I have been a doubter about crypto (Bitcoin is best of the lot, I think) from the start. I think almost all of these "exchanges" are frauds if they promise anything other than a portal to acquire crypto in exchange for dollars, with the buyer holding the crypto himself, not the exchange. In the end, I think governments will step in to protect their fiat currencies, and will squash crypto, or take it over. There is simply too much power tied up in the production of money to allow the process to be decentralized.
"I failed to appreciate that centralized services would be able to provide the best user experience"
I'm a User Experience person from Web 1.0 through Web2, now working in Web 3 (more in the non-finance side of crypto, on DAOs and smart contracts). This is exactly what keeps me up at night.
The Web UX improved because 1) firms had strong incentive to beat the competition and 2) they were able to make decisions fast. Web 3 is struggling with how to make decisions fast, in a world where they try to bring the "customer" into the process. Fix that, and I'm more optimistic that decentralization can be more successful than "tech democracy".
"Part of the challenge that Elon faces with Twitter is that moving to a donscription model would require Twitter to stay on the left."
I don't think this is really true since Twitter itself isn't the content creator. Now, I am not convinced a subscription model would work for Twitter, but it seems to me a better business model if Twitter opens itself to the entire political spectrum without bias. I think Musk's real risks are personal, though- the Left actively hates him now, and they will likely go after him with legal proceedings, including criminal charges.
Long before left-right politics became a significant issue for Twitter, users were mostly on the left because it evolved to offer activities of interest to far more liberals than conservatives. That's mostly an age issue but also a matter of what is of interest. I agree with Kling to the extent that if Musk loses the left, his chances of a successful outcome diminish greatly.
New York Times and “donscription”--It's worth remembering that in the world before TV major cities had multiple newspapers and people could read one that catered to their views. My father used to quip that NYT's motto really was "All the news that fits, we print." He said the NYT was the Democratic paper while the New York Herald Tribune was the Republican paper. And then were several other papers in NYC back then catering to different slices of the population. People reading news in their niches on the internet is really not a new phenomenon. It's just a bit a hubris for NYT to claim the mantle as the "paper of record."
In an era of fiat money, in which governments have grossly abused their authority to issue, an essential quality of money is missing: scarcity. Crypto is the attempt to address that missing essential.
Fiat currencies have lost their monetary function of serving as a store of value. Governments have attempted to manage that decline to a pace that doesn't provoke revolt, but the loss of value is accelerating as fiscal irresponsibility has run out of control.
Is the attempt to provide quality money once again reason enough to view Crypto in a positive light?
"Fiat currencies have lost their monetary function of serving as a store of value."
Whether inflation is zero, single digit, or even low double digit, cash is never a good long-term store of value but it remains good in the short-term. Deflation and hyper-inflation each have significant problems hence the goal of not going below 2% where increasingly more items will be deflating while others inflate. Likewise, as inflation increases problems increase but relatively slowly. People and the economy can mostly adjust to modest but stable inflation. Variation causes more problems than presence of inflation.
With that as a starting point, what makes you so seemingly adverse to inflation? Or is your real complaint the fiscal irresponsibility?
In a well managed economy, fiat currencies ought to hold value, the way they did up until the 1930s in the US, regardless of whether held in cash, or more likely, in debt obligations.
Inflation is a means of cheating those who save, and rewarding the profligate, including governments, and is therefore morally objectionable. The supposed goal of 2% is, I suppose, a measure of keeping the rate of temperature increase slow enough that the frog can be boiled without causing him to jump out of the pot. It would seem to lack any other persuasive justification. Here is Keynes on inflation:
"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery."
"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Debauching the currency at say 2% per annum does not change the moral valence.
I've heard Lenin's words on inflation before. I've never thought of him as a go-to resource on inflation or much of anything related to economics. That said, while maybe Lenin overstates the issue a bit I generally agree.
Our difference seems to hinge on a slightly different point. The quote is rather ambiguous on what inflation rate is necessary for debauching the currency. Lenin appears to agree with me that 2% per annum is not. 2% would not be noticeable month to month.
