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Can Interest Rate-driven Crypto Selloffs Be Hedged?

It has been a very tough stretch for cryptos. In the past week (as of 2:50pm ET on 7-Jan-22),

  • Bitcoin – 11.4%
  • Ethereum -14%
  • Solana -19.1%
  • Avalanche -16.4%
  • Polygon -17.6%

And on and on. But cryptos have only mirrored some of the high-valuation, high-growth, momentum-oriented stocks. Week-to-date, some returns include:

  • iShares S&P 500 Growth ETF (IVW) -4.1%
  • ARK Innovation ETF (ARKK) -10.4%
  • Global X Cloud Momentum ETF (CLOU) -8.4%

But the reason is pretty simple. All of those – cryptos, momentum stocks, profitless tech – are just very much levered to rates. The Fed signaled this week that it was going to tighten policy faster than many expected, Treasury yields have spiked, and a lot of the high-fliers have been seriously wounded.

So what is a crypto investor to do

Most people buy cryptos because they think they’re going to go higher, not necessarily as a hedge to a portfolio or another asset class. In fact, one of the big selling points is that crypto is an uncorrelated asset class. But as I argued in December, the opposite is true – cryptos are just super high-beta assets. They just swing (quite widely) along with the markets over time.

But let’s pretend that crypto investors were interested in limiting risk. Without jumping into complex derivatives to limit up- and downside exposure, something like a pair trade between long crypto + short Treasuries would somewhat lock in the crypto-only exposure.

Does that work in practice though?

To preface: This is just a sample of one hedge, and over an unusual period for Bitcoin at that…

I looked at the price of Bitcoin and the price of the iShares 20+ Year Treasury ETF (TLT). If Bitcoin’s price rises, you gain. If long-duration Treasury yields rise (that is, Treasuries sell off), TLT loses. But if you’re short TLT and yields go up, you gain (there are other ETFs that are short Treasuries, but we’ll pretend we’re borrowing for free for this example). A long Bitcoin/short Treasury strategy should work because they should be natural hedges to each other.

If we look at a snapshot over the past week, the decline in Bitcoin’s price would have been offset somewhat by the short TLT position, as yields have jumped. Of course, I’d never expect TLT to fully offset Bitcoin’s ups and downs since cryptos are inherently much more volatile than Treasuries. But maybe it would help create a more stable portfolio.

Unfortunately, this one example didn’t work

From 6-Jan-20 to 5-Jan-21, $100 in Bitcoin alone would have ended up at $560. A $100 investment in TLT would have led to $106.50 over the same period – so a short TLT position would have netted you a $6.50 loss (we’re ignoring borrowing costs for simplicity).

Let’s say you invested in a 130/30 long Bitcoin/short TLT portfolio. That is, you borrow 30% of your position in TLT to roll into Bitcoin. That would have give you $697 at the end of the period. You’d also have increased your Sharpe Ratio – that is, your risk adjusted return – from 1.81 with Bitcoin alone to 1.82 for the long/short portfolio. However, you can’t get very much more levered without eating into your returns. In fact, a 110/10 portfolio would have give you a Sharpe Ratio of 1.81 – better than the 130/30 and about the maximum risk-adjusted return possible. A 200/100 portfolio would give you Sharpe Ratio of 1.15 – not great.

The problem is, you can’t really get the volatility of the mixed portfolio down by combining with a short TLT position. The Bitcoin portfolio had an annualized volatility of 0.75 (yikes!). The TLT was 0.182. The 130/30 portfolio is 0.90. That is – adding a short position did nothing to reduce your portfolio’s volatility. You have to have a portfolio that is long both Bitcoin and TLT to reduce your portfolio’s volatility – but even then, you’re going to give up some of your risk-adjusted reward.

This is probably all a function of a very unique period in Bitcoin’s history – and it may just work yet

If Bitcoin settles down and somehow becomes less volatile, the long/short strategy might just work to earn a significantly better risk-adjusted return. But Bitcoin futures are up only 5% over the past year to $41,665, and in that time there has been a closing high of $67,985 on 9-Nov and a closing low of $29,815 on 20-Jul.

