What’s Your Metagame? An Open Letter to the Crypto Community

It IS a community, you know. It’s an epistemic community, which is a ten-dollar phrase mean
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  1. As John Kenneth Galbraith said: “There is nothing reliable to be learned about making money. If there were, study would be intense and everyone with a positive IQ would be rich.”

  2. … as opposed to much of the electorate’s “everyone who’s rich is really smart” …
    … as opposed to much of the electorate’s “nobody who’s not rich can’t be very smart” …
    … which creates the seemingly-credible conclusion, “intelligence and wealth go hand-in-hand” …
    … which creates support for Ms. Rand’s fictional backing of that concept and the non-party based on it.
    I think this is global thinking. Not a pleasant thought for me.

    But here’s something less pleasant … and IMHO true …
    Galbraith was wrong (and he surely knew it). There are VERY reliable ways, methods, schemes for making money. Some are called crimes by statute; others with different names and faces are called legitimate, by statute or by other legal maneuvering. Some are by prohibition of popular vices, some by the nudging of reformists and do-gooders. (btw, ‘reform’ is my primary candidate for mass education as to the real purpose of using that term.) They all are exploitive of the “rest of us” unless you or I, overtly or covertly or indirectly, join in the exploitation. They are all devious, whatever the perceived goal. All require due diligence.

  3. These are the reported rantings of ultra-rich survivors of the money wars, figuring out that cash isn’t king, nor ironically is power. Big deal, I say - just pathetic.

    But to me, the story emphasizes the negative impact of full-on Capitalism (read on, please), rather than a warning about the egos of the very rich. The most recent (say, 21st century) attitude of Us v. Them regarding the ultra-rich ignores gov’t refusal and/or inability to reign in out-of-control corporations, no matter how popular, has enabled the ostentatious FB or the slightly more subtle GOOGL to soar to 2Big2Fail status. We were warned by Adam Smith at the beginning of capitalism that regulation is required, though to how great extent he could not have grokked, given the relative pace of tech v. bureaucratic action, even in a roughly democratic society. Regulation, as we and the EU know it, has a huge challenge in maintaining values (social and economical) in the face of technological raccoons ready to sell your soul for their riches. This isn’t Marx or Lenin or Mao, nor is it any of the current autocracies attempting to exclude capital as a legitimate element of government. It is about reasonable and effective control by people, by citizens of any country, of LIMITS on all economic extremes. The cries from the towers can be heard even now …

  4. “Money aint got no owners. Only spenders”

  5. “wise as serpents and as harmless as doves.”
    Harmless as doves is not much of a rallying cry.

    The money business may attract bureaucratic scrutiny, but that’s precisely what makes it such a fantastic area for disruption. You aren’t going to see financial institutions tolerate true change, so you need to build a full workaround clever enough to evade the whole system, something only a true fearless innovator can even think about. Crypto v2, probably another decade away, is going to be lasting. The raccoons and the suckers will be long gone by then.

  6. Ben
    I am wondering if gold belongs to Caesar? Roosevelt seemed to think it did…

  7. Crypto, is an implementation of Blockchain. Blockchain is simply a communications platform. It’s a very immature one, that is worse than other platforms, except that it has one advantage; it enables self-verifying integrity of a message. If blockchain’s ability to self-verify the integrity of the message proves to be important enough, all the other issues tied to the immaturity of the platform will be worked out.

    Intuitively, blockchain is simple. Think of when you played Telephone as a child. In the game of Telephone, one kid whispers something in the kid next to him and then that kid repeats it to the kid sitting next to him and so-forth down the line. Now, make one adjustment to the game, and you understand blockchain. In this adjustment, every time a kid whispers the word or phrase to the kid sitting next to him, every kid in the line writes down on a piece of paper what that kid said. If there’s ever a question about what was said, every kid looks down at his own piece of paper and says what they wrote down that the kid said. If there’s a dispute, whatever has 50% of the vote plus 1 wins and that’s what’s used going forward. That’s how the blockchain enables self-verifying integrity of what was said. It’s simply every kid writing down on a piece of paper what one kid said to the next kid and how disputes are resolved via vote.

    Crypto currencies happen to be an implementation of blockchain. Are they the best implementation? Maybe, maybe not. It’s is a very immature communications platform. But think, how different would Twitter be if it validated the integrity of its messages? How different would the exchange of ideas be, if the source of the ideas accumulated credibility for their ideas?