"As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, "
Since I have no strong feeling on whether 10% is debauching the currency and we could argue whether Lenin thinks so, it doesn't seem worthwhile to argue that point.
I think Elon Musk views twitter as a communication protocol. One use I see for it, communication between cars. Cars subscribe to hash tags (long&lat or something like what3words) along their route and communicate and coordinate through that. No need for cars to communicate directly with each other. He said several times he thought it was under utilized.
He does seem to value free speech, but he seems to be needlessly confrontational for a successful businessman. Even more so than in the past. He does not seem to value its current use.
I also wonder if there's a model of a very cheap-to-run Twitter platform for the data itself, with a subscription-driven layer of moderation and UI improvements on top of that. Crossing that chasm will be hard, but Musk may have the fortitude (and the cash) to do it.
I agree Ezra Klein's piece include some insightful comments. At the end I saw this link and thought this column was more interesting but maybe I just need to reread Klein's piece.
Your analysis is missing a large disruption that upends the current equilibrium. I think GPT4 has the potential to disrupt search and Google’s search ad monopoly. Also, I think a “centralized” and highly trusted entity like Twitter or Chase could disrupt Crypto. There seems to be the potential for lots of creative destruction in the coming years in all the areas of this essay.
I am also very skeptical about “crypto” - if you think about Bitcoin and crypto being two different things. Software that needs its own money doesn’t make sense to me. (Crypto).
Digital, decentralized money that can’t be inflated, censored or controlled by captured institutions does make sense. (Bitcoin)
Well, I used to cite to we.trade as a real-world use case for smart contracts on a block chain. I went to get a good link to it and ... it shut down. That makes me significantly reduce my belief in smart contracts being a thing, because that seemed like a very well worked-out system from a legal perspective and it seemed like it had the right backers.
I have been a doubter about crypto (Bitcoin is best of the lot, I think) from the start. I think almost all of these "exchanges" are frauds if they promise anything other than a portal to acquire crypto in exchange for dollars, with the buyer holding the crypto himself, not the exchange. In the end, I think governments will step in to protect their fiat currencies, and will squash crypto, or take it over. There is simply too much power tied up in the production of money to allow the process to be decentralized.
"I failed to appreciate that centralized services would be able to provide the best user experience"
I'm a User Experience person from Web 1.0 through Web2, now working in Web 3 (more in the non-finance side of crypto, on DAOs and smart contracts). This is exactly what keeps me up at night.
The Web UX improved because 1) firms had strong incentive to beat the competition and 2) they were able to make decisions fast. Web 3 is struggling with how to make decisions fast, in a world where they try to bring the "customer" into the process. Fix that, and I'm more optimistic that decentralization can be more successful than "tech democracy".
"Part of the challenge that Elon faces with Twitter is that moving to a donscription model would require Twitter to stay on the left."
I don't think this is really true since Twitter itself isn't the content creator. Now, I am not convinced a subscription model would work for Twitter, but it seems to me a better business model if Twitter opens itself to the entire political spectrum without bias. I think Musk's real risks are personal, though- the Left actively hates him now, and they will likely go after him with legal proceedings, including criminal charges.
Long before left-right politics became a significant issue for Twitter, users were mostly on the left because it evolved to offer activities of interest to far more liberals than conservatives. That's mostly an age issue but also a matter of what is of interest. I agree with Kling to the extent that if Musk loses the left, his chances of a successful outcome diminish greatly.
New York Times and “donscription”--It's worth remembering that in the world before TV major cities had multiple newspapers and people could read one that catered to their views. My father used to quip that NYT's motto really was "All the news that fits, we print." He said the NYT was the Democratic paper while the New York Herald Tribune was the Republican paper. And then were several other papers in NYC back then catering to different slices of the population. People reading news in their niches on the internet is really not a new phenomenon. It's just a bit a hubris for NYT to claim the mantle as the "paper of record."
In an era of fiat money, in which governments have grossly abused their authority to issue, an essential quality of money is missing: scarcity. Crypto is the attempt to address that missing essential.