However, since mid-2021, we’ve seen a broad decline in the volatility of Bitcoin – meaning it might just become tame enough to play some long/short positions against it.

Here’s a link to the spreadsheet if you want to play around with the numbers – you can change the weights of the portfolio by adjusting O14 on the calc tab (highlighted in yellow) https://docs.google.com/spreadsheets/d/1JFq6Vav3AdgG4IncpM9ADaR3nV6tLtXa/edit?usp=sharing&ouid=107288868242385396557&rtpof=true&sd=true

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Why Ford wants to make buying a car as easy as buying an iPhone

The past year has been a difficult one for the auto industry. December auto sales were down 23% y/y, while the second half of the year was the worst for the industry since 2009.

The global semiconductor shortage is the biggest culprit – and it’s going to take several years to get things right. As a Chevrolet dealer told Bloomberg,

“This will be my lowest volume year in 20 years. We’ll end up around 2,500 units when I normally do 3,300 to 4,500,” Paddock said by phone. “Everything I’ve got coming in, we’re selling before they come in.”

If you’ve bought a car in the past year – or simply did any level of research about buying a car – you know it’s impossible out there. You have to make some major concessions on what you’ll get – color, features, and most importantly, price. Otherwise you’re just not going to get a car, because the perfect car for you doesn’t exist right now.

Consumers adapting to the new rules set by automakers

Axios said this week that the car shortage could change buying behavior forever. Because you can’t just go to a dealer and walk away with a car,

Supply chain disruptions could have a silver lining for automakers if Americans can be trained to order the exact car they want — color, features, bells and whistles — and then wait a month or so for it to be delivered.

I think what’s happening is the exact opposite. People are fine settling for a car that isn’t perfect – that doesn’t check all the boxes for color, features, and bells and whistles.

For basically all buyers, there were so few cars, so there was no such thing as the perfect car. And as we’ve seen, that hasn’t deterred people from actually buying cars.

And that has pretty big implications for automakers – just not in the “fully customized, perfect car made-to-order” way the Axios article sees the future.

The paradox of choice would suggest that maybe people don’t want to choose between a ton of models. Instead, carmakers should just build a smaller number of models that people do want to buy. And figure out how to either build them better or more cheaply.

Complexity = cost

Let’s say you’re an automaker.

You can be automaker A and make four models with three different packages for each model. That’s a total of 12 possible cars.

Or you can be automaker B and make 20 different models with five different packages for each mode. That’s a total of 100 different cars.

Who is going to have the more efficient cost structure? Obviously it’s A. And that’s the Tesla model.

In order to scale its business a few years ago, Tesla had to create one vehicle model at a time, so they had to be something they were sure people would want to buy. Then the next step was to create a lot of them. Then rinse and repeat.

Tesla wasn’t a legacy automaker so it had to be efficient with its capital, which meant build fewer models but get people to really want them. In its Q3 results, Tesla’s automotive gross margins hit a record 30.5%, its best in at least five quarters (CNBC). Then the company announced this week it delivered 308K vehicles in Q4, well above estimates for 267K (CNBC). So it’s producing more cars at a growing margin. That’s the kind of scale the legacy autos can only dream of.

[Note: this by no means justifies Tesla’s share price. That’s another issue altogether]

Enter Ford’s F-150 Lightning

Ford has realized that scale is the future of the industry – cutting the number of sedans it offers to just two (Bloomberg). Ford’s automotive segment margins have sat in the high-single-digits for years, so the company has a long way to go to catch Tesla.

One way it can do that – and is doing that – is creating cars that people want. The all-electric F-150 Lightning is one of those.

The waiting list for the F-150 Lightning reached 200K last month, while Ford just announced it would double production to 150K units per year. Do you think those people who put in a reservation for the truck care if it’s the perfect color or has the absolute correct entertainment/media package?

