up, oth­ers will just con­tinue read­ing. Here are two things you can do to nudge your fel­low ra­tio­nal­ists in the right di­rec­tion:

1) Imag­ine a per­son who has very lit­tle knowl­edge in this spe­cific area, and for some rea­son is not go­ing to study more. Can the whole thing be sim­plified; ideally into a short list that is easy to fol­low? For ex­am­ple: “Step 1: reg­ister on­line at BitS­tamp. Step 2: send them the re­quired KYC doc­u­ments. Step 3: do the money trans­fer. Step 4: buy Bit­coins. Step 5: HODL!” More peo­ple will fol­low this pro­ce­dure, than if they just read “buy and/​or mine some Bit­coins, find out how”.

2) Offer help at your lo­cal meetup. Make a short lec­ture, ex­plain the de­tails, an­swer ques­tions. When peo­ple are in­ter­ested, guide them step by step.

All we would have needed to do was in­vest $100 (or a few CPU cy­cles) back when peo­ple on LW started recom­mend­ing it. All we needed was some­one who would make a lec­ture about Bit­coins at a meetup and then say: “If you are in­ter­ested, bring a lap­top and USD 100 to the next meetup and we will do this to­gether.” To­day, you would have a lo­cal ra­tio­nal­ist mil­lion­aires’ club. Think how awe­some that could be! More gen­er­ally, if we want to win, we need to se­ri­ously im­prove our team­work. Some­times that means to co­op­er­ate with other peo­ple. Some­times that means to lead them. It is not true that each of us needs to play the game of life alone. • This post is in­ter­est­ing to me, be­cause I feel strong re­sis­tance to act­ing as you sug­gest. (Back­ground: I made a lot of money from buy­ing Ether at$0.80, but was into crypto be­fore I was into ra­tio­nal­ism.)

I think my in­tu­ition is some sort of fear of so­cial risk? I’m mostly will­ing to tell peo­ple what I think the right move is, but if they’re not mo­ti­vated to figure out the de­tails them­selves, then I worry that they will be up­set if the most likely out­come (los­ing 100% of their money) hap­pens, and that I’ll bear the so­cial cost.

• Yeah, I tend to agree that so­cial fac­tors work against the idea of tel­ling some­one to in­vest in cryp­tocur­rency or other high-risk high-re­ward things like this. (And de­spite Eliezer’s point that mod­esty is not nec­es­sar­ily cor­rect in mak­ing de­ci­sions for one­self, I find it hard to sen­si­bly elimi­nate mod­esty in what one tells other peo­ple to do.)

• Strongly agree that I prob­a­bly would have bought some crypto on LW ad­vice had there been a nearby meetup to go through the pro­cess of do­ing it. Other­wise my pri­ors about not giv­ing my credit card info (or what­ever) to strange web­sites were too strong to be­lieve I would even suc­cess­fully en­gage in the strat­egy.

• To take a differ­ent set of data points in the com­mu­nity, MIRI and CFAR eas­ily filled up their re­spec­tive fund­ing gaps re­cently (largely as a re­sult of crypto), and if this con­tinues to be the new nor­mal then I’ll con­sider us to have passed fairly well (maybe a B+). If it’s a one off hit then I’ll agree to the C grade.

• I can’t click your link, but I dis­agree. MIRI got most of its money from Vi­talik, who I think was into crypto first and then found ra­tio­nal­ity/​LW. We don’t get any credit for that.

Also, MIRI got a 500,000 dol­lar (why can’t I make the dol­lar sign on this site?) worth of Rip­ple dona­tion in 2014. If they had kept it as Rip­ple, it would be worth 50 mil­lion now. In­stead they sold it for 500,000 dol­lars (I’m not blam­ing them, this made sense at the time).

So al­though MIRI and CFAR lucked out into get­ting some money from crypto, I don’t think it was pri­mar­ily be­cause of their (or our) great de­ci­sions. And if peo­ple had made great de­ci­sions they could have got­ten much more.

• Maybe this is nit­pick­ing, but per their post MIRI got a plu­ral­ity of cryp­tocur­rency from Vi­talik but not a ma­jor­ity. If the web­site is ac­cu­rate, then out of 66% of the funds raised ($1.656m) Vi­talik con­tributed$763k, the other $893k of cryp­tocur­rency be­ing from other donors. • Are the num­bers MIRI cites for crypto dona­tion amounts in USD based on how much they worth at the time of the dona­tion? Or how much that dona­tion is worth in USD based on price right now? • MIRI got most of its money from Vitalik While not tech­ni­cally part of the win­ter fundraiser, don’t for­get that MIRI also got a mil­lion dol­lar ETH dona­tion in the spring. For the year, it’s more than half crypto, even af­ter ac­count­ing for the 1.25M from Open Phil. • You can’t write a dol­lar sign be­cause it’s in­ter­preted as “start writ­ing math­e­mat­ics”. But if you type a back­slash first it gets es­caped and you get the dol­lar sign you hoped for:$.

• I think it says some­thing good about our com­mu­nity that who­ever im­ple­mented this fea­ture as­sumed peo­ple would be more likely to want to write math­e­mat­ics than to dis­cuss amounts of money.

• That is a nice thought, but it seems more likely that they just didn’t think of it…

(also, I don’t think that par­tic­u­lar bit was cus­tom-writ­ten for LW, though the dev team can cor­rect me on that if I’m mis­taken)

• Nope, not cus­tom-writ­ten. We are us­ing this plu­gin: https://​​github.com/​​efloti/​​draft-js-math­jax-plugin

How­ever, I did con­sider whether to change the be­hav­ior of press­ing ‘$’ and de­cided that peo­ple would prob­a­bly use LaTeX more of­ten than try­ing to use the dol­lar sign, and so was rea­son­ably happy with that de­fault be­hav­ior. • FWIW, I ran into the same is­sue with Ar­bital, and very quickly de­cided to change it to$$. Other­wise, any time you’re writ­ing a post about money, it’s su­per in­con­vinient. • In­ter­est­ing! I ac­tu­ally had in mind the origi­nal au­thor of the plu­gin, when I said who­ever it was just didn’t con­sider it; but it’s in­ter­est­ing that you did think about it in this way! It might be cool to sur­vey cur­rent users of the site, to see what in fact are the rel­a­tive prevalences of these two use cases. (Also there are lots of other similar ques­tions I’d love to have the an­swers to.) • de­cided that peo­ple would prob­a­bly use LaTeX more of­ten than try­ing to use the dol­lar sign Err… this seems like the kind of thing that *re­ally* wouldn’t stand up to user test­ing. • Tak­ing my place in his­tory—one of my first tasks as an in­tern at MIRI was to write some ruby scripts that dealt with some as­pects of that dona­tion. Not only did that ex­pe­rience land me my first pro­gram­ming job, but just re­al­iz­ing now that it was also the im­pe­tus that led me to grab more bit­coin (I had sold mine at the first peak in 2013) AND look into Stel­lar. Prob­a­bly the most lu­cra­tive in­tern­ship ever. (Shoutout to Malo/​Alex if you guys are still lurk­ing LW) • (Re-writ­ing this com­ment from the origi­nal to make my point a lit­tle more clear). I think it is prob­a­bly quite difficult to map the de­ci­sions of some­one on a con­tinuum from re­ally bad to re­ally good if you can’t simu­late the out­comes of many differ­ent pos­si­ble ac­tions. There’s rea­son to sus­pect that the “op­ti­mal” out­come in any situ­a­tion looks vastly bet­ter than even very good but slightly sub-op­ti­mal de­ci­sions, and vise-versa for the least op­ti­mal out­come. In this case we ob­served a few peo­ple who took mas­sive risks (by de­vot­ing their time and en­ergy into un­der­stand­ing or de­vel­op­ing a par­tic­u­lar tech­nol­ogy which very well may have turned out to be a boon­dog­gle) re­ceive mas­sive re­wards from the suc­cess of it, al­though it could have very well turned out differ­ently, based on what ev­ery­one knew at the time. I think the ar­gu­ments for cryp­tocur­rency be­com­ing sucess­ful that ex­isted in the past were very com­pel­ling but they weren’t ex­actly air­tight log­i­cal proofs (and still aren’t even now). Not win­ning hugely be­cause a le­gi­t­i­mately large risk wasn’t taken isn’t ex­actly “los­ing” (and while buy­ing bit­coins when they were cheap wasn’t a large risk, in­vest­ing time and en­ergy into be­com­ing knowl­edgable enough about crypto to know it was worth tak­ing the chance may have been. A lot of the biggest win­ners were peo­ple who were close to the de­vel­op­ment of cryp­tocur­ren­cies). But even so, a few of these win­ners are close to the LW com­mu­nity and have in­vested in its de­vel­op­ment or some of its pro­jects. Doesn’t that count for some­thing? Can they be con­sid­ered part of the com­mu­nity too? I see no rea­son to keep the defi­ni­tion so strict. • Did quick stats on SSC sur­vey data, wanted to re­port null re­sults: a per­son’s favoura­bil­ity rat­ing of the ra­tio­nal­ity com­mu­nity pre­dicted the amount of money some­one made in crypto very weakly (r=0.07), though more than IQ (r=0.03). Both with tiny p val­ues. • I’m one of the 3% who made over$100K (I made ~$500K). I have to agree with other com­menters that it was gen­uinely difficult to buy the cryp­tocur­rency in the first place. It took me about 5 solid hours to learn how it worked, and then sev­eral days to fun­nel the cur­rency through the var­i­ous nec­es­sary con­ver­sions, any of which might’ve un­ex­pect­edly eaten my hard-earned cash for some in­com­pre­hen­si­ble rea­son. In hind­sight it’s easy to see this as “5 hours’ work for$100,000/​hour, plus some wait­ing”, but at the time there was no such guaran­tee of suc­cess. The only rea­son I per­sisted was be­cause I was in­ter­ested in the cryp­tog­ra­phy as­pect and wanted to be a part of an up-and-com­ing tech­nol­ogy.

• The only rea­son I per­sisted was be­cause I was in­ter­ested in the cryp­tog­ra­phy as­pect and wanted to be a part of an up-and-com­ing tech­nol­ogy.

And that is a re­ward I guess a very high frac­tion of the peo­ple ac­tu­ally ‘in­vest­ing’ in Bit­coin had. Those hack­ers, nerds, tech en­thu­sists didn’t need high frac­tions of like­li­hood times pay­off.

And maybe the true les­son to draw from this is not to look at an ab­stract pay­off but at the so­cial dy­namic: Are there enough peo­ple at­tracted to some­thing.