Fiat currencies have lost their monetary function of serving as a store of value. Governments have attempted to manage that decline to a pace that doesn't provoke revolt, but the loss of value is accelerating as fiscal irresponsibility has run out of control.
Is the attempt to provide quality money once again reason enough to view Crypto in a positive light?
"Fiat currencies have lost their monetary function of serving as a store of value."
Whether inflation is zero, single digit, or even low double digit, cash is never a good long-term store of value but it remains good in the short-term. Deflation and hyper-inflation each have significant problems hence the goal of not going below 2% where increasingly more items will be deflating while others inflate. Likewise, as inflation increases problems increase but relatively slowly. People and the economy can mostly adjust to modest but stable inflation. Variation causes more problems than presence of inflation.
With that as a starting point, what makes you so seemingly adverse to inflation? Or is your real complaint the fiscal irresponsibility?
In a well managed economy, fiat currencies ought to hold value, the way they did up until the 1930s in the US, regardless of whether held in cash, or more likely, in debt obligations.
Inflation is a means of cheating those who save, and rewarding the profligate, including governments, and is therefore morally objectionable. The supposed goal of 2% is, I suppose, a measure of keeping the rate of temperature increase slow enough that the frog can be boiled without causing him to jump out of the pot. It would seem to lack any other persuasive justification. Here is Keynes on inflation:
"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery."
"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Debauching the currency at say 2% per annum does not change the moral valence.
I've heard Lenin's words on inflation before. I've never thought of him as a go-to resource on inflation or much of anything related to economics. That said, while maybe Lenin overstates the issue a bit I generally agree.
Our difference seems to hinge on a slightly different point. The quote is rather ambiguous on what inflation rate is necessary for debauching the currency. Lenin appears to agree with me that 2% per annum is not. 2% would not be noticeable month to month.
"As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, "
Since I have no strong feeling on whether 10% is debauching the currency and we could argue whether Lenin thinks so, it doesn't seem worthwhile to argue that point.
I think Elon Musk views twitter as a communication protocol. One use I see for it, communication between cars. Cars subscribe to hash tags (long&lat or something like what3words) along their route and communicate and coordinate through that. No need for cars to communicate directly with each other. He said several times he thought it was under utilized.
He does seem to value free speech, but he seems to be needlessly confrontational for a successful businessman. Even more so than in the past. He does not seem to value its current use.
I also wonder if there's a model of a very cheap-to-run Twitter platform for the data itself, with a subscription-driven layer of moderation and UI improvements on top of that. Crossing that chasm will be hard, but Musk may have the fortitude (and the cash) to do it.
I found the Ezra Klein column today surprisingly good: https://www.nytimes.com/2022/12/11/opinion/what-twitter-can-learn-from-quakers.html
I agree Ezra Klein's piece include some insightful comments. At the end I saw this link and thought this column was more interesting but maybe I just need to reread Klein's piece.
Chris Hayes: Why I Want Twitter to Live https://nyti.ms/3Vbx1JV
"he seems to be needlessly confrontational"
I agree. Yet he is a clearly an extremely smart or even visionary person and I can't help but think he has a reason.
Your analysis is missing a large disruption that upends the current equilibrium. I think GPT4 has the potential to disrupt search and Google’s search ad monopoly. Also, I think a “centralized” and highly trusted entity like Twitter or Chase could disrupt Crypto. There seems to be the potential for lots of creative destruction in the coming years in all the areas of this essay.
I am also very skeptical about “crypto” - if you think about Bitcoin and crypto being two different things. Software that needs its own money doesn’t make sense to me. (Crypto).
Digital, decentralized money that can’t be inflated, censored or controlled by captured institutions does make sense. (Bitcoin)
What do you think about smart contracts, separately from cryptocurrencies?
will work in a tiny fraction of transactions that people want to make
Well, I used to cite to we.trade as a real-world use case for smart contracts on a block chain. I went to get a good link to it and ... it shut down. That makes me significantly reduce my belief in smart contracts being a thing, because that seemed like a very well worked-out system from a legal perspective and it seemed like it had the right backers.