Probably not – instead people want the experience to be as easy as walking into an Apple Store and buying an iPhone. Know which model you want, pick the color and storage, and that’s it. You know the price, you know the specs – no getting upsold on anything else.

Tesla has the margins to prove that consumers are wiling to choose between a narrow range of models and features. It’s exactly like Apple and the the super-high-margin iPhone. Allow consumers to choose between a couple of different models, go DTC, and don’t allow for too much customization. Let the product (and the brand) speak for itself.

That’s what Ford is doing, especially with the F-150 Lightning and the Bronco. It can really take its performance to the next level if it starts selling direct-to-customer.

There’s just one problem – its century-old dealership model isn’t going to let that happen anytime soon.

Read this

  • Ford Wants To Compete With Tesla, But Its Dealers Are Getting In The Way (Jalopnik)
  • Selling Cars, Plus Coffee, Tea or a Fancy Dinner (NY Times)
  • Titans of Carmaking Are Plotting the Overthrow of Elon Musk (Bloomberg)
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Why is 2021 ending with much love for web3, hate for Bitcoin?

As 2021 comes to a close, here’s no shortage of crypto annual recaps out there. This was the year of a new Bitcoin all-time high. Of Dogecoin. Of NFTs. Of Ken Griffin scooping up a copy of the Constitution over a DAO. Where you could ask somebody (under the age of, say, 40… or Ken Griffin) if they know what a DAO is and there’s a decent chance they can tell you.

But the vibe around Bitcoin as the year comes to an end just isn’t the same as it was in 2017. Or 2020. It’s… different.

The descendent Bitcoin

Let’s go back one year to December 2020, when the general sentiment around Bitcoin was through the roof. A garden variety of reasons tipped a lot of previously indifferent observers into something more akin to bulls (but not maximalists – that’s an entirely different breed altogether). Bloomberg’s Tracy Alloway captured the zeitgeist at the time very succinctly:

The list of Bitcoin’s purported uses goes on and on, and every time an obituary for Bitcoin is written, a new use case or bull argument steps in to to take its place. I used to think this was a weakness since Bitcoin could never be all these things at once. But the more I think about it, the more I realize that it’s actually a strength.

Myles Udland echoed this in his Substack “Bitcoin is a thing that exists

“No one cares if the network is good or the price is volatile. The strongest case for owning Bitcoin is that pretty much everyone has heard of it and has an opinion on whether you should own it.”

Everyone at the time had an opinion – and this year we continued to see a lot of capitulation among the skeptics, a ton of FOMO, and some new (maybe) uses (theories) for the broader crypto-sphere over the past 12 months. Just look at Solana and Avalanche – if you put $1 in either of those at the beginning of 2021, well, lunch is on you.

But sentiment around Bitcoin has plummeted in the past few weeks. After hitting an all-time high in November, pushing toward $70K, it’s since fallen into the mid-$40K range for several weeks.

The amazing thing was that it wasn’t really skepticism over how well Bitcoin is as a payment mechanism. Or how many HODLers are out there on Reddit touting Bitcoin. Or how many parents and grandparents are finally signing up for a Coinbase account and buying up a couple of bucks of Bitcoin at a time.

Bitcoin is basically just a momentum asset, just like cloud computing or payments stocks. Want to get a sense of how bullish investors are? Just look at the price of Bitcoin. Or Shopify. Or ServiceNow. Or ARKK. Or any of the numerous high valuation, growthy stocks and funds out there.

Bitcoin correlates with Nasdaq 100 futures more than bond-market inflation gauge

Even worse, just take a quick look through Crypto Twitter and it won’t take too long to find a mention of M2 or Jay Powell. The money printer go brrrr meme has been the lynchpin of a huge swathe of the Crypto universe for a long time.

The problem with this argument is that this was never true. Bitcoin’s price has never been driven by inflation expectations or money supply or any nefarious government plot to debase the dollar. Inflation is the highest it has been in decades (and is going to continue holding at elevated levels into 2022), and Bitcoin is off by a third from its all-time high just a couple of weeks ago.