    An epistemic community grants integrity to the people presenting ideas, because they’ve been vetted and admitted to the community prior to presenting any ideas, what if the communications platform provided a method of doing that vetting?

    My two-cents worth,


  8. Appreciate your two cents but would love to add my two satoshis (0.00000002 Bitcoin).

    You’ve explained part of how a blockchain works, but because you focused on the non-monetary message portion, it’s only part of the whole, and thus has to remain in the conceptual. Without an attached incentive for successful consensus within the telephone game, why continue to play when you get bored, why not cheat to make the message benefit you exclusively?

    Each player has to have a chance (proportionate to the work he or she did writing down the messages) to be rewarded for being the first to initiate the next round of message up for group consensus. The face value of that reward is hard-coded into the software, and subject to the same consensus as the messages themselves; if someone tries to cheat by changing the rules, they’d better have [50% +1] participants backing up the proposition to cheat or they’re wasting their work on something that will never achieve consensus. The relative value of that reward… well, that’s subject to all the economic theorizing, comparisons to existing assets/currencies, and market-based price discovery on which so much attention has been focused through Bitcoin’s history.

    What I’m driving at is, despite what you might have read from proponents of a hamfisted “blockchain not Bitcoin” narrative, there’s no practical way to separate blockchain out from Bitcoin (or any other nonzero-valued currency/asset running on a distributed, permissionless consensus mechanism). So cryptocurrencies/cryptoassets are no more an implementation of blockchain than a smile is an implementation of upturned corners of a mouth. If you attempt to separate the two, you don’t really end up in a useful place. Smiles are well-understood. Permissionless, trustless, decentralized assets and consensus: less so.

    But hell yeah we can build an epistemic community ON TOP of this, a quality-filtered version of Twitter where message integrity-- which I’m taking to mean peer-reviewed quality of contribution to a discussion, as opposed to message input matching message output-- can trustlessly, equitably vetted by virtue of the platform’s inherent design, is not only possible, it’s being built right now. (There’s an added side effect of message permanence and immutability which may itself change how we build and evaluate mistakes, vetting, and reputation, but that’s another mountain to climb.) Have a look at the way Peepeth is building a Twitter analogue.

    This is my first post in ET Premium and I expect I will be writing a lot of posts like this, clearing up such oversimplifications regarding Blockchain and providing the best window I can, past the maddening price talk crowd, into solid understanding of what this piece of technology is/isn’t, and what of meaningful value can be, is being, and should be built with it.

  9. @notsofastcrypto I generally agree with your assessments of incentives in proof of work distributed systems.

    My struggle with most decentralized proof of work or proof of stake systems (most crypto as it exists today) is that they’re horribly inefficient. Today it really doesn’t currently make sense to build high throughput systems on top of them (payment networks, databases, etc). This may change in the future, there is lots of good work going along to scale these networks. But remember, we tried internet video 15 years ago and it really only started to work recently because of significant throughput, development platforms and edge caching technology, which allowed Netflix to prosper.

    Decentralization does not mean we get a better world for free. It takes hard work. Most of bitcoin is controlled by a few very large miners, one who almost got to the 50%+1 level. I’m not sure how well “distributed” this system is.

    I strongly believe in that regulation and centralized mandates should be a last resort. As no one has a crystal ball the unintended consequences of regulation and centralized decisions can sometimes be worse, as they eliminate entire solutions spaces from ever emerging.

    We also need to come to terms that many people simply do not want a purely decentralized system, they want someone to be held accountable for mistakes. Today, I think the value for bitcoin and other decentralized systems, is to play as a power check against a lot of the centralized and fiat institutions of today.

  10. Interesting insights. I think I come from a different perspective than you do, in terms of the possible uses of blockchain. To me, there is no reason blockchain and crypto currencies have to be linked.

    Let me give a couple examples to support my thinking. First, smart contracts are a decentralized method of verifying a legal contract and they have nothing to do with currencies. Second, cryptokitties are an example of linking a tangible asset to blockchain, in order to verify ownership. Finally, and probably the most likely place blockchain will find a use, is transferring credits between video games. For example, if you build up credits/lives/points/experience in League of Legends (a popular video game), blockchain could be used to verify and transfer those lives/points/etc to Fortnite or any other video game.

    One could argue that the last example is a form of currency, and I wouldn’t disagree, but I believe my point still holds that there are uses for blockchain separate from currencies.