• This is pretty low on the list of op­por­tu­ni­ties I’d kick my­self for miss­ing. A longer re­ply is here: https://​​www.face­book.com/​​yud­kowsky/​​posts/​​10156147605134228

• I sus­pect it was the triv­ial in­con­veninece of set­ting it up that stopped most of those who were con­sid­er­ing it.

• I re­mem­ber recit­ing “be­ware triv­ial in­con­ve­niences” to my­self in my head when I went through the pro­cess of figur­ing out how to buy BTC in De­cem­ber 2010. It was good ad­vice.

• Yeah. I was won­der­ing if I get any points for spend­ing two or three evenings back in 2014 try­ing to get some bit­coin and failing due to the com­plete crap­piness of the user ex­pe­rience.

• I mean, you get points for try­ing, but those points don’t go to your fi­nal grade. Your fi­nal grade is only ever de­ter­mined by re­al­ity, and if you didn’t make mil­lions be­cause of a triv­ial in­con­ve­nience, then you didn’t make mil­lions.

• I’m a lit­tle cu­ri­ous, can you go into more de­tail? I had always as­sumed that the “too in­con­ve­nient” bar­rier was when you had to mine it your­self, or when you had to slowly wire money to some fishy site like Dwolla and from there to some fishy ex­change like Mt. Gox, and that by 2014 it would largely seem eas­ier and less risky.

• Speci­fi­cally, I first looked into buy­ing some. I found that all the ex­changes re­quired far more of my per­sonal in­for­ma­tion than I was will­ing to sub­mit to what looked like and, in ret­ro­spect, very well may have been a scam.

Next I tried to mine some, but I didn’t own any com­put­ers that could re­ally do it effec­tively. I only had lap­tops and if I re­call cor­rectly I didn’t have enough spare disk space to hold the blockchain.

I could have per­sisted along the route of pur­chas­ing the bit­coin and ex­posed my­self to re­ally quite sig­nifi­cant fi­nan­cial risk. I could have per­sisted along the min­ing route and pur­chased a new ex­pen­sive com­puter. While I felt like bit­coin could be­come A Thing, nei­ther of those op­tions seemed worth the trade­off.

• I found the in­con­ve­nience more than triv­ial. I made sev­eral at­tempts over the life of Bit­coin to ei­ther mine some (back when that was prac­ti­cal for any­one) or buy some, but my efforts always ran into the sand. The soft­ware didn’t work, or the web sites didn’t look like cred­ible places to send sub­stan­tial sums of money to, or what­ever. Scan­dals like Mt Gox didn’t help. Of course, plenty of peo­ple did get past those hur­dles, so I can’t blame any­one but myelf.

I did fi­nally man­age to buy a to­ken quan­tity of Bit­coin a few months ago, but I ex­pect the boom is now over. I haven’t both­ered track­ing the price since then. I’ve even had ads for digi­tal coins in my Face­book feed, tar­get­ted at the gen­eral pub­lic (eww!). In fair­ness to Bit­coin, they mostly looked like scams with lit­tle like­li­hood of do­ing any­thing with their cus­tomers’ money but keep­ing it.

• or web sites didn’t look like cred­ible places to send sub­stan­tial sums of money to

It seems to me that this par­tic­u­lar bar­rier is some sort of dou­ble count­ing. If you’ve already de­cided that this bit­coin thing is weird and risky, but also worth a shot, then you shouldn’t change your mind when pre­sented with ev­i­dence that it’s in­deed weird and risky.

• It’s mul­ti­ple risks, each singly counted. Bit­coin in gen­eral is risky for definite rea­sons: volatility, the pos­si­bil­ity that gov­ern­ments will come down hard on it, se­cu­rity of the cryp­tog­ra­phy it de­pends on, etc. But any par­tic­u­lar method of op­er­at­ing in Bit­coin has its ad­di­tional risks of the pro­bity and se­cu­rity of those in­volved. My un­con­fi­dence in some of the cryp­tocur­rency deal­ers I looked at was not sim­ply be­cause they were cryp­tocur­rency deal­ers.

• Yeah, it’s definitely true that it’s an ad­di­tional risk. My in­tu­ition that it’s likely to be a mis­firing heuris­tic lingers, though.

Say any given ex­change has a 50% chance of los­ing or steal­ing your money, and that it’s in­de­pen­dent of the chance Bit­coin suc­ceeds. (That feels pretty pes­simistic to me, and the ac­tual track record has been no­tably bet­ter than that.) If you needed 1/​10000 cre­dence for suc­cess be­fore adding that fac­tor, now you need 15000. I’m skep­ti­cal that any of us are well-cal­ibrated enough to put Bit­coin’s suc­cess at higher than 1/​10000 but lower than 15000.

It also seems that it’s un­likely to be un­cor­re­lated. I would ex­pect a higher chance of ex­changes work­ing in wor­lds where Bit­coin is suc­cess­ful. (Be­cause if ex­changes are con­sis­tently un­re­li­able, that will make Bit­coin less at­trac­tive, and be­cause they’re both en­tan­gled with difficult-to-ob­serve fac­tors like “the com­mu­nity ac­tu­ally tries to make it work rather than just scam­ming ev­ery­one”.)

This is of course all hind­sight, so I could eas­ily be wrong. But it seems definitely true to me that most peo­ple have a lot of trou­ble over­com­ing con­ser­va­tive heuris­tics enough for suc­cess­ful “black swan farm­ing”, and pay­ing too much at­ten­tion to su­perfi­cial feel­ings of sketch­i­ness seems likely to be -EV in that con­text.

• Say any given ex­change has a 50% chance of los­ing or steal­ing your money

Ap­ply­ing a pop­u­la­tion av­er­age to an in­di­vi­d­ual is a course of last re­sort, es­pe­cially in a mar­ket­place that con­tains ev­ery­thing from solidly re­li­able busi­ness­peo­ple to those who will just take your money and run. One must seek fur­ther in­for­ma­tion about each in­di­vi­d­ual to make a judge­ment about who can best be trusted.

For ex­am­ple, the re­views I found of one of the ex­changes I con­sid­ered were al­most all nega­tive, the main com­plaint be­ing that it was next to im­pos­si­ble to with­draw funds from it and cus­tomer sup­port was un­con­tactable. The few pos­i­tive re­views I found read like spam. No-brainer there—avoid.

It also be­came clear to me that to deal se­ri­ously in cryp­to­coins (and deal­ing at all is too ex­pen­sive to do frivolously), you must have your own wallet on your own ma­chine, and not merely have an ac­count with an ex­change that holds your coins for you in their own wallet. The track record says that no ex­change can be trusted to that ex­tent. The lat­ter is the usual way of han­dling con­ven­tional cur­rency, but that is be­cause banks, funds, etc. are on the whole and by and large, rea­son­ably re­li­able, notwith­stand­ing no­table fi­nan­cial crashes from time to time. (Even then, you need to miti­gate the risk by di­ver­sify­ing not just your kinds of in­vest­ment, but the in­sti­tu­tions they are in­vested with.) You then have to take se­ri­ously the se­cu­rity of that wallet, to the point of never ex­pos­ing it to the in­ter­net ex­cept as ab­solutely nec­es­sary and for the short­est pos­si­ble time.

In short, you have to think about spe­cific failure modes and plan against them.

• Your post is a good sum­mary of how to have ex­cel­lent cryp­tocur­rency se­cu­rity, but why is it a re­quire­ment to have ex­cel­lent se­cu­rity? In sen­tences like this one:

Where does the “must” come from? What would hap­pen if you didn’t?

This seems like ap­ply­ing K-se­lec­tion strat­egy, in a situ­a­tion where a r-se­lec­tion strat­egy might out­perform. I posit that it would have been bet­ter to use $10 to buy 5 Bit­coin with­out sub­stan­tial con­sid­er­a­tion of se­cu­rity risk, rather than put$0 in due to wor­ries about se­cu­rity. Yes, you might lose that $10 in all sorts of ways, but that’s the risk you’re sign­ing up to take, and the po­ten­tial re­ward makes it worth it. • I bought 200 BTC and lost them in a hack. Later bought 50 ether and kept them in a wallet, so I still have those. In light of that, I’d say se­cu­rity was pretty im­por­tant! • Se­cu­rity is great! I love se­cu­rity. I recom­mend hard­ware wallets if you’re stor­ing a non-triv­ial amount of crypto. But the ques­tion is about what some­one should do when it’s 2011 and they want to buy$10 worth of Bit­coin as a (+EV) lot­tery ticket. My claim is that, if your goal is “have some Bit­coin”, then the op­tions go like this:

It’s great if you can get the first one, but it’s ir­ra­tional to let the ex­is­tence of the first strat­egy push you into the third strat­egy. The sec­ond strat­egy ends up with “maybe some Bit­coin”, which is more Bit­coin then “definitely no Bit­coin”.

• Th eas­iest way to buy Bit­coin was MtGox for a long time and any­body who just kept the Bit­coins at MtGox lost them af­ter­wards.

• Yep! When you make 1000-to-1 bets, usu­ally you lose.

• For my pur­poses, I rate the mid­dle op­tion lower than the last. I’m not in­ter­ested in merely “hav­ing some Bit­coin” (or other cryp­tocur­ren­cies, some of which look more promis­ing go­ing for­ward). My only rea­son for do­ing this is for a sig­nifi­cant chance of mak­ing some use­ful amount of money. By “use­ful” I am roughly think­ing in terms of at least 6-figure sums of money. Proper se­cu­rity is es­sen­tial at that scale, and cau­tion over who I deal with. My cur­rently trifling amount of BTC was only to test the ba­sics of how to do it, and in fact I haven’t yet tested the other half of the mat­ter, i.e. turn­ing BTC back into con­ven­tional cur­rency.

• a sig­nifi­cant chance of mak­ing some use­ful amount of money

It sounds like you’re talk­ing about a differ­ent bet than the one the ar­ti­cle is about. Gw­ern’s 0.05% is not “a sig­nifi­cant chance”.

I agree that for your to­tally differ­ent case, you should put more effort into se­cu­rity.

[Edit: The 8020 for crypto se­cu­rity is to buy from Coin­base if you’re in the US, or the most cred­ible lo­cal ex­change if not. If you’re buy­ing alt­coins, con­vert from BTC/​ETH on poloniex or shapeshift. Then put it in a hard­ware wallet such as Tre­zor or Ledger, with pa­per copies of your pri­vate key in a cou­ple se­cure lo­ca­tions.]

• Com­pletely agreed. I even pub­li­cly an­nounced on my Face­book when Bit­coin was USD that I was buy­ing 100USD worth, but then once I looked into how to even con­vert USD to Bit­coin, I said “eh, not worth, even it for some in­ter­est­ing eco­nomic ex­per­i­ment”.