(Not to mention M2 growth is way below its peak earlier this year and has settled only slightly above the levels of the previous couple of years – not surprising given nominal GDP grew by 17% in Q2 and by 10% in Q3. That was always a weird horse to hitch your argument)

Bitcoin and cryptos are first and foremost momentum assets. Second, they’re narrative assets – they require a vision of some grand future to get people to buy into the system now, so they can be at the vanguard of our new tokenized world

(For the record – I think there are a lot of interesting crypto projects out there, and while my own crypto holdings are very minimal, I will be happy to admit that I think there’s something there).

Which brings us to…

The ascendant web3

Call it what it is – web3 is a rebrand of crypto.

But that’s ok – it’s part of the narrative.

We’ve already pretty much stricken ICOs and ETOs from the crypto conversational dictionary. So this is just the next iteration.

And it seems to be working. Jack Dorsey pivoted the web 2.0 Square to the web3-focused Block. Lyft executive Brian Roberts pivoted from the web 2.0 ride sharing firm to the web3 NFT platform OpenSea. David Marcus let the face of web 2.0 – Facebook – to start his own web3 crypto project. Even Facebook’s own rebrand as Meta is an attempt to transition from web 2.0 to web3.

It’s going to take a while for web3 to move into the mainstream – if it ever does (or at the very least, it will certainly exist alongside web 2.0, if not remain a small fraction of the size of the old tech stalwarts).

But it’s a thing. People are leaving real jobs to be part of the web3 movement.

One of the best parts of my week is getting Packy McCormick’s Not Boring Substack. If you’re at all interested in finance, banking, payments, art, technology, social media, or really any part of the modern economy – there will be some web3 element trying to disrupt it. At the end of the day, they may only scrape off a few pennies from each of these massive segments of the economy – but that doesn’t mean they aren’t important or aren’t A Thing.

But 2022 will be even more interesting for crypto and web3 because…

The Fed said it will hike rated three times in 2022

The past 21 months have been incredible for risk assets. Since the pandemic, pretty much everything is up and to the right – small-cap stocks, large-cap stocks, big tech stocks, unprofitable tech stocks, bonds, junk-rated debt, crypto… Everything was a winner. Some more than others, but it’s been a good run.

And crypto is already feeling the wrath of a tightening Fed.

Growth stocks have been hit particularly hard in recent weeks, with companies like Facebook, Tesla, the whole cloud/momentum software universe, Cathie Wood’s ARK Innovation ETF all taking it on the chin as the threat of higher rates takes some of the air out of these previously high fliers.

And that’s the problem – Bitcoin (and certainly Solana and Avalanche) haven’t lived through a true cycle of tightening monetary policy (recall the Fed started and quickly stopped tightening in 2018 and 2019 – nothing close to a full tightening cycle). What’s the appeal to Bitcoin when you can start actually getting paid to hold cash and government debt? What happens to cryptos in a disinflationary cycle?

The narrative has to shift in 2022.

We’ve already seen it start in 2021 with the comeuppance of the term web3. The Fed policy backdrop might mean next year has be a show-me year. The narrative might no longer be enough by itself. Now, it’s how can consumers start using cryptos for real-life purposes? I look forward to hearing about how it goes (like Joe Weisenthal, on web 2.0 Twitter).

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learning

Quoteth:

From Farnam Street Sunday Brain Food newsletter (21-Nov-21):

“You can’t replace reading with other sources of information like videos, because you need to read in order to write well, and you need to write in order to think well.”

— Paul Graham

I think this relates:

Writing is often the process by which you realize that you do not understand what you are talking about.

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learning

November 26, 2021

I wrapped up Amazon’s Exam Readiness: AWS Certified Machine Learning – Specialty course today.

It’s the preparation course to take just before the AWS Machine Learning specialty exam, but I’m nowhere near ready. Instead my strategy was to get a high-level overview of what the AWS ML ecosystem looks like, then diving into those tools themselves.

My experience with ML so far is just creating and training and running jobs locally, so excited to see how that gets spun up in the cloud.