    That is my thinking. I’m open to be persuaded otherwise. to me, blockchain as a communications platform is immature and clunky, however, there may well be innovations that leverage the platform in ways we can’t imagine today. Remember, the internet was put in place in the late 60s for military communications, but it wasn’t until email came along as a killer app in the late 80s that it started being widely used. As a further example, it wasn’t till the 90s, when HTML based web pages came along, that internet interactions moved away from the closed gardens of AOL and Compuserve and Prodigy to open access.

    My point being, it’s very early days in the blockchain era. Today, it’s a solution looking for a problem. Maybe it becomes a solution for verified communications? Maybe it becomes a solution to verify ownership of art/patents/ideas/etc? Maybe it becomes the method of transferring intangible assets? If it does, it will become a widely used platform and all it’s current issues will be innovated away.

    One the other hand, it could be a solution that never finds a problem that needs to be solved. For example, maybe it goes the way of prediction markets. If you’re not familiar with predication markets, they were (and still are) one of the most interesting solutions enabled with computers, however, no one’s ever found a generalized problem that’s worth using them to solve.

    Blockchain maybe the greatest thing since sliced bread, or maybe it’s a solution looking for a problem (other than crypto currencies). Only time will tell.

    My two cents more,


  11. Great points. Glad to address them.

    We’re still figuring out how to measure whether or not blockchains are efficient. There is plenty of media uproar about the obviously large amount of energy consumed: 67 terawatt-hours annually by this estimation.https://arstechnica.com/tech-policy/2018/05/new-study-quantifies-bitcoins-ludicrous-energy-consumption/
    Similar uproar about American household Christmas lights, which consume an estimated 6.63 terawatt-hours annually, is conspicuously absent.https://arstechnica.com/tech-policy/2018/05/new-study-quantifies-bitcoins-ludicrous-energy-consumption/
    Whether the value of permissionless, distributed assets/money/value is worth ten times the good feelings Americans get from Christmas lights is a lopsided debate but it also betrays our attitudes toward new technology whose benefits will take time, work, and iterative research to fully realize. The high per-transaction electricity costs are also arguable, mostly defeated by the emergence of the Lightning Network-- the foremost second-layer technology that can group thousands or millions of transactions together in a network of open channels that only generate an on-chain transaction once a channel closes for settlement. To roll with your video analogy, imagine Lightning Network as a throughput boost; and because incentives for development are inherent to the Bitcoin system and its use, expect the inefficiency argument against Bitcoin (and many other cryptocurrencies) to fall flat far sooner than 15 years.

    Another erroneous soundbite is the centralization of Bitcoin. The propagation of this somewhat fudged data-based conclusion is thanks in large part to Ripple, a centralized bank-friendly competitor which essentially trades the Fed as the source of money-printing, to a couple of Silicon Valley trust fund kids who kept for themselves (and later Ripple) most of the billions of XRP they created. The hashrate distribution of late has been Nash-equilibrium distributed amongst 6-7 of the largest pools, with plenty of smaller ones also involved.https://www.blockchain.com/en/pools
    Threats of 51% attack could still exist if large miners were to collude and switch to the same mining pool, but Nash equilibrium all but removes the risk of 51% attack; there are far better advantages to attempt to exploit (in hardware development/production, economic resource positioning, state subsidy negotiation, etc.). In my opinion, by the time the general public understood what a 51% attack is, the risk of it with Bitcoin at least was long past. Very small chains get successfully 51% attacked all the time but it’s been my observation that most of the larger ones, and many of the midrange ones, reach a stable and enduring Nash equilibrium.
    I very much agree with your end conclusions, and to circle back to what Ben Hunt has been saying about crypto being a massive metagame risk, when compared to a less usurious, centralized, global credit system, I imagine that crypto is the endgame invention that arrived early. Its survival is mathematically inevitable and incentivized by its participants, and perhaps the intermediate and intermediary option of the proposed “fairer global credit standard” will bridge enough of the power check gap that legacy central banking, new proposed global credit, and permissionless crypto can find an equilibrium of their own.

  12. hmmmm … “hard-coded into the software” … how’s that work? firmware? solidware? or maybe just implemented in hardware?

  13. In the end, people control the block-chain and any application thereof. Access and applications are human generated and controlled. Block-chain is a vehicle; its implementation is by humans; its uses, its applications, are created and maintained by humans. Ultimate trust is not justifiable. In that sense, crypto (currency or whatever else might be called that) is hackable, internally and/or externally. Trust me.

