January 2015

is Bitcoin a pyramid scheme?

My answer is "it's complicated". Honestly, bitcoin is just too different from too many things to really be pegged at the moment.

Also, I propose that we use SI style units for talking about bitcoin in day-to-day life... So right now, with bitcoin trading at $100, a cBTC is worth $1, and a mBTC is worth 10 cents.

Let's look at some of the takes on it:
At the moment, everything that I consider to be a traditional currency derives its value from one or both of two places.

Two party systems, Radicalization and the Overton Window

I have been thinking about how far to the right the democrats are, along with the role of occupy, and the tea-party, as well as the role of solidarity. My thoughts are built on top of a few core concepts, the first is how a smoothly running two party democracy leads to voter apathy, low turnout, and two candidates that are almost identical. This set of ideas was brought to my attention by Danny Hilles' article [ http://www.edge.org/3rd_culture/hillis_democracy/hillis_p1.html (annoyingly broken up into many pages.

Who is Middle Class

So recently I have encountered some political action by a group thinking drastically differently from me, and in an effort to model what the hell was going on, I may have finally figured out what the hell being middle class means, or rather what people intuitively mean by it when they say it.

For the longest time I was frustrated that seemingly _everyone_ self identified as middle class. Minimum wage walmart workers, right up to business owners reporting $500K a year on their income tax. That always seemed absurd and incomprehensible to me. After all who does that leave as the lower class? What about the rich? I think I get it now.

The first critical insight, and one that I have had for a while, is that middle class is not an income, it's a state of mind. It just happens to be a state of mind that correlates with a (wide) income level. The middle class are the people who "Have something to lose". That something might be potential, status, property, responsibility, or social connections. But the core thing that defines them is that they have something that they care about.
There are two very important repercussions to that idea, the first is they can be controlled and punished through what they care about. If you fine the middle class, they have money to be taken away, and they feel it's loss. If you put the middle class in jail for a few nights it disrupts their family life, their work life, and generally makes a mess of things.
The second repercussion is that they are interested in growing whatever it is they have, and as a corollary, they have an interest in making the system they are embedded in work better. They value things like efficiency, and are most emphatically NOT interested in going through the trauma that a societal reboot might cause, because it will present a serious risk to the thing they have.

Those who have exited the middle class on the bottom are not so much the poor, as the "Nothing Left To Loose" crowd. They have so thoroughly been failed by the current system, by the world as it stands, that they have nothing they particularly need to defend. If you fine them, it doesn't matter because they have no money anyway. If you put them in jail for a few nights it causes minimal disruption to their lives. Physical violence, and long term incarceration both remain dangerous to them, but even these things loose their threat, not because they are less painful, but because they are so likely to happen at random that a little extra exposure to the risk doesn't matter much one way or another.

Fight Ossification and Build a society you can be proud of

Ossification, System Building, and Creative Destruction.
When a system is young, we can use a nation in our example, but this can apply to many different systems, there is no such thing as "creative destruction". If a component of it, a subsystem, is arbitrarily removed then on average what flows in to replace it will be neither better or worse, and it simply may not be replaced at all. The system is still more full of opportunities than components have capacity to fill, and sub-systems are typically still well designed for the current environment.

As systems age the subsystems that survive take on a life of their own. They become both more integrated, and tend to develop (or simply have) mechanisms of self preservation, even at the cost of the larger system. There is nothing nefarious about this, it is simply an emergent behavior, after a while things that don't have self-preservation mechanisms usually disappear. The problem is that as the external environment, or other elements of the system change the self-preserving systems survive, even if they no longer serve the system as a whole well.

With this state comes the concept of "creative destruction" When a single component of the system that has passed maturity and entered ossification is destroyed it, on average, acts to the benefit of they system. Typically there is an excess of new system building resources that can flow in and create a new, replacement system. Typically the replacement system will typically have two trates: on average not as good at self preservation (not having been filtered by time), and on average a better fit for the current system, and environment. What's more, if the replacement system is NOT a good fit for the environment, it is far more likely to get destroyed and replaced with something that is.
For example, if all the phone companies in the US were to simultaneously fail, it would prove to be an opportunity, new and better systems would replace them almost instantly in an act of "creative destruction".

Little Known Ways to Think About Discipline

Discipline, specifically self-discipline is a tricky beast. It has become a recurring puzzle for me, a word that I come back to frequently, and a concept that I am frequently directed to. The concept of discipline exposes new riddles with each angle that I look at it from. With any subject I consider, pondering how discipline relates to it usually leads into the heart of the subject.

What is discipline anyway?

Wikipedia has a particularly interesting entry, and is a great place to start the investigation of most any subject. From the Wikipedia article:
Discipline is a course of actions leading to certain goal or ideal. A disciplined person is one that has established a goal and is willing to achieve that goal at the expense of his or her individuality. Discipline is the assertion of willpower over more base desires, and is usually understood to be synonymous with self control. Self-discipline is to some extent a substitute for motivation, when one uses reason to determine the best course of action that opposes one's desires. 1

For me, the most unexpected and valuable idea here is that discipline is distinct from motivation. Motivation is what you want to do, discipline is something else. This is a very important point: If I enjoy dancing, then practicing dancing every day is not an act of discipline. Even if I don't enjoy dancing but practice dancing every day, thinking about how it's going to help me wow them at the recital, it's still not an act of discipline. Discipline is strictly reserved for the “Arggh, why am I doing this?” moments.

Another important part of this definition is the assertion of willpower over more base desires. A large part of what discipline is the practice of intentionally ignore your desires, which is to say, to choose to suffer. There is a tendency to think of this only with regards to desires like hunger and rest. It can, however, apply to virtually all desires, including quite refined ones, so long as the willpower is asserted in pursuit of even loftier goals.

An example of this is choosing to go into debt, and choosing not to pay back creditors in order to start a business. Most of us have a strong desire to keep our finances, credit, and good name in order. To intentionally leave that desire unfulfilled can be an act of discipline. The question of which desires are more base than others is it's own riddle of infinite depth.

In this definition, we also encounter the concepts of subsumed individuality and goal setting. What is our individuality in this case? Individuality and identity easily become a theme as large as that of discipline itself, but in this piece I would reflect that it is essentially our ability to make choices, our freedom, or our optionality. Discipline is, in some sense, enslaving ourselves to an ideal or goal. A critical component of this definition is that the setting of the goals, the choosing of our ideals is not part of discipline. Discipline refers only to the follow-through on goals that have already been set. The talent of setting effective sub-goals might be included as part of the act of discipline.

With the Wikipedia article's definition in mind, I'm going to continue the exploration on my own.

Be More Effective by Letting Your Cognitive Bias Run Free

A cognitive bias is a recurring illogical pattern of thought or judgment that appears in most people. That's a fancy way of saying it's something that people always seem to think about the wrong way, or a common mistake. An easy cognitive bias to observe is “the bandwagon effect”, which is believing something is reasonable or true simply because many other people think that it's reasonable or true.

There is a strong, but rarely explicitly made, suggestion regarding cognitive biases: we should attempt to eliminate them from our thinking. On the surface this seems like a very reasonable idea, after all, biases are illogical and lead to incorrect results. I have grave concerns about this approach to cognition because, in my experience, the correct result is not always the optimum one. For example, the perception of terrain slopes is seen as much steeper than it is measured. It's a well documented cognitive bias1, and it's also present for a good reason. Walking up even moderate slopes is generally a bad idea, the bias keeping us safe.

Before we think of a particular cognitive bias as a bad thing or try to correct it, it's worth applying the principal of Chesterton's Fence … Let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.2