I’m also very curious to see how Amazon SageMaker works in practice, and if it can make something of a Machine Learning engineer out of me, very much a non-engineer.

I’m working out a checklist of my next steps – what I’m planning to follow all the way to the AWS Certified Machine Learning – Specialty examination. These are some of the templates I’m also following, just for reference:

  • How I prepared for the AWS Certified Machine Learning Specialty (TowardsDataScience)
  • My Path to Passing the AWS Machine Learning Certification (Adam DeJans, Medium)

I’m also looking into the PluralSight/A Cloud Guru learning paths, which are larger than just this ML specialty, but probably provide the best combo of learning/action to really understand what I’m working with.

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learning

November 20, 2021

I just signed up for the Buildspace project “Build your own NFT collection on Solana” which starts in early December.

I enjoyed the Buildspace project on Solidity, and while I have zero intention on launching my own NFT collection, it should be interesting to see exactly how the process works.

I’m also (somewhat) interested in Solana. Ever since Packy McCormick wrote about it in August, it has been interesting to compare how it works against Ethereum. Faster, cheaper… but not necessarily more user-friendly. That still seems to be the biggest roadblock for all of the cryptos/smart contracts/web3 platforms.

And just for transparency – Solana is the only crypto I own, and it’s a whopping $30.

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A few thoughts on Cal Newport’s Digital Minimalism

Cal Newport: Digital Minimalism

  • I’d heard about Cal Newport when he was on Ezra Klein’s podcast about four years ago. I’d always had some sense of his argument – that we all have unhealthy relationships with our phone and technology – but hadn’t really done much about it.

  • After I listened to that podcast, I tried a version of his digital detox – deleting all social media apps from my phone, forcing myself to not use the browser. But I still used Google Maps, Kindle, and texted.

  • After that 30 days, I got my daily iPhone usage down to less than an hour a day. I’ve reverted back to a higher level, but I still go in cycles of adding/deleting Twitter and Instagram from my phone. They are both huge distractions to me, especially Twitter. The only problem is I find myself sometimes LinkedIn in its place when I have a free moment. LinkedIn!

  • I’m not worried about maintaining only weak connections through social media – because all my social connections are weak at this point in my life. I have kids, I literally have no time to hold phone call office hours or keep an hour open to grab coffee every week. Time is absolutely my scarcest resource, and it’s not like I’m already frittering it’s away on Instagram.

My biggest takeaway: I need to spend more time creating and less time consuming

My job (a macroeconomic analyst) is a lot of creating. I write a lot for my job.

But I need to do better creating outside of work.

  • I look back at some of my old blog posts from 2014 and am impressed by the breadth of what I was thinking about (for example, I still get traffic on a post about inequality mapped through broadband availability. I’m not sure how – I thought all my work then was offline. I need to look at that…). And it was all writing that was just for fun.
  • There’s no better way to understand something than writing about it. It forces you to get deeper and understand the nuances.
  • This is especially important as hot Twitter takes drive the narrative, which are the most superficial way of communication.
  • Twitter is hugely important to understanding what broad ideas are out there, but you need to do more than write/read 280 characters to really understand it. That should be obvious but I’m practice that’s how people operate.

It’s a really good book. A lot of the advice may be impractical for a lot of people, but I think it is directionally correct for most people. How we need to not only do better with our devices. And especially how the idea of the “slow news movement” would be much healthier for all of our information consumption.

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learning

November 18, 2021

I’ve been working on the AWS Certified Machine Learning – Specialty off and on for about a month or so.

In September, I passed the AWS Certified Cloud Practitioner certification, with the plan of moving right from that into the machine learning certification.

Next is the AWS ML ecosystem. I’ve used AWS at a very high level for a few years, but not with any types of ML workflows or tools.

