Let's take a look at some of the lesser known forces driving adoption.
Starting with B..B..Barbra Streisand 🎤
A 🧵..
The STREISAND EFFECT:
A phenomenon whereby an attempt to hide, remove, or censor a piece of information has the unintended consequence of publicizing the information more widely, usually facilitated by the Internet.
Every time a an institution attempts to repress or dissuade Bitcoin usage, they are unknowingly driving traffic towards it.
In a fiat economy, the original recipients of new money enjoy higher standards of living at the expense of later recipients. As they create a disproportionate rise in prices, through their spending preferences, among different goods in an economy.
VEBLEN GOOD:
'Types of luxury goods for which the quantity demanded increases as the price increases, an apparent contradiction of the law of demand.'
“A higher price may make a product desirable as a status symbol. A product may be a Veblen good because it is a positional good, something few others can own.” - wikipedia
ANTIFRAGILITY:
“The classic example of something antifragile is Hydra, the Greek mythological creature that has numerous heads. When one is cut off, two grow back in its place.”
-Farnham Street
GRESHAM'S LAW:
If two forms of commodity money circulate, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation.
Gresham made his observations with respect to the poor quality of British coinage.
Henry VIII, had replaced 40% of the silver in the coin with base metals, to pay for wars without raising taxes.
Eventually the outer layer of silver had become so thin that it would wear off revealing the copper below.
SCHELLING POINT:
A solution that people tend to choose, by default, in the absence of communication.
Oncoming bikers need to coordinate to avoid a crash. They each can go straight, left or right.
If you drive on the right hand side of the road, it becomes natural that both bikers would swerve to their respective right side.
LINDY EFFECT:
Adapted from Goldman’s 'Lindy Law', and later popularised by Taleb, Mandelbrot defined the 'Lindy Effect' in 'The Fractal Geometry of Nature' (1982).
"However long a person's past collected works, it will on the average continue for an equal additional amount.”
THE IMPOSSIBLE TRINITY:
Also known as the 'Mundell-Fleming Trilemma', this rule states that a country must choose between free capital movement, a fixed exchange-rate and an independent monetary policy. Only two-out-of-three can be achieved.
Several major financial crises have occurred as a result of attempting to have all 3 policies:
AMARA'S LAW:
Roy Amara captured how wildly excited we get about a new technology initially, but how our excitement eventually wanes due to disappointment. It's at this point the technology accelerates and becomes disruptive.
AMARA'S LAW:
THE KAPLAN DOCTRINE:
Coined by @DTAPCAP, the principle highlights the inherit risks of holding hard physical assets, specifically gold, in jurisdictions deemed risky or hazardous.
THE INEQUIVALENCE THEOREM:
Many economic assumptions about behaviour are rooted in
the 'tyranny of place'.
Countries that run ever-growing deficits w/ large unfunded liabilities will see rational & able people flee for jurisdictions with less indebtedness and more certainty.
'An individual’s values, a company’s mission, and a nation’s constitution, all attract long term players playing long term games.'
‘All returns in life, whether in wealth, relationships, or knowledge come from compound interest.”
'The minority rule will show us how it all it takes is a small number of intolerant virtuous people with skin in the game, in the form of courage, for society to function properly.'
An analysis of the history of technology shows that technological change is exponential... So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).
- Ray Kurzweil (2001)
"When it comes to history, we think in straight lines... In order to think about the future correctly, you need to imagine things moving at a much faster rate than they’re moving now."
"As oil and gas companies continue to wake up and realize they can use all of the FREE gas they are currently wasting on their fields to mine bitcoin, this will severely reduce the price at which your average miner can mine profitably."
Conceived by George Gilder but attributed to Robert Metcalfe (co-inventor of Ethernet), this concept relates to the value of a communications network being proportional to the square of the number of connected users.
Asset classes are defined by the preferences of a generation. So how will the world's first digitally-native cohort behave?
Millennials get a lot of the attention, but the future of Bitcoin will one day be driven by Generation Z to see the asset through to its maturity.
🧵👇
Firstly, who is Gen Z? What are the generational boundaries?
There’s still much debate about the exact cut-off for millennials, but let’s take the @pewresearch definition of people born between 1997-2012. Making this cohort currently between 8 and 23 years of age.
Secondly, how significant is Gen Z in terms of size?
Some selected tweets from @naval's most recent appearance on The Tim Ferriss Show that specifically reference how he is currently thinking about Bitcoin + crypto.
1/ "I think cryptocurrencies are probably one of the greatest inventions in human history and the reason why they’re interesting is because if you look to the technology industry, technology plays in unregulated spaces."
2/ "It is a digital frontier that is being created, now that the physical frontiers are all closed and the new world has been colonized and the wild west has been tamed."
Another Bitcoin cycle means another wave of FUD in the form of red herrings, false claims & flawed arguments.
Some are due to ignorance, some are intentionally misleading and some are just pure lazy.
So, here are the most common BAD TAKES to be on the lookout for.
THREAD
“There is nothing inherent about the tools used to facilitate crimes that makes them criminal in themselves. Despite criminal use, no one is calling for the ban of roads, the internet, mail, etc.” @parkeralewis
“It is logically inconsistent to form a view that bitcoin is sufficiently functional to be viable as a currency for criminals, while at the same time deny the implication that such a view would merely establish that bitcoin is functional for everyone.” @parkeralewis
The Price of Tomorrow by @JeffBooth explains what happens when deflationary technology meets inflationary money.
It’s also a guide for where we might be headed.
“What is coming next in technology changes the rules in a way that too few understand.”
🧵
Jeff is exceptional in anticipating the exponential speed at which technology develops, while understanding the surrounding economic environment.
Few are better positioned to explain what is happening today.
My key takeaway:
The speed of technology deflation outruns monetary inflation.
A mandate to create inflation is a losing battle against tech products + services that are, by nature, deflationary. It will only serve to unevenly redirect inflation into other areas of an economy.
This is the story of two disruptive innovations, several centuries apart, with remarkable similarities.
My hope is that you'll gain insight into the largely invisible technological forces that alter the incentives of obedience and steer the evolution of how we organise society.
What Johannes Gutenberg and Satoshi Nakamoto unleashed would prove to have ramifications far greater than anyone could have imagined at the respective time.
Their *information-freeing* innovations challenged stale and burdensome institutions, ripe for a grass-roots disruption.
Let’s begin with TRUST- the key ingredient that enables us to cooperate and trade.
Assessing it requires access to accurate information.
Maintaining it requires delivering on promises or social contracts.