• A hind­sight solu­tion for ra­tio­nal­ists to have re­duced the setup costs of buy­ing bit­coin would have been ei­ther to have had a Ra­tion­al­ist min­ing pool or ar­range to have a few peo­ple buy in bulk and serve as points of dis­tri­bu­tion within the com­mu­nity.

This sug­gests that if a fu­ture op­por­tu­nity ap­pears to be worth the risk of in­vest­ment, but has some bar­rier to en­try that is in­di­vi­d­u­ally costly but col­lec­tively triv­ial, we ought to work first to elimi­nate that bar­rier to en­try, and then al­low the com­mu­nity to eval­u­ate more dis­pas­sion­ately on risk and re­turn alone.

• I like this much much bet­ter than the other pro­posed pro­posed solu­tion, of effec­tively pres­sur­ing peo­ple to buy. Re­mov­ing in­con­ve­niences (triv­ial and oth­er­wise) would prob­a­bly have been the most helpful thing some­one could do. (I can’t hon­estly re­mem­ber if I was in the LW com­mu­nity yet when I started in Bit­coin, as they were both so long ago, but I was definitely not part of an IRL ra­tio­nal­ist com­mu­nity, and it didn’t oc­cur to me that ra­tio­nal­ists would be in­ter­ested in Bit­coin at the time.)

• That’s a smart idea!

• I think a large part of what pre­vented many peo­ple from in­vest­ing in Bit­coin may have been the epistemic norms com­monly referred to nowa­days as “the ab­sur­dity heuris­tic”, “the out­side view”, “mod­est episte­mol­ogy”, etc. In other words, many of us may have held the (sub­con­scious) be­lief that it’s im­pos­si­ble to perform sub­stan­tially bet­ter than the mar­ket, even in situ­a­tions where the Effi­cient Mar­kets Hy­poth­e­sis may not fully ap­ply. To put it an­other way:

Well, sup­pose God had de­cided, out of some sym­pa­thy for our pro­ject, to make win­ning as easy as pos­si­ble for ra­tio­nal­ists. He might have cre­ated the biggest in­vest­ment op­por­tu­nity of the cen­tury, and made it visi­ble only to liber­tar­ian pro­gram­mers will­ing to dab­ble in crazy ideas. And then He might have made sure that all of the ear­liest adapters were Less Wrong reg­u­lars, just to make things ex­tra ob­vi­ous.

I think many of us con­sid­ered this, and un­con­sciously dis­missed it due to the ob­vi­ous ab­sur­dity: surely things can’t be that easy, right? Sure, we may be ra­tio­nal­ists, and sure, ra­tio­nal­ists “ought to win”, but surely win­ning can’t be so easy that the op­por­tu­nity to win liter­ally hits us on the head, right?

I think what this points to is a fun­da­men­tal in­abil­ity on our part to Take Ideas Se­ri­ously. Of course, most peo­ple don’t have this abil­ity at all, and we’re surely do­ing much bet­ter on that count—but what mat­ters in this case isn’t your rel­a­tive su­pe­ri­or­ity to other peo­ple, but your ab­solute level of skill. (I’m us­ing the pro­noun “your” here to re­fer to the ma­jor­ity of ra­tio­nal­ists who didn’t in­vest in Bit­coin, not the few who did.) The cor­re­spond­ing solu­tion seems ob­vi­ous: work to im­prove our abil­ity to Take Ideas Se­ri­ously, with­out dis­miss­ing ab­surd-sound­ing ideas too quickly.

Easier said than done, of course.

• I bought 10 bit­coins back around 2012. I for­get the ex­act date, but they were around ten dol­lars each. To­day, that in­vest­ment is worth zero dol­lars, be­cause those bit­coins were in Mt Gox.

My point: there may be a non­triv­ial chunk of LWers who cor­rectly pre­dicted where bit­coin would go, but still ended up with­out any sig­nifi­cant profit. (That ac­tu­ally would not in­clude me; I just got into it to test a trad­ing al­gorithm, then left a few bit­coins sit­ting around af­ter the test was done.)

• I have some Bit­coin, and have made some money on Bit­coin[1], and am cur­rently a soft­ware en­g­ineer at a Bit­coin startup, where I’ve been work­ing since the be­gin­ning of 2015.

I have com­pli­cated feel­ings about this. Ob­vi­ously I in­vested in Bit­coin be­cause I thought it was +EV, and I did make a nice profit by do­ing so. That doesn’t nec­es­sar­ily mean I was cor­rect to imag­ine that it was +EV, and I strug­gle to un­der­stand whether my choices were rea­son­able or just lucky. I think Eliezer’s re­cent se­quence about ad­e­quacy prob­a­bly has some­thing use­ful to say about this. But I also think that a lot of Bit­coin and cryp­tocur­rency be­hav­ior is fun­da­men­tally a func­tion of the psy­chol­ogy of the mar­ket, rather than ac­tual value, and the psy­chol­ogy of the mar­ket is a dan­ger­ous thing to bet on.

Of course, it’s not wrong to take dan­ger­ous bets with good up­side. Ul­ti­mately I think cryp­tocur­rency in­vest­ing may or may not have been the cor­rect de­ci­sion for peo­ple de­pend­ing on their cir­cum­stances. There’s no con­ven­tional wis­dom or ob­vi­ous right an­swer to fall back on.

I might have more to say on this later.

[1] Bit­coin is very hard to store safely. Don’t ask any­body how much Bit­coin they have (at least in pub­lic non-anony­mously). They would be very fool­ish to dis­close it, and the more it is the more fool­ish they would be.

• Col­lec­tively the com­mu­nity has made hun­dreds of mil­lions from cypto. But it did so by get­ting a few wealthy peo­ple to buy many bit­coin, rather than many peo­ple to buy a few bit­coin. This is a more effi­cient model be­cause it avoids big fixed costs for each in­di­vi­d­ual.

It also avoid ev­ery­one in the com­mu­nity hav­ing to ded­i­cate some of their at­ten­tion to think­ing about what out­stand­ing in­vest­ment op­por­tu­ni­ties might be available to­day.

Due to de­clin­ing marginal re­turns, hun­dreds of mil­lions is a sub­stan­tial frac­tion as good as billions. So I think we did alright.

• If you’re con­sid­er­ing the welfare of the in­di­vi­d­u­als con­cerned: “a few wealthy peo­ple make mul­ti­ple mil­lions” is not as good an out­come as “dozens of not-so-wealthy peo­ple make hun­dreds of thou­sands” be­cause of diminish­ing marginal re­turns.

If you’re con­sid­er­ing cryp­tocur­rency gains only as fuel for effec­tive al­tru­ism or some­thing, then “a few wealthy peo­ple make mul­ti­ple mil­lions” might be as good an out­come, but then it’s no longer so plau­si­ble that “hun­dreds of mil­lions is a sub­stan­tial frac­tion as good as billions”.

If you’re con­sid­er­ing cryp­tocur­rency gains only as fuel for some nar­row kind of effec­tive al­tru­ism (say, dona­tions to help AI safety work) then both halves might be right, but then it seems rea­son­able to ask whether those hun­dreds of mil­lions have in fact gone to AI safety dona­tions. My im­pres­sion is that most of the money has just gone into the per­sonal for­tunes of the peo­ple who bought cryp­tocur­rency. That’s fine, but if so then I think we’re back with my first para­graph.

• From a self­ish point of view, I don’t think most ra­tio­nal­ists would benefit sig­nifi­cantly from a bit of ex­tra money, so it doesn’t make much sense to be ded­i­cat­ing their truly pre­cious re­source (time and at­ten­tion) to iden­ti­fy­ing high-risk high-re­turn in­vest­ments like bit­coin and in this case figur­ing out how to buy/​store them safely. And I’m some­one who bought bit­coin for the sake of en­ter­tain­ment.

From an al­tru­is­tic point of view, yes I ex­pect hun­dreds of mil­lions of dol­lars to be donated, and the cur­rent flow is con­sis­tent with that—I know of 5 mil­lion in the last few months, and there’s prob­a­bly more than hasn’t been de­clared.

“then it’s no longer so plau­si­ble that “hun­dreds of mil­lions is a sub­stan­tial frac­tion as good as billions”.”

At the full com­mu­nity level the marginal re­turns on fur­ther dona­tions also de­clines, though more slowly: https://​​80000hours.org/​​2017/​​11/​​tal­ent-gaps-sur­vey-2017/​​#how-diminish­ing-are-re­turns-in-the-community

• My biggest take­away is that there’s a chance I can beat mar­kets which as far as I could tell ought to have been pretty effi­cient, so I’m per­son­ally go­ing to at­tempt to do that more of­ten in the fu­ture un­til I get ev­i­dence that it’s not work­ing.

• Dude, no. You are as­sum­ing that be­cause you beat the mar­ket one time, through crypto, that you can of­ten do so. So then we need to ask our­selves, are the peo­ple who beat the mar­ket (with crypto) peo­ple that con­sis­tently beated the mar­ket be­fore crypto?

In al­most all cases the an­swer is no. This is a spe­cial case where lots of peo­ple who are oth­er­wise not good at in­vest­ing made lots of money. Beat­ing the mar­ket in this unique case shouldn’t sug­gest any abil­ity to re­cur­sivly beat the mar­ket.

• There’s some­thing I should note that doesn’t come through in this post: one of the rea­sons I was in­ter­ested in Bit­coin in 2011 is be­cause it was ob­vi­ous to me that the ‘ex­perts’ (economists, cryp­tog­ra­phers, what have you) scoffing at it Just Did Not Get It.

The crit­ics gen­er­ally made blither­ingly stupid crit­i­cisms which showed that they had not even read the (very short) whitepa­per, say­ing things like ‘what if the Bit­coin op­er­a­tor just rolls back trans­ac­tions or gets hacked’ or ‘what stops min­ers from just rewrit­ing the his­tory’ or ‘the defla­tion­ary death spiral will kick in any day now’ or ‘what hap­pens when some­one uses a lot of com­put­ers to take over the net­work’. (There were much dumber ones than that, which I have mer­cifully for­got­ten.) Even the most ba­sic read­ing com­pre­hen­sion was enough to re­veal most of the crit­i­cisms were sheer non­sense, you didn’t need to be a crypto ex­pert (cer­tainly I was not, and still am not, ei­ther a math­e­mat­i­cian or C++ coder, and wouldn’t know what to do with an ex­po­nent if you gave it to me). Many of them showed their ide­olog­i­cal cards, like Paul Krug­man or Charles Stross, and re­vealed that their ob­jec­tions were ex­cuses be­cause they dis­liked the po­ten­tial re­duc­tion in state power—I mean, wow, talk about ‘poli­tics is the mind-kil­ler’. I think I re­marked on IRC back then that ev­ery time I read a blog post or op-ed ‘de­bunk­ing’ Bit­coin, it made me want to buy even more Bit­coin. (I couldn’t be­cause I was pretty much bankrupt and wound up sel­l­ing most of the Bit­coin I did have. But I sure did want to.)

