- Humans process reality through a subjective lens and thus can’t fully know the objective reality.
- The conceit of modern economics is “thinking you can model human behavior in these unbelievably complex systems”
- In our attempt to understand reality, we use tiny data sets trained over the last few decades and interpreted based on our accumulated assumptions.
- However, as Nassim Taleb describes, things are much less predictable than we think, and we end up with black and grey swans
- Bitcoin is a concrete object in an unpredictable world
The Dollar system
- While we may understand the short-term effects of the Fed’s action, the long-term consequences of the dollar structure are not understood.
- For instance, the effects of debt accumulation and negative interest rates, mandated unemployment or high inflation levels
- Although individuals may have good intentions, centralized power is susceptible to abuse with malicious intent.
- Central bankers believe it’s their duty to perform their activities and that society can be tinkered into a desirable state by changing a few variables. In reality, consequences are often detrimental
- The corporate sector loses competitiveness when bad companies aren’t allowed to fail
- Unfortunately, politicians have short-term outlooks and thus avoid short-term pain. They rush to inject capital at the slightest sign of falling prices.
- Bitcoin’s core operation is to settle transactions according to a specific ruleset. The technical features of the system give rise to political qualities
- Non-discretionary monetary policy: Bitcoin’s algorithmic monetary policy is an alternative to the constant tweaking and intervention of modern central banking
- New bitcoins are minted at a decaying rate, halving every four years until reaching the 21 million coin cap
- The numbers themselves are not what matters. Rather, it’s the predetermined schedule made public before the network was operational
- Strong respect for property rights: No party can issue more bitcoins and dilute the existing supply for network participants
How Bitcoin works
- In essence, Bitcoin is just a replicated ledger, with peers maintaining up-to-date copies.
- A full node downloads and verifies every transaction ever processed on the bitcoin network, any ordinary laptop can run a full node
- Mining is a competitive process that involves large costs. This forces miners to assemble the blocks in a faithful way in order to earn the newly minted bitcoins.
- Mining involves finding a solution to an SHA-256 problem by guessing and checking (brute force)
- The network converges on the latest global state of the ledger continuously, which updates every 10 minutes on average
- A change to the network consensus requires all users to agree. A change that is backward compatible with the current chain is called a soft-fork.
Money is freedom, and if you make stupid financial decisions, you can remove freedom from your life.
Writing as a skill
- In essence, writing is communicating literal neural arrangements from the writer to the reader
- It’s the power to, at scale, change the literal physical composition of peoples’ brains
- Humility is key, letting pride and vanity seek into one’s writing results in a noisy signal
- Strive for simplicity; if you can’t explain it simply then you don’t understand it
- Write to communicate meaning, not to show off or to promote something
Being an impressive writer is different from being an effective writer.