Nocoiners and Skin in the Game

There is an old joke amongst post graduate students and it goes like this: I finished my BSc and I thought I knew everything, then I did my Masters and I realized I knew nothing, and then when I did my PhD I realized that I knew nothing and neither did anybody else!

My experience doing my PhD can be summarized as follows:

1. This is easy shouldn’t take long.
2. Look I have already solved it, warm fuzzy feeling.
3. Late night thought, if I have solved it, then it means that this really really hard problem is also solved. At this point you either just deluded yourself, yeah that’s right, because I am Gauss and Feynman all rolled up into one, or you go dammit there must be a mistake!
4. You go find the mistake; your world falls apart, and at that point the real work begins!

What’s this got to do with ICOs and cryptocurrencies? The problem that Satoshi Nakamoto solved in the origional Bitcoin paper is ground breaking, it’s a careful blend of various factors that allows for a solution to the double spending problem inherent in digital currencies.

Now most people like to think of themselves as balanced, they weigh the evidence on new technology or ideas and make decisions after having considered all the facts. Of course, this is complete bullshit. We are all biased and have limited time. It’s perfectly reasonable that most people have never heard of cryptocurrencies and don't have the tools or time to evaluate them, and so missed out on the whole space.

Now what about people in Finance, Economics and IT? Clearly there are many who got it and get it. Then we have the naysayers: the classic “nocoiners”.

When I decided to get more active on social media, I discovered trolls. I never really understood the term, but basically it’s people, who will ask open ended questions like; “It sounds like the law of diminishing returns, until only a few really large mining operations are left, does that not defeat the point of decentralization?” To which some poor noob will give some well thought out long response explaining, exactly how mining works and how difficulty adjusts. To which the troll will respond with a thumbs up emoji or variation on that. Then the troll will say, “But what about Quantum computing?” To which the noob will go into a long explanation that quantum algorithms, assuming they exist, will only give a Sqrt(n) speed up. The response of course will be another emoji, soon followed by another open ended question. The next time you see Nassim Taleb respond “Fuck off” now you know why. So the best way to handle trolls ignore them, or tell them to “Fuck off”!

What is the troll’s aim. Basically trolls seem to take pleasure in the fact that someone else is passionate about something. They like to draw people out on their ideas and then waste their time by pretending to be interested. Sometimes what they are actually after is a job or funding for their project. So, as is so often true in human interactions, it’s about money.

Let me tie this back to nocoiners and cryptocurrencies; there are a whole lot of people in Finance, Economics and IT that could have said, gee this Bitcoin thing seems like a good idea, let me buy $100 of Bitcoin at 1c a coin or at $1 a coin and just forget about it, but didn't. Sure I accept some were to busy and their attention was elsewhere.

Now Bitcoin has surged in value, it’s difficult to ignore. So instead of looking and saying: damn, I was wrong, they double down and say no way I could be wrong, it must be a scam. Others though are: let me see, I will create my own Bitcoin. Others are less nuanced than that, they are: let’s troll people with blockchain and other buzz words and get some cash that way. What’s really funny is, they could just have spent $100 and done nothing and made a fortune! ($100 of Bitcoin at $0.01 a coin is now worth $8m).

The problem for no-coiners now is that, what if Bitcoin succeeds? It means the early adopters become the richest people in the world, bugger that, the richest people in history. With great wealth comes great power, sorry but it’s the way human culture works; I may not agree with it, but it’s the way it has always been. What this means for no-coiners is that they have skin in the game, even if they don’t know it. The rational thing is to invest something into Bitcoin, even at $8 000. Of course they won’t; most will wait till it’s $100 000.

In trading we say “Would Have, Could Have, But I didn’t”.

Don’t be a nocoiner, don’t be a troll: it’s a waste of your time and of everyone elses.

Sunday 16 April 2018