Even cryp­top­unks of­ten didn’t seem to get it, and I wrote a whole es­say in 2011 try­ing to ex­plain their in­com­pre­hen­sion and ex­plain to them what the whole point was and why it worked in prac­tice but not their the­ory (“Bit­coin is Worse is Bet­ter”). So, it was quite clear to me that Bit­coin was, ob­jec­tively, mi­s­un­der­stood, and a ‘se­cret’ in the Thiel sense.

And in a mar­ket where a price is ei­ther too low or too high, ‘re­versed stu­pidity’ is in­tel­li­gence...

(If any­one was won­der­ing: I don’t think this ar­gu­ment re­ally holds right now. Dis­cus­sions of Bit­coin are far more so­phis­ti­cated, and the crit­ics gen­er­ally avoid the dumb­est old ar­gu­ments. They of­ten even man­age to avoid mak­ing any fac­tual er­rors—al­though I’ve won­dered about some of the Tether crit­i­cisms, which rely on what looks like rather du­bi­ous statis­tics.)

What sort of luck or cog­ni­tive strat­egy did this re­quire? I think it did re­quire a good deal of luck sim­ply to be in LW cir­cles where we have enough cryp­top­unk in­fluence to hap­pen to hear about Bit­coin early on. Other­wise, it would be un­rea­son­able to ex­pect peo­ple to some­how pluck Bit­coin out of the en­tire uni­verse of ob­scure niche prod­ucts like ‘all penny stocks’. But once you pass that filter, all you re­ally needed was to, while read­ing about in­ter­est­ing fun de­vel­op­ments on­line, sim­ply not let your brains fall out and no­tice that the crit­ics were not do­ing even the most ba­sic due dili­gence or mak­ing log­i­cally valid ar­gu­ments and had clear (bad) rea­sons for op­pos­ing Bit­coin, and un­der­stand that im­plied Bit­coin was un­der­val­ued and a fi­nan­cial op­por­tu­nity. I definitely do not see any­thing nega­tive about most peo­ple for not get­ting into Bit­coin in 2011, since there’s no good ex ante rea­son for them to have been in­ter­ested in or read up on it and do­ing so in gen­eral is prob­a­bly a bad use of time—but for LWers, we had other rea­sons for be­ing in­ter­ested enough in Bit­coin to re­al­ize what an op­por­tu­nity it was, so there it is a bit of a failure to not get in­volved.

• I think the per­centages of ‘suc­cess­ful’ LW read­ers need to be re­calcu­lated. What per­centage of LW read­ers were in the SSC sur­vey, but started read­ing LW af­ter the most prof­itable win­dow for buy­ing bit­coin had already passed? What per­centage were stu­dents with no spare funds in 2011, or oth­er­wise had too lit­tle risk tol­er­ance to in­vest?

I started read­ing LW in 2014, took the ad­vice of the 2015 post to the ex­tent I could, but was only able to make a lit­tle money be­cause I didn’t have any sav­ings and 1 bit­coin was worth $200. Later, I heard about ethereum very early on from a friend who bought a bunch and was in­ter­ested in in­vest­ing my­self, but was in the midst of a job tran­si­tion where I again had no spare cash to in­vest. I only re­ported hav­ing ac­quired about$1000 from crypto on the sur­vey, but I count my­self as hav­ing done about as well as I could have, given cir­cum­stances and timing.

• 15% seems like a lot.

Maybe I have that im­pres­sion be­cause I tend to reach for a null hy­poth­e­sis as my de­fault model, which in this case is that LWers would do no bet­ter with cryp­tocur­rency than other peo­ple who had similar lev­els of in­ter­est in tech. And 15% of peo­ple mak­ing $1000+ is way more than I would pre­dict on that model. • Scott’s whole point is ‘if ra­tio­nal­ity is good for any­thing, we should be do­ing much bet­ter than the av­er­age tech in­dus­try.’ • And mine is that it sounds like we did do much bet­ter than the av­er­age tech in­dus­try. Though maybe you/​Scott/​oth­ers have differ­ent in­tu­itions than I do about how com­mon it has been for tech folks to make a bunch of money on cryp­tocur­rency. My im­pres­sion from Scott’s post was that we wouldn’t differ much in our es­ti­mates of the num­bers, just about whether “15% is way less than 100%” was more salient than “15% is way more than 1% (or what­ever the rele­vant base rate is)”. • I agree, 15% struck me as a huge num­ber. In par­tic­u­lar, ev­ery­one in the tech in­dus­try has had the money to in­vest over the last sev­eral years, while LessWrongers are a lot younger and poorer. More than half of SSC sur­vey re­spon­ders are stu­dents or en­try-level em­ploy­ees, and less than half of peo­ple well into their ca­reers are in tech. Also, this is still just an on­line fo­rum, so I wouldn’t ex­pect in­vest­ment op­por­tu­ni­ties to spread as con­ta­giously as among peo­ple hav­ing lunch to­gether at a tech com­pany office ev­ery day. Bot­tom line: based purely on back­ground de­mo­graph­ics, I would have ex­pected at least 5 times as many (as a %) of Sili­con Valley peo­ple to have made money off crypto as LessWrongers. Based on the 15% re­sult, I’d be sur­prised if we didn’t do 5 times bet­ter. I won­der if this comes down to per­sonal situ­a­tion bias. Scott made no money, and he gives us a C. I made enough to donate >$5k in BTC to MIRI, and I’d give us an A- at worst.

• Do we have any data on how well other peo­ple who had similar lev­els of in­ter­est in tech did?

• It seems like a good idea to col­lect self-re­ports about why LessWrongers didn’t in­vest in Bit­coin. For my own part, off the top of my head I would cite:

• less visi­ble en­dorse­ment of the benefits than e.g. cry­on­ics;

• vaguely sens­ing that cryp­tocur­rency is con­tro­ver­sial and might make my taxes con­fus­ing to file, etc.;

• and re­flex­ively writ­ing off ar­ti­cles that give me in­vest­ment ad­vice be­cause most in­vest­ment ad­vice is bad and I gen­er­ally as­sume I lack some min­i­mal amount of wealth needed to ex­ploit the op­por­tu­nity.

So some­thing like We Agree: Get Froze,might have helped. I also could have ac­tu­ally eval­u­ated the difficulty of filing taxes given that I’d pur­chased bit­coins, in­stead of flinch­ing away and de­cid­ing it was too difficult on the spot. I could pay more at­ten­tion to figures that are rel­a­tively small even for some­one with lit­tle wealth.

If sur­veys are still be­ing done, that seems like im­por­tant data to col­lect on the next sur­vey. I would want to know if most peo­ple knew but didn’t in­vest, or sim­ply didn’t know at all, and so on.

• I didn’t in­vest in Bit­coin be­cause I don’t in­vest in things that I don’t un­der­stand well enough to be con­fi­dent that the Effi­cient Mar­ket Hy­poth­e­sis doesn’t ap­ply. I con­tinue to be­lieve this is a ra­tio­nal choice—okay, sure, this one time I might have made a lot of money, but most of the time I would waste a bunch of money/​time/​other re­sources. And no one writes blog posts about how they could have lost a lot of money but didn’t, so the availa­bil­ity heuris­tic is go­ing to over­weight suc­cesses.

• okay, sure, this one time I might have made a lot of money, but most of the time I would waste a bunch of money/​time/​other re­sources.

This seems like a good heuris­tic, but is it ac­tu­ally true that Bit­coin was an un­differ­en­ti­ated mem­ber of an ex­tremely large class? I agree that the availa­bil­ity heuris­tic is very im­por­tant here, but I’m strug­gling to think of a sin­gle thing in the same refer­ence class (maybe cry­on­ics? MIRI? Nootrop­ics?). If any­one can give me ex­am­ples of “stuff lots of peo­ple on LessWrong liked that could have huge pay­outs”, that would be much ap­pre­ci­ated.

• As some­one who made a profit in­vest­ing in Bit­coin I en­dorse and en­courage your de­ci­sion. I definitely want to avoid this some­how turn­ing into “ra­tio­nal­ists should win by try­ing to jump on ev­ery crazy make-money-fast scheme be­cause one of them could be the next Bit­coin.” If it’s the case that ra­tio­nal­ists should have been able to pre­dict Bit­coin’s suc­cess, we should fo­cus on spe­cific fac­tors that in­di­cated there was some­thing there to be got­ten.

I can talk now about all the smart peo­ple I know who be­lieve in Bit­coin as a rea­son to want to keep it, but I didn’t know any of those peo­ple yet when I first bought it—I met them along the way. It’s hard for me to re­mem­ber what it was that at­tracted me to it at the time. I think it had a lot to do with the way the tech­nol­ogy played into my own spe­cific vi­sion for the fu­ture of tech, which is very per­sonal and not nec­es­sar­ily portable to an ar­bi­trary per­son in the ra­tio­nalo­sphere (in terms of rea­sons to have be­lieved in Bit­coin at the time.)

• For my part, it was one part triv­ial in­con­ve­niences, one part that it read like woo. I was aware it ex­isted through other av­enues (I wasn’t a Less Wronger then), and aware of what it was try­ing to do, and I had the tech­ni­cal acu­men to get in on it if I had so cho­sen. Given that, I’m a lit­tle bit­ter that I didn’t do so. I could re­tire to­day if I had. I could get into it to­day, of course, but now that ev­ery­body knows it’s a magic money mak­ing ma­chine I sus­pect a bub­ble is well un­der­way. I don’t want to be in when it breaks.

I’m a lit­tle wor­ried about Bit­coin’s ex­ter­nal­ities. The min­ing pro­cess con­sumes more and more en­ergy, and pro­fes­sional min­ers are driv­ing up hard­ware costs. Which might be fine if most trans­ac­tions were, well, trans­ac­tions, i.e. if we’re get­ting hu­man value out of the work. But I get the im­pres­sion that the vast ma­jor­ity of the net­work’s effort goes to­wards play­ing mu­si­cal chairs with money, and that seems bad.

Bit­coin doesn’t feel woo-ish, any­more, but it’s start­ing to feel pa­per­clippy in­stead.