  • Some of the concepts from the Cloud Practitioner were familiar, but it was good to better understand how I could start leveraging some of the data analysis tasks I do on my computer into the cloud.
  • I don’t necessarily do enough where I need the cloud architecture from a performance perspective, but I think it opens up a lot of possibilities in my workflow.
  • I have done a few machine learning courses online over the years. But I wanted to start to learn how I could do it with the AWS tools – which is probably how I would use it professionally if I were to start having to leverage machine within my day-to-day workflow (currently I don’t have to, but there are a lot of initiatives at my company that are shifting in that direction).

What I’ve done so far and what I’m doing next

  • I’ve completed most of Amazon’s Exam Readiness: AWS Certified Machine Learning – Specialty course to get a high-level overview of what I’ll be working with.
  • Then my plan is to follow with Amazon’s Machine Learning Learning Plan – that is, starting to actually put those tools into action. Then I’ll plan on taking the exam.
  • In the meanwhile I’ll be sharing some of my progress and maybe some of my workbooks that I’ll be putting together as I go through the process.
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November Update: Smart contracts and Solidity

I made good on my promise to myself to learn more about crypto and blockchain.

My last month was mostly filled with the Buildspace Solidity + Smart Contracts project. It was really well done and I look forward to taking more from Buildspace.

Am I going to go all in on Ethereum after that project? No. I still think that a lot of the most mentioned crypto and blockchain use cases don’t even require crypto or blockchain at all. It’s more often than not a solution in search of a problem.

But I hope the whole ecosystem continues to develop because there may be some value to come out of it.

What are my biggest takeaways after the Solana project?

First, I like to think I’m fairly technically minded. I’m not a software engineer by any stretch, but I really try to understand the ideas and concepts behind the software and code that drives technology and ideas and business forward.

But I’m not representative of everyone – and there’s no way that smart contracts, at least in their current form, can take off broadly. There’s a big UI and UX problem with blockchain.

Second, I’m trying to understand how this scales more broadly. I’m currently reading Nathaniel Popper’s book about Bitcoin, and even a lot of the early Bitcoin advocates didn’t trust themselves with private keys. And a lot of them are actually developers! So what’s the point of decentralization when peoples own preferences and tendencies drift toward centralized organizations?

What’s next?

I would really like to make an effort to finish the AWS Machine Learning certification next. I also would like to brush up on some of my Python and SQL fundamentals but I felt like I lost momentum on AWS ML with the blockchain project, and I need to focus on one thing at a time.

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The decentralization movement has a messaging and UX problem

I own zero crypto or digital assets. I have no horse in the race – not because I don’t believe they’re important, or part of the future of finance, or a technology that we may use every single day at some point in the not too distant future.

I simply just buy passive broad-market ETFs. I’ve handcuffed myself to that strategy (but that’s another post for another day).

But I am trying to learn more about the crypto/NFT/digital asset space. I am finding I have a lot more questions than answers as I go through it. I’m a lot more positive on a lot of parts of the space, while I’m a lot more negative about other elements.

There’s a user-friendly design flaw across the decentralized space

I apologize for using “user-friendly.” It’s a term that has been bashed in the ground as everyone and everything tries to copy the iPhone – one of the most complex machines ever invented, yet so intuitive that it doesn’t require ANY instruction manual.

Advocates of crypto and NFTs and blockchain technology think they are sitting on something that has the same power to change the world as the iPhone. I can’t judge whether or not that’s true. But the “blockchain fixes this” meme quickly went from earnest observation to a (fantastic) Twitter joke. Not because blockchain technology can’t solve a lot of problems – it can – but because the current design flaws of the space and the messaging around it are so absurd.

Blockchain

I was recommended a book to read to understand the broader… let’s call it ethos of blockchain.

Amazon link

I think the book fails in a few regards. First, I don’t think it does a very good job of explaining what blockchain really is.

It does an even worse job producing some use cases for blockchain – examples which are fanciful at best and outright blind to any sort of real-world perspective at worst.