  14. Avatar for bhunt bhunt says:

    “The endgame invention that arrived early”. I’m totally stealing that line.
    Great note, very helpful to the pack, and I hope you’re right!

  15. It’s very much hard-coded into the software, by consensus. There are currently 10465 independent Bitcoin nodes, running the same software-- and distributing consensus that they’re doing so-- every 10 minutes give or take. To change the Bitcoin software materially requires a hard-fork, where ALL miners signal and propagate the changes, or a user-activated soft fork (politically complex but nutshelled involves non-miner nodes upgrading in order to force the miners to follow suit).

  16. Totally agree with you on the philosophical extreme of ultimate trust, but blockchains are trustless. Human trust is not a part of the equation. A human either participates according to the blockchain’s consensus rules, or does not participate.

    Hacks (which I must interpret as unwanted, damaging, or self-enriching changes at the expense of the network) either happen by consensus, in which case they’re not really hacks at all because everyone wanted them to happen-- or they don’t happen at all, as the hacker’s attempted changes are rejected by the greater network.

    We can get into some “what if quantum computing” but to my understanding, a quantum proof can be included into any blockchain’s proof of work burden by consensus, and we’ll discover quantum proofs far earlier in the tech cycle than we will the ability to decrypt hashes using quantum computing.

    Sure there are ways to hack an individual’s blockchain-based holdings, such as a trojan embedded in a hacked software wallet that empties its contents out into the trojan creator’s wallet (I speak from experience here). But that doesn’t affect the chain, its consensus, or anything beyond the unfortunate hackee.

    If you can propose a specific way to hack a blockchain-- specify an action outside of, or counter to, its consensus rules; then perform that action-- I will be able to see the public proof of that action in my own Bitcoin wallet and on a public Bitcoin block explorer, and I will have no choice but to believe that verification.

  17. Really appreciate your further thoughts here Andy.

    To hammer home the unbreakable link between blockchain and what you’re calling currencies, I have to aggregate currencies, tokenizable assets, and messages/timestamps/nonmonetary transfers/smart contracts into one entity called Assets That Get Transferred On A Blockchain or ATGTOAB. It’s an easy fallacy to slip into traditional finance-based definitions and much rotten hay is made from arguing against the horseless carriage.

    Smart contracts as you describe them are little more than pieces of executable code (which may or may not be similar to a legal contract), living on the same blockchain as all the currency-based transactions, that take up space on it-- a little more than that of a simple currency-like value-transfer transaction. Let’s take the Ethereum network as it’s the foremost smart-contract enabled network we know, though there are plenty of others (even Bitcoin contains opcodes that allow smart contracts). Based on the amount of code in a smart contract, and how much space in a block of transactions it’s going to take up, the executor of that smart contract must append a price in gas-- an internal sub-token that represents Ethereum transaction prices based on supply and demand for the finite space inside each block of Ethereum-- to his/her execution of that smart contract. You are unlikely to be able to execute a smart contract without paying a gas fee in Ether currency to do so. This could be a decentralized method of verifying a legal contract as you describe. Popularly these contracts are for the creation and exchange of new, different ATGTOAB, piggybacking on the distributed consensus layer of Ethereum.

    Cryptokitties and your proposed transferrable video game credits are actually quite similar. Though I don’t agree my Cryptokitties are tangible (well I guess I could print them out and hold them), they are indeed the result of a specific type of smart contract called ERC-721 that sets out rules for the creation of non-fungible (IE that follow an identical ruleset for that smart contract, but are individually distinct and unique) tokens with unique characteristics, or at the very least, unique combinations of a shared set of characteristics. There’s a market for Cryptokitties, and it’s measured in Ether as base currency, and if a Cryptokitty has easily measurable value on its transaction network then you could conceive of a transaction where one would accept a Cryptokitty in lieu of Ether for something. Bam, Cryptokitties are currency. (Well, really just ATGTOAB, but you now see how the blockchain doesn’t easily fit discrete legacy finance terminology of what a specific asset is or is not.)

    Transferrable video game credits get me really excited. You should take a look at Neon District, a game in development. ND’s devs are strategically not making a big deal about it, but all the game’s items-- a legendary weapon or a piece of armour-- are going to be ERC-721 NFTs. Even crafting elements will be represented by a special new set of NFTs that can be used to create entirely new NFTs when you melt down a few mithril bars to make a Weightless Spear (I’m making this up). On the blockchain, the mithril bar NFTs are “burned