• Yes, pa­per­clippy. And also bit­coin net­work is equal to 10E23 flops now (but cant’t do any­thing else ex­cept bit­co­in­clips), which is 60 times more than to­tal com­pu­ta­tional power of all other com­put­ers com­bined, which was es­ti­mated by Grace. It is re­ally mind­bend­ing and as­tro­nom­i­cal amount of com­pu­ta­tions, and it dou­bles ev­ery 8 months. And it pays peo­ple for its con­struc­tion.

• I no­tice I am con­fused. 60 times more than all other com­put­ers com­bined would im­ply that >98% of hu­man com­pute ca­pac­ity is tied up in the bit­coin net­work. That seems...un­likely.

• The figure’s mis­lead­ing, be­cause min­ing (these days) is done with spe­cial­ised hard­ware: ASICs, chips ded­i­cated to calcu­lat­ing SHA256 hashes (or what­ever al­gorithm your favourite coin uses), which can calcu­late those ap­prox. times times faster (per sec­ond per $) than a gen­eral-pur­pose CPU—but can’t do any­thing else. So that im­pli­ca­tion may well be true in the sense that if all the wor­lds com­put­ers turned to min­ing bit­coin, the to­tal min­ing ca­pac­ity would only be in­creased by a cou­ple per­cent over what it is at the mo­ment (due to gen­eral-pur­pose com­put­ers be­ing so in­effi­cient at spe­cific tasks com­pared to ded­i­cated hard­ware). But false in the sense that very lit­tle of the world’s gen­eral-pur­pose com­pute ca­pac­ity is tied up min­ing cryp­tocur­rency. • 60 times more than to­tal com­pu­ta­tional power of all other com­put­ers com­bined What are you refer­ring to here? • I’m a lit­tle wor­ried about Bit­coin’s ex­ter­nal­ities. I think most such wor­ries are not well-founded, but I would also like to point out that “Bit­coin seems like it might eat the world in a bad way” is not ex­actly a rea­son not to in­vest. It might be a rea­son to fight against Bit­coin, but if you’re not fight­ing against it, it seems like pre­cisely a rea­son you would want to buy it. • In­di­vi­d­ual in­cen­tives to back some­thing col­lec­tively ter­rible seems like text­book Moloch to me. (which doesn’t im­ply that you’re wrong, of course) • When such a situ­a­tion arises again, that there’s an in­vest­ment op­por­tu­nity which is gen­er­ally thought to be worth while, but which has a lower than ex­pected up­take due to ‘triv­ial in­con­ve­niences’, I won­der whether that is in it­self an op­por­tu­nity for a group of ra­tio­nal­ists to co­op­er­ate by out­sourc­ing as much as pos­si­ble of the in­con­ve­nience to just a few mem­bers of the group? Sort of: “Hey, Less­wrong. I want to in­vest$100 in new tech­nol­ogy foo, but I’m be­ing put off by the up­front time in­vest­ment of 5-20 hours. If any­one wants to make the offer of {I’ve in­ves­ti­gated foo, I know the tech­nolog­i­cal pro­cess needed to turn dol­lars into foo in­vest­ments, here’s a step by step guide that I’ve tested and which works, or post me a cheque and an email ad­dress, and I’ll set it up for you and send you back the ac­cess de­tails} I’d be in­ter­ested in be­ing one of those who pays you com­pen­sa­tion for pro­vid­ing that ser­vice. ”

There’s a lot less­wrong (or a similar group) could set up to fa­cil­i­tate such out­sourc­ing, such as let­ting mul­ti­ple peo­ple reg­ister in­ter­est in the same po­ten­tial offer, and pro­vid­ing some fil­ter­ing or guaran­tee against some­one claiming the offer and then rip­ping peo­ple off.

• There’s a pro­ject Scott pro­posed some­thing like eight years ago that got started last week­end be­cause some­one posted a bounty on it.

Even if the bounty is just beer money, be­ing able to profit fi­nan­cially by do­ing some­thing feels qual­i­ta­tively differ­ent from do­ing it for free.

A cen­tral­ized reg­istry of boun­ties would be use­ful. And there might even be a startup idea in there—it’s es­sen­tially We­searchr for out­sourc­ing in­stead of far-right gos­sip jour­nal­ism.

• For ex­am­ple, if any­one is plan­ning on set­ting up an in­vest­ment ve­hi­cle along the lines de­scribed in the ar­ti­cle:

In­vest­ing in Cryp­tocur­rency with In­dex Tracking

with pe­ri­odic re­bal­anc­ing be­tween the cur­ren­cies.

I’d be in­ter­ested (with ad­e­quate safe­guards).

• It’s one thing to know when to buy, it’s an­other to know when to sell. In hind­sight buy­ing at 1.00 made sense with gw­ern’s logic,(I don’t think I had even heard about bit­coin let alone gw­ern’s ar­gu­ment at the time) but what hap­pens when it rises to 100.00? In that case, the same logic would tell you to sell, in which case if you had in­vested 100.00 you’d have made 10,000.00, hardly a life-chang­ing sum. To have made it to 100,000.00 you’d have had to sit and watch as that not in­con­sid­er­able sum bounces around the hun­dreds range, driven by peo­ple whose only ex­pla­na­tion is “it’s go­ing up” while not mak­ing hardly any head­way in its in­tended pur­pose of be­ing an ac­tual cur­rency used for le­gal trans­ac­tions. The one per­son I know who mined it early on did ex­actly this, he sold it at around the 50.00 point and said it was a bub­ble when it was in the hun­dreds range. I still think he’s right, it was and is a bub­ble; I don’t see the value in some­thing which has no ac­tual value.

About the ra­tio­nal­ists win­ning, we already ‘win’ in a lot of ways. We on av­er­age have higher in­comes, bet­ter-man­aged fi­nances, bet­ter health, fewer sub­stance abuse prob­lems, ect, than the av­er­age per­son. But lit­tle of that is due to ra­tio­nal­ism per-se, as these “ra­tio­nal” be­hav­iors are in­cor­po­rated into the gen­eral suite of lifestyle ad­vice given to the av­er­age “normie:” don’t get in debt, don’t ma­jor in that in col­lege, ect. You prob­a­bly fol­lowed them be­fore you ever heard of ra­tio­nal­ism. There are a few ways how­ever that the com­mon ide­ol­ogy of the up­per-mid­dle class peo­ple di­verges from ra­tio­nal be­hav­ior, and which ra­tio­nal­ists would gain an ad­van­tage:

1. On in­fer­til­ity. Don’t get me wrong, few com­mu­ni­ties are as ster­ile as this one, but IF ra­tio­nal­ists de­cide to get mar­ried and IF they de­cide to have kids, I would think they would be more aware of the fact that fer­til­ity takes a nose­dive around age 37, rel­a­tive to a non-ra­tio­nal­ist of similar in­come level.

2. On mar­riage. Ra­tion­al­ists are heav­ily sin­gle, some of that owes to the gen­eral sperg-de­mo­graphic, but I would bet that a lot of them re­main un­mar­ried due to a more ac­cu­rate un­der­stand­ing of the fam­ily court sys­tem and the di­vorce in­dus­try.

3. On rais­ing chil­dren. If they have them, ra­tio­nal­ists will be more likely to un­der­stand the dom­i­nant role of ge­net­ics in shap­ing their chil­dren’s up­bring­ing, and will thus be spared a lot of ex­pense and heartache caused by peo­ple’s be­lief that they can buy IQ points for their child.

In all these cases, it’s not any­thing that al­lows one to get rich quick, rather, it’s the avoidance of a po­ten­tially very bad out­come. And that’s all you should ex­pect with the fact that the stock mar­ket is already ra­tio­nal … and the cor­po­rate lad­der largely isn’t.(So our skills are of limited rele­vance there.)

• Just for pos­ter­ity and to try to make the suc­cess rate bet­ter next time, you should IMO se­ri­ously look at Ethereum now and de­cide what you make of it. Blockchain-based ledgers of stuff still seem to me like a good idea, the mar­ket has val­i­dated that opinion, and Ethereum is tech­ni­cally far in the front of the curve. (Some com­peti­tors, e.g. Te­zos, Car­dano have rea­son­able-sound­ing ideas but are way be­hind in terms of ac­tual im­ple­men­ta­tion and de­vel­oper man­power be­ing ap­plied.) In the next two years we should see whether Ethereum’s scal­ing plans work out or not. If they do, I can’t un­der­stand any plau­si­ble fu­ture for Bit­coin.

My only prob­lem is that it’s con­fus­ing to me to un­der­stand how to com­pute how much an in­di­vi­d­ual ether should be worth—more con­fus­ing than Bit­coin, where it seemed to be com­pet­ing di­rectly with spe­cific tech­nolo­gies like Western Union or Visa and I thought I could look at the fees and ve­loc­ity of money through those as a com­par­i­son. So even if Ethereum be­comes the tech­ni­cal in­fras­truc­ture for a ton of ran­dom to­k­enized soft­ware I’m not sure how to es­ti­mate the fu­ture value of ether as a re­sult. Per­haps I should be look­ing at po­ten­tial tx/​sec lev­els and es­ti­mat­ing de­mand for gas in each case.

Dis­claimer: Con­fu­sion notwith­stand­ing, my money is where my mouth is.

• Some com­peti­tors, e.g. Te­zos, Car­dano have rea­son­able-sound­ing ideas but are way be­hind in terms of ac­tual im­ple­men­ta­tion and de­vel­oper man­power be­ing ap­plied.

To me it seems that EOS is the most vi­able com­peti­tor. The ac­tual blockchain of theirs will go live this sum­mer, but they already have test nets up and run­ning that de­vel­op­ers can use to de­velop ap­pli­ca­tions (though I dunno how easy or hard it is to get started with the cur­rent level of doc­u­men­ta­tion, etc). Some of the ques­tions that de­ter­mine how well EOS does or doesn’t do are:

• How de­vel­oper-friendly will EOS be com­pared to Ethereum? This ar­ti­cle ar­gues that EOS will be a bet­ter choice for dapp de­vel­op­ers (https://​steemit.com/​eos/​@nade­jde/​eos-de­vel­op­ment-plat­form-first), with a bit of dis­cus­sion for and against some of the ar­ti­cles points in the com­ments. I don’t have ex­pe­rience with ei­ther my­self, and I don’t know much about what kind of third party code that is /​ will be /​ can be made available for Ethereum to make it more de­vel­oper friendly.