Here’s a snippet:

Digital Asset Proof as an Automated Feature In the future, digital asset protection in the form of blockchain registry could be an automatically applied standardized feature of digital asset publication. For certain classes of assets or websites, digital asset protection could be invoked at the moment of publication of any digital content. Some examples could include GitHub commits, blog posts, tweets, Instagram/Twitpic photos, and forum participations. Digital asset protection could be offered just as travel insurance is with airline ticket purchases. At account setup with Twitter, blogging sites, wikis, forums, and GitHub, the user could approve micropayments for digital asset registration (by supplying a Bitcoin wallet address). Cryptocurrency now as the embedded economic layer of the Web provides microcontent with functionality for micropayment and microIPprotection. Cryptocurrency provides the structure for this, whether microcontent is tokenized and batched into blockchain transactions or digital assets are registered themselves with their own blockchain addresses. Blockchain attestation services could also be deployed more extensively not just for IP registry, but more robustly to meet other related needs in the publishing industry, such as rights transfer and content licensing.

Ok, that’s all great! Here are a couple of real-world use cases where an immutable record would be useful and important.

But then it just starts rolling downhill from there:

There could be “personal thinking chains” as a life-logging storage and backup mechanism. The concept is “blockchain technology + in vivo personal connectome” to encode and make useful in a standardized compressed data format all of a person’s thinking. The data could be captured via intracortical recordings, consumer EEGs, brain/computer interfaces, cognitive nanorobots, and other methodologies. Thus, thinking could be instantiated in a blockchain — and really all of an individual’s subjective experience, possibly eventually consciousness, especially if it’s more precisely defined. After they’re on the blockchain, the various components could be administered and transacted — for example, in the case of a post-stroke memory restoration.

And…

As mentioned, in the vein of life logging, there could be personal thinking blockchains to capture and safely encode all of an individual’s mental performance, emotions, and subjective experiences onto the blockchain, at minimum for backup and to pass on to one’s heirs as a historical record. Personal mindfile blockchains could be like a next generation of Fitbit or Apple’s iHealth on the iPhone 6, which now automatically captures 200+ health metrics and sends them to the cloud for data aggregation and imputation into actionable recommendations. Similarly, personal thinking blockchains could be easily and securely recorded (assuming all of the usual privacy concerns with blockchain technology are addressed) and mental performance recommendations made to individuals through services such as Siri or Amazon’s Alexa voice assistant, perhaps piped seamlessly through personal brain/computer interfaces and delivered as both conscious and unconscious suggestions.

I don’t know if it’s because this book was published in 2015, at the true peak of technolibertarianism, but I don’t see these kinds of arguments out there in the wild much anymore.

A quick pause to quickly define terms. I’ll use privacy here not as hiding one’s self from others, but removing one’s self from entrenched institutions: businesses, government, etc.

I think that privacy has become the ultimate goal of the decentralization movement. That’s fine, but as we’ve seen with countless examples in the past years (hacks, scams, grifters…), just because you operate on a decentralized platform, that certainly doesn’t mean it’s private. Are we really going to put our minds on the blockchain (ignoring the fact for the moment that that’s nowhere near possible)? Are we really going to log all of our vitals and most important personal data about ourselves and let it live digitally, even if its on the blockchain? The author admits this is science fiction, so why even mention it?

Or better yet, why would blockchain technology even be the best solution for this type of problem?

Bring it back to Steve Jobs and Dieter Rams

One of the first Mac ads said:

Since computers are so smart, wouldn’t it make sense to teach computers about people, instead of teaching people about computers?

And the industrial designer Dieter Rams wrote up 10 principles of good design.

A few key choices? Good design…

  1. makes a product useful
  2. makes a product understandable
  3. is unobtrusive
  4. involves as little design as possible

That’s it. That’s what’s missing with crypto and the broader decentralization movement.

If you want to promote blockchain technology and cryptocurrencies and start NFTing everything, you need to start producing not only reasonable use cases, but better user experiences to achieve it.

Currently cryptos and NFTs are being designed by crypto/NFT advocates for crypto/NFT advocates. There aren’t a lot of people out there putting themselves in the typical consumer’s shoes and making those experiences seamless in our day-to-day lives.

(I’m also not paying a 21% fee to buy ETH, but again, another post for another day)