• How much flex­i­bil­ity will EOS give for de­vel­op­ers lan­guage-wise? My im­pres­sion has been that lots of the pop­u­lar lan­guages we have to­day will be pos­si­ble to use since they’ll be us­ing We­bAssem­bly. After googling We­bAssem­bly a bit more I’m not as op­ti­mistic about this as I was, but still think this seems to be an ar­gu­ment in favour of EOS vs Ethereum: https://​github.com/​ap­p­cypher/​awe­some-wasm-langs, https://​stack­overflow.com/​ques­tions/​43540878/​what-lan­guages-can-be-com­piled-to-web-as­sem­bly-or-wasm. I don’t know if lan­guages that are well-sup­ported by We­bAssem­bly prac­ti­cally speak­ing will be easy to use to de­velop on EOS, or if C++ in the be­gin­ning or in­definitely will be the de facto choice for EOS de­vel­op­ers, but I’m as­sum­ing that they chose We­bAssem­bly be­cause they in­tend for it to be pos­si­ble to use sev­eral differ­ent lan­guages, so that more de­vel­op­ers can choose a lan­guage they already are com­fortable with.

• Prac­ti­cally speak­ing, when can de­vel­op­ers start work­ing on dapps on EOS vs on Car­dano? EOS has a test-net ready for dapp de­vel­op­ers to work on, and will re­lease the main net this sum­mer, though I don’t know how easy or cum­ber­some it is to get started. Un­less I’m mis­taken Car­danos work on smart con­tracts is pretty early stage, and there hasn’t been set a date yet for when smart con­tract func­tion­al­ity will be available: https://​www.red­dit.com/​r/​car­dano/​com­ments/​7q9yq0/​when_will_car­dano_have_smart_con­tracts/​?

• Will EOS trans­ac­tions re­ally be free for most users? This seems to be what they claim, and so far I haven’t come across peo­ple ar­gu­ing that this isn’t the case.

• Is it the case that reg­u­lar users of Ethereum ap­pli­ca­tions always will have to pay fees, even if these get re­ally low? As I un­der­stand it, one pos­si­ble solu­tion would be to have dapps give the users money for gas. If this be­comes af­ford­able, will it for most dapps be prac­ti­cally doable to “hide” them from users so that it doesn’t make the dapp less user-friendly? I don’t see why it wouldn’t be if gas-fees be­come low enough, at least for dapps where users have to reg­ister ac­counts, but my un­der­stand­ing is vague. Also, this seems to me like yet an­other thing that de­vel­op­ers will have to think about, un­less some easy stan­dard­ized solu­tion be­comes available.

• For the differ­ent lev­els of speed, scal­a­bil­ity and low costs of trans­ac­tions, will both EOS and Ethereum get there? And if both get there, who will get there first and how large will the time differ­ence be­tween them be? Take for ex­am­ple steemit.com, a web­site that runs on a blockchain with an ar­chi­tec­ture that is similar to the one EOS will be us­ing. Will it be­come pos­si­ble to have some­thing like that run on Ethereum with­out hav­ing users wait a lot, pay high fees, and hav­ing the net­work get clogged? My im­pres­sion is that if this be­comes pos­si­ble on Ethereum it will prob­a­bly not be a few months af­ter EOS, but years af­ter. Is that im­pres­sion wrong? I don’t have a full overview of the differ­ent up­grades Ethereum are plan­ning and their ex­pected timelines. In this video from Septem­ber 2017 Vi­talik seems to think that Ethereum prob­a­bly will have the ca­pac­ity to re­place Visa in a cou­ple of years, but with pro­to­types with lower se­cu­rity hav­ing that kind of ca­pac­ity in about a year: https://​youtu.be/​WSN5BaCzsbo?t=10m42s. He also seems to think that run­ning some­thing like Star­craft on Ethereum will be pos­si­ble at some point thanks to sec­ond-layer sys­tems. Here are some com­ments re­gard­ing the ca­pac­ity of EOS (the video moves on to other top­ics at 2:02): https://​youtu.be/​UC6RYwYPnpU?t=49s.

• How will they com­pare in terms of fund­ing for pro­jects? I don’t know, though I know that EOS has a pretty big “war chest” of money that will be used to fund pro­jects on their blockchain (https://​​cryp­tovest.com/​​news/​​break­ing-block­one-ceo-bren­dan-blumer-an­nounces-1-billion-in-cap­i­tal-for-eos-pro­jects/​​).

My own guess is that Ethereum will con­tinue to be the num­ber one smart con­tract plat­form, but that EOS will do bet­ter in terms of per­centage­wise growth in price from here. That’s just the guess that feels most likely to me though, not some­thing I ex­pect nec­ce­car­ily will hap­pen. I have read a sig­nifi­cant amount and watched a sig­nifi­cant amount of in­ter­views and so on, but my un­der­stand­ing of this stuff is vague and in­com­plete.

I have the ma­jor­ity of my money in EOS at this mo­ment, though I’m not sure if that’s smart of me or not, and am very much un­sure about when I should pull out (now? in a month? this sum­mer?). What makes me most un­sure is the pos­si­bil­ity of a crash of the whole crypto-mar­ket, which may be pretty likely.

In the next two years we should see whether Ethereum’s scal­ing plans work out or not. If they do, I can’t un­der­stand any plau­si­ble fu­ture for Bit­coin.

Smart con­tracts thanks to root­stock? Scal­ing and lower trans­ac­tion fees thanks to light­ning net­work? More in­vest­ments and us­age due to first-mover ad­van­tage /​ brand aware­ness /​ net­work effects? Th­ese pos­si­bil­ities, which I don’t rule out with my cur­rent ad­mit­tedly shal­low/​vague un­der­stand­ing, makes it seem plau­si­ble to me that Bit­coin could con­tinue to be #1 even if Ethereum scales suc­cess­fully.

• From the linked blog post it seems to be that EOS doesn’t provide trust in code be­cause it al­lows a de­vel­oper to make changes in the code af­ter it was first de­ployed.

It feels to me un­likely that de­vel­op­ers want to write dapps in any ran­dom pro­gram­ming lan­guage. For dapps it’s im­por­tant to op­ti­mize perfor­mance and com­put­ing is ex­pen­sive and the un­der­ly­ing in­fras­truc­ture is just differ­ent than a nor­mal com­puter and you should’t ex­pect that sim­ply port­ing nor­mal ex­ist­ing pro­gram­ming lan­guages re­sult in a good re­sult.

From a se­cu­rity per­spec­tive it’s also very bad. If you look at the prob­lem that brought down The DAO, it sug­gest that you need to think differ­ently about how your code is ex­ectued to not re­peat that mis­take. For­mal ver­ifi­ca­tion seems to be very im­por­tant for dapps and that just isn’t a fea­ture in the ex­ist­ing lan­guages pro­gram­mers already know.

• Thanks for this in­ter­est­ing in­fo­dump, I haven’t looked hard at EOS yet (I am bi­ased to­wards only both­er­ing to learn about things which are ac­tu­ally “live in pro­duc­tion” in a mean­ingful way, as a kind of bozo filter) but I will pro­mote it in my at­ten­tion.

I agree that Bit­coin could sort of tack on scal­a­bil­ity with pay­ment chan­nels and tack on smart con­tracts with RSK. It just seems re­ally un­likely that it’s a bet­ter idea to do these things on top of a PoW blockchain layer that has tire fire gov­er­nance. It’s definitely true that some kind of worse-is-bet­ter net­work effect* could keep Bit­coin at the top in a way that’s hard for me to un­der­stand—I don’t even have any ex­pla­na­tion for why Bit­coin is at the top as of right now! At the end of the day, though, my origi­nal de­ci­sion to buy Bit­coin and later Ethereum was based on my as­sess­ment of the tech­ni­cal use­ful­ness of the work be­ing done, and since that turned out so well, I’m go­ing to keep rid­ing that heuris­tic un­til I see it not work.

*Although it’s in­ter­est­ing to spec­u­late what the net­work would be. Ethereum has mostly caught up in terms of ease-of-ob­tain­ing-and-trans­fer­ring; ex­changes, wallets, node soft­ware, etc. Bit­coin never re­ally hit the main­stream in terms of peo­ple trans­act­ing in it for ev­ery­day things, and due to con­ges­tion it prob­a­bly won’t now un­til pay­ment chan­nels are run­ning and the kinks get worked out. One in­ter­est­ing thing that might be a “net­work effect” is the num­ber of peo­ple with non-portable in­vest­ments into Bit­coin’s fu­ture, e.g. min­ers with Bit­coin ASICs. That’s a lot of cap­i­tal which is in­cen­tivized to make Bit­coin in par­tic­u­lar suc­ceed, and com­peti­tors don’t have that.

• I agree. Ethereum has sev­eral trump cards. Namely a se­ries of de­sir­able third party Ethereum ap­pli­ca­tions in the pipeline. For ex­am­ple, Augur, a pre­dic­tion mar­ket on the blockchain. If you want to play on the pre­dic­tion mar­ket, you need to buy ether. I’ll pub­li­cly state that I ex­pect Augur to sin­gle­hand­edly dis­t­in­guish Ethereum from all the other coins.

• Ethereum cur­rently has av­er­age trans­ac­tion costs of 1.62$. To me that seems two or­ders of mag­ni­tude to high for Augur to work de­cently. That’s even more true when there’s more pres­sure from pro­jects like Augur to make even more trans­ac­tions. Given that Augur it­self is open source, I would ex­pect it to get ported in some way to other coins. • The hy­potheis that there are plenty of uses for etherium is to­tally com­pa­tiable with the hy­poth­e­sis that Etherium will say be worth 12 it’s price in a year from now. In other words, even if Etheri­umn has a prac­ti­cal use case, it might very well be that the sys­tem is ac­tu­ally worth 20 billion or some­thing (that is less than its cur­rent mar­ket cap). I’m not sure, do we ac­tu­ally know the maket cap that prop­erly re­flects the as­sumed uses? • Very in­ter­est­ing, and I kind-of agree with the con­clu­sion. How­ever, as a few peo­ple pointed out, it wasn’t as sim­ple as just buy­ing bit­coin, you had to sell at the right time, etc.. And buy­ing bit­coin was com­pli­cated. But the other prob­lem is that there are thou­sands of op­por­tu­ni­ties, things you should do, etc, ly­ing around, with a pos­si­bly good pay­off in ex­pected value terms. And how many of them do we do? How many of them do we even think about se­ri­ously? Just a few off the top of my head (first two are ob­vi­ous, then some oth­ers): 1. Cryo, ob­vi­ously. 2. AI safety—tons of peo­ple in the com­mu­nity agree that’s it’s a se­ri­ous is­sue, but how many ac­tively work to­wards fix­ing it? (A de­cent amount, but I’d guess not as much as the “could” do). 3. CPR train­ing—how many peo­ple do it? What is the chance that you’ll one day be in a situ­a­tion where you need it? I have no idea of the num­bers, but con­sid­er­ing this is a life-and-death situ­a­tion, have you looked up the num­bers and de­cided it’s not worth do­ing? 4. Similarly, buy­ing an emer­gency sur­vival pack in case of a nat­u­ral dis­aster. Again, not idea of the num­bers here, but peo­ple do find them­selves in situ­a­tions where they’re with­out food/​wa­ter for some pe­riod. Do you know the num­bers here to de­cide it’s not worth buy­ing canned goods? 5. How many peo­ple have even both­ered to sit down and make sure their health in­surance/​life in­surance/​un­em­ployemnt in­surance/​etc is han­dled prop­erly? 6. Even more ob­vi­ous—send­ing out re­sumes ev­ery year to find bet­ter job op­por­tu­ni­ties? Or tak­ing a course/​read­ing about find­ing a bet­ter job? This is likely have a mas­sively higher im­pact than buy­ing bit­coin, not only in mon­e­tary terms, but also in life satis­fac­tion im­pact. Etc, etc. Most of the above are pretty ob­vi­ous and triv­ial things al­most any­one can do. I can prob­a­bly list a dozen more, some more “stan­dard ad­vice”, some more out there but still prob­a­bly high in ex­pected value. If I or any­one were to ac­tu­ally sit down and work through these one by one, we’d prob­a­bly do lit­tle else for the next year. So while bit­coin, in ret­ro­spect, may have been the most ob­vi­ous and im­me­di­ately high-value pay­off, I’m not sure it’s easy to seper­ate it from all the other things above. Then again, I’m not sure you should—maybe we should have a list of “these are things you need to take care of ASAP” some­where. • >When I first saw the posts say­ing that cryp­tocur­rency in­vest­ments were a good idea, I agreed with them. I even Googled “how to get Bit­coin” and got a bunch of tech­ni­cal stuff that seemed like a lot of work. So I didn’t do it. Hum. I be­lieved on var­i­ous “weak effi­cient mar­ket” ar­gu­ments, that this Bit­coin was un­likely to be prof­itable. So I didn’t in­vest. Does this makes me worse or bet­ter? I had worse epistemics, but it wasn’t a failure to act on things I thought I were true... • At the time I took the sur­vey I would have an­swered that I made no money out of cryp­tocur­rency. Since then, I found out that some free cryp­tocur­rency I had for­got­ten about, which was worth less than$10 at the time, is now worth sev­eral thou­sand. Given that I went to the (small) effort of notic­ing and sign­ing up for the give­away, but only did the long-term-hold strat­egy by ac­ci­dent, I’ll give my­self a D+. I’m also too lazy to sell it for now so hope­fully there isn’t a hard crash.

• It’s not like the op­por­tu­nity is gone. Mak­ing money on blockchain hype is still easy enough. But it feels more like a bub­ble/​scam now, so I’m out.

• So this is where we are. Cryo: some are tak­ing it se­ri­ously, but not enough. The bet is still open, but yet to pay off. Cryp­tocur­rency: some took it se­ri­ously, but not enough. The bet paid off mag­nifi­cently in the past. It may still be open to a sig­nifi­cant ex­tent, though maybe not with BTC.

Are there any can­di­dates for a cur­rent thing in the cat­e­gory of things that some­one in­formed about, smart, and hav­ing com­par­a­tive ad­van­tage should be leap­ing into? Broad­en­ing from per­sonal gain (al­though that’s my in­ter­est here), maybe x-risk, AGI x-risk, defeat­ing ag­ing, and EA would count. Any­thing else?

• I am not con­vinced that peo­ple in 2011 should have bought bit­coin. If you gave 2011 me the epistemic skills of 2018 me, I would not have bought bit­coin. I don’t know how one could re­li­ably dis­t­in­guish bit­coin from, say, a penny stock that makes promises of 10,000x growth.

Or per­haps a slightly stronger ar­gu­ment would be ven­ture cap­i­tal. Many startup founders have plau­si­ble sto­ries of why their com­pany will one day be worth billions of dol­lars. Surely it’s worth in­vest­ing even if there’s a 0.1% chance that they are cor­rect? But if VCs in­vested in ev­ery com­pany with a story they thought was 0.1%-plau­si­ble, they wouldn’t make any money.

If you could figure out a gen­eral epistemic strat­egy that would lead to buy­ing bit­coin in 2011 but not buy­ing penny stocks, or not in­vest­ing in the wrong star­tups, that would be great. I don’t know how to do that.

This is es­pe­cially a con­cern in mar­kets, where mak­ing an ar­gu­ment that an as­set will ap­pre­ci­ate isn’t enough; you have to also ex­plain why other peo­ple (in­clud­ing very smart peo­ple, and peo­ple whose en­tire job is to find as­sets that will ap­pre­ci­ate) haven’t done it already.

• But if VCs in­vested in ev­ery com­pany with a story they thought was 0.1%-plau­si­ble, they wouldn’t make any money.

This is pretty much ex­actly what they do, if by “0.1%-plau­si­ble” you mean “has a 0.1% chance to give us a 10,000x re­turn”. The vast ma­jor­ity of VC in­vest­ments lose money, and that’s fine, be­cause one 10,000x pays for a lot of failures.

Paul Gra­ham has a good es­say on it: http://​​www.paulgra­ham.com/​​swan.html

Now, that prob­a­bly doesn’t mean VCs shouldn’t filter star­tups at all (though I’d be in­ter­ested to see some­one try that as an ex­per­i­ment). So it’s worth con­sid­er­ing what made Bit­coin “not non­sense”. My first take is that it was a gen­uine tech­nolog­i­cal in­no­va­tion, which also got in­ter­est from a de­cent num­ber of smart peo­ple. But this is a re­ally un­in­tu­itive game. You have to be OK with usu­ally los­ing all your money. Your sys­tem 1 isn’t go­ing to like that.

• My un­der­stand­ing is that VCs only in­vest in about 1% of star­tups, even though prob­a­bly 5-10% of star­tups have rea­son­ably good sto­ries for why they’ll be su­per suc­cess­ful, and where you could ar­gue “surely they have at least a 0.1% chance of suc­ceed­ing, so let’s in­vest in all of them.” If VCs low­ered their stan­dards by 5-10x, they would not make any money; that’s what I was try­ing to say.

The ques­tion isn’t how do you dis­t­in­guish bit­coin from the 1% of star­tups that are worth in­vest­ing in; it’s how do you dis­t­in­guish it from the 5-10% of star­tups that look like they’re worth in­vest­ing in ac­cord­ing to the ar­gu­ments in OP?

• It seems to me that you’re con­flat­ing “suc­ceed­ing” and “re­turn­ing 5000x my money”. I think it’s ob­vi­ously true that most star­tups don’t have a 0.1% chance of re­turn­ing 5000x your money.

No­tice that the most im­por­tant fac­tor in that calcu­la­tion is gen­er­ally not “chance of suc­cess”, but rather “chance of 5000x re­turn, given suc­cess”.

• I thought Bit­coin, speci­fi­cally, was a bub­ble/​pyra­mid scheme. I still think so, as well as think­ing it’s a colos­sal waste of en­ergy.

Ob­vi­ously, that doesn’t mean I couldn’t have got­ten rich by buy­ing it, or that I wouldn’t want to do so. And I’ve also ad­justed my be­liefs; I think I un­der­stand how it has failed to crash, and so I could imag­ine it con­tin­u­ing to have some­thing like its cur­rent value for even 5 or 10 years more.

But it is very, very hard for me to imag­ine a world in which I am able to make a large pile dol­lars from some­thing I so deeply dis­trust and dis­like. And I don’t think “I coulda been rich” is an out­stand­ingly com­pel­ling rea­son to rad­i­cally up­date my val­ues and/​or episte­mol­ogy.

• Who is our con­trol group? I can think about two can­di­dates:

1) “Ra­tional”Wiki

David Ger­ard (RW ad­min) writes ar­ti­cles about how you can’t ac­tu­ally sell Bit­coins, and those ar­ti­cles get highly up­voted on Hacker News. I would take that as a weak ev­i­dence he doesn’t have any.

2) Logic Nation

Athene (some guy who tried some weird fi­nan­cial scheme on LW, and then started his own cult) is sel­l­ing his own cryp­tocur­rency (ac­tu­ally, two of them; you can use the former to buy the lat­ter).

Seems to me that Less Wrong is somethere in the mid­dle. I guess that makes us merely av­er­age weir­does.

• I’m one of the 15%. Given de­clin­ing marginal util­ity of money , high-risk-high-fi­nan­cial-re­ward bets have never ap­pealed to me; the fi­nan­cial EV would have to be ridicu­lously high for the EV in utilons to be pos­i­tive. I con­sid­ered get­ting some BTC as a cu­ri­os­ity in 2011 but de­cided it was too much has­sle. How­ever dis­cus­sions in the af­ter­math of the 2016 elec­tion led me to con­clude that hold­ing a small amount of cryp­tocur­rency could de­crease over­all risk by miti­gat­ing cer­tain le­gal risks (e.g. money you can mem­o­rise might be good to have if you’re a flee­ing re­fugee), and so I bought some in early 2017, de­spite as­sum­ing that the then-cur­rent price was ba­si­cally effi­cient and so ex­pect­ing 0% av­er­age re­turns. I have of course been pleas­antly sur­prised by the re­turns since then, but con­tinue to make de­ci­sions based on the as­sump­tion of 0% ex­pected re­turns go­ing for­ward. (I’m wait­ing to re­bal­ance out un­til the cap­i­tal gains are long-term for tax pur­poses.)

• 1: Our epistemic ra­tio­nal­ity has prob­a­bly got­ten way ahead of our in­stru­men­tal rationality

I would defend the in­stru­men­tal ra­tio­nal­ity of hav­ing a rule of thumb that un­less you’re quite wealthy, you don’t bother look­ing into any­thing that ap­pears to be a ‘get rich quick’ scheme, or seek to in­vest in high-risk high-re­turn pro­jects you can’t eval­u­ate.

Yes some­times it will fail big, if you miss the boat on bit­coin, or Face­book or what­ever. Every strat­egy fails in some sce­nar­ios. Some­times bet­ting it all on 23 red will have been the right call.

But be­cause it i) low­ers risk, ii) saves you wast­ing time look­ing into lots of dud in­vest­ments to find the oc­ca­sional good one, iii) makes you less of a mark for scams and delu­sions, I think it’s sen­si­ble for most.

• I got a lot of ex­tremely valuable ra­tio­nal­ity ad­vice from Less­wrong, but even if I had read the ar­gu­ments about Bit­coin, I would not have bought any. Like some­one else said, it feels too much like a penny stock.

You migh call Bit­coin “Pas­cal’s In­vest­ment Scheme”

• Hmm, now I’m start­ing to won­der if Satoshi is a rationalist

• Hal Fin­ney was Bit­coin user num­ber 2, and is cur­rently cry­op­re­served at Al­cor. There’s been a LOT of over­lap from the very be­gin­ning. Hard to say about Satoshi, though.

• Thanks for rub­bing salt in the wound. (Only a tiny bit se­ri­ous.)

Back when min­ing was pos­si­ble on a stan­dard desk­top com­puter I mined a block in my first week, and re­ceived 50 bit­coins. A cou­ple years later, I found that bit­coins were trad­ing at the mind-blow­ing sum of \$1 each, and cashed in. (In my pitifully weak defense, I was re­ally short on money at the time.)

If I had done some­thing sen­si­ble, like sold a few each time the price went up 10x, I’d have a pile of cash and prob­a­bly some bit­coins left.

Weep for me, oh ye in­ter­nets.

• Is this tak­ing the as­sump­tion that it was a sound in­vest­ment based on its un­der­ly­ing value and there­fore pre­dictable? Or is this say­ing that the ex­plo­sion in price was pre­dictable even if un­jus­tified?

My be­lief on bit­coin is that it isn’t a vi­able fiat cur­rency al­ter­na­tive and won’t be (nor will any other crypto) be­cause gov­ern­ments won’t al­low it. I be­lieve this be­cause it wouldn’t make sense for a cen­tral bank to vol­u­nar­ily give up one of its few eco­nomic lev­ers. A gov­ern­ment could kill the bull propo­si­tion for bit­coin by mak­ing it ille­gal for all trans­ac­tions to reg­istered busi­nesses and mak­ing you pay tax in fiat cur­rency as well. If law abid­ing busi­nesses are un­able to use it then it can’t be a good cur­rency. Then it’s only use­ful as a volatile cur­rency store and for buy­ing drugs on the in­ter­net, al­though cryp­tos with bet­ter anonymity will even­tu­ally take that over.

If you think I’m miss­ing or wrong about some­thing here please let me know. I’m re­ally cu­ri­ous as to how this will play out.

• It seems like you are us­ing the word pre­dictable in a way that’s non­stan­dard. Every­thing is pre­dictable. You can put a prob­a­bil­ity on whether an as­troid will hit earth. The core ques­tion is what prob­a­bil­ity is war­rented and for bit­coin a rea­son­able prob­a­bil­ity as­sess­ment would have sug­gested buy­ing it.

Gold isn’t a good cur­rency and there’s a lot of money stored in it. Similar ar­gu­ments go for ex­pen­sive art that gets brought with the be­lief that it ap­pre­ci­ates.

If you look at the US, the cen­tral bank can’t make laws. It’s a Repub­li­can con­trol­led congress and sen­ate along with a Repub­li­can pres­i­dent who cur­rently do. There are pow­er­ful peo­ple in Sili­con Valley who lobby for bit­coin and Repub­li­can’s don’t want to pass reg­u­la­tion that makes life hard for busi­ness.

• Thanks. I get your first para­graph. That’s what I was mean­ing to say.

On Bit­coin vs Gold: Gold has phys­i­cal prop­er­ties that make it very valuable. It is a great con­duc­tor of heat and elec­tric­ity, the most cor­ro­sion re­sis­tant of all met­als, highly male­able, aes­thet­i­cally pleas­ing and scarce. Gold may have some de­gree of cul­tural/​sig­nal­ling effect driv­ing its price up but I don’t know this for sure.

On Bit­coin vs Art: Art has its aes­thetic value but ob­vi­ously most of the price comes from its cul­tural/​sig­nal­ling value and scarcity.

Bit­coin ob­vi­ously has scarcity in com­mon, but if it doesn’t get mar­ket share as an ac­tual goods and ser­vices trade cur­rency then its in­her­ent value just comes from what­ever other peo­ple are will­ing to pay for it and not what it does (un­less the fast, se­cure trans­ac­tions fea­ture is valuable enough on its own). Nor­mal cur­rency is scarce and backed by the gov­ern­ment and there­fore the en­tire econ­omy of its coun­try mean­ing you can use it to trade for X amount of goods/​ser­vices in that coun­try. Bit­coin is worth USD, which you can use to do all the above, but only be­cause peo­ple are will­ing to pay lots for it. And peo­ple are only will­ing to pay lots for it be­cause they ex­pect in the fu­ture it will be worth more. Even­tu­ally peo­ple will stop want­ing to buy it so then why would you hold it? Then you’d just put your money in stocks to get re­turns again.

I guess the ques­tion I’m re­ally chas­ing an an­swer to is what would a fu­ture look like that jus­tifies Bit­coin’s price?

Re 3rd para­graph: You’re right there. I wrongly as­sumed gov­ern­ment would do the will of the cen­tral bank. In more au­thor­i­tar­ian coun­tries like China this may be the case soI’d ex­pect them to be the first to im­ple­ment such a policy.

• I guess the ques­tion I’m re­ally chas­ing an an­swer to is what would a fu­ture look like that jus­tifies Bit­coin’s price?

The fu­ture used to look like a medium for anony­mous, un­trace­able trans­ac­tions be­yond the con­trol of gov­ern­ments for the sorts of goods that you need that to safely deal in. That was the pri­mary, ob­ject-level sel­l­ing point of Bit­coin. Then Silk Road got bro­ken by law en­force­ment. The newer ri­vals have their own would-be kil­ler apps to give them real value. I’m not sure what Bit­coin’s unique value propo­si­tion is these days. For any­one who has some Bit­coin and is will­ing to say: when did you last use it to buy some­thing, and what?

• Bit­coin is (cur­rently) pretty much use­less as a medium of ex­change. It re­mains of some prac­ti­cal use as a store of value re­silient to cer­tain le­gal risks (e.g. as the an­swer to the ques­tion Eliezer asked in this Face­book post), and in gen­eral with a risk pro­file un­cor­re­lated with other as­sets. Its strength over other cryp­tocur­ren­cies for this use case is based pri­mar­ily on be­ing the most es­tab­lished Schel­ling point. It’s also pos­si­ble (though not look­ing par­tic­u­larly likely) that fu­ture soft­ware changes will even­tu­ally make it use­ful as a medium of ex­change again.

• I think it’s safe to say it doesn’t have a unique value propo­si­tion any­more. It just has mar­ket share.

• I do think that bit­coins cur­rent price is more likely than not a bub­ble that will pop.

But to en­gage with the is­sue I don’t think that any­body buys art­work worth 9 figures of money for cul­tural/​sig­nal­ing value.

If you are in the US with a rel­a­tively trust­wor­thy gov­ern­ment it’s easy to hold USD and be con­fi­dent that it won’t lose much value due to in­fla­tion. The same isn’t true in many other coun­tries.

• I think ex­pen­sive art gets its value from the fact that re­ally rich peo­ple are will­ing to buy it for so­cial sig­nifi­cance. On top of that in­tel­li­gent art in­vesors will also buy it know­ing that rich peo­ple in the fu­ture will still want to buy it, but there will be more com­pe­ti­tion be­cause of the in­creased num­ber of rich peo­ple and the scarcity cre­ated by it be­ing held over time by a pri­vate sel­ler (the longer it gets held the less likely you’ll get an­other chance to buy it in your life­time). What’s your the­ory on where the value comes from?

Agree on your in­fla­tion point. How­ever then your BTC is only a trade away from the less volatile USD. The value pro­pos­tion seems tough with all the su­pe­rior com­pe­ti­tion and bet­ter uses. Kinda psyched for the one with a pre­dic­tion mar­ket at­tached.

• I think that art has scarcity and that leads to rich peo­ple buy­ing it be­cause they think it wil ap­pre­ci­ate in the fu­ture.

If you are in a third world coun­try and the gov­ern­ment raides your house they can eas­ily take all the USD you have at home. On a big­ger scale you have big or­gan­si­a­tions buy­ing mas­sive num­bers of trea­sury bills with nega­tive yields be­cause they don’t want to hold cash.

Even in the US you can have the gov­ern­ment take your money via civil forfei­ture if you carry too much cash around. Num­bers sug­gest that the US po­lice stole more money from cit­i­zens via civil forfei­ture then was stolen in bur­glaries.

• And scarcity, es­pe­cially of any­thing with cul­tural value, gives pres­tige/​sig­nifi­cance to who­ever owns it. Like rich peo­ple buy­ing cool old but rel­a­tively use­less cars. It’s just a cool think to have that ev­ery­one else will think is cool too. Most don’t care about its ap­pre­ci­a­tion. Some may buy it for that pur­pose, but not all.

Valuable art pieces also con­fers pres­tige on any in­sti­tu­tions that hold them. Every­one can og­gle at how much the art is worth and as­sume this must be one of the best mu­se­ums in the world.

Think of it like buy­ing an over­priced but cool pair of limited edi­tion shoes (Yeezy’s or what­ever). Most peo­ple will wear them to show them off, but some peo­ple will never take them out of the box be­cause they know in the fu­ture other peo­ple who want to wear them to show them off will pay even more for them. With art, show­ing it off doesn’t de­pre­ci­ate it so it’s like hav­ing LE shoes that never wear out.

It can’t just be scarcity. Peo­ple have to want the art for some other rea­son for it to have that value. I can cre­ate an equally scarce piece of art by do­ing one paint­ing, sign­ing my name to it and never do­ing paint­ing again. Pi­casso’s are valuable be­cause they are great, fa­mous for their great­ness and scarce mean­ing it’s a big sig­nifi­cant pres­ti­gious thing to own one.

• I de­cided to buy only 0.5 BTC in 2013 as I thought that buy­ing more will re­quire too much my men­tal en­ergy to think about how the ex­change rate changes. The truth is that I still think about it a lot.

I also read a post about Davos-2018 where was said that older peo­ple think that all prob­lems will be solved by AI, and younger ones think that blockchain will solve ev­ery­thing. Surely, LW peo­ple are more in­clide to think that AI will solve ev­ery­thing and it ex­plains the ig­nor­ing of bit­coin.

• I also read a post about Davos-2018 where was said that older peo­ple think that all prob­lems will be solved by AI, and younger ones think that blockchain will solve ev­ery­thing.

I think that (x-risks aside) while for ev­ery thing there is a time at which it will be solved, there will be no time at which ev­ery­thing is solved. How old does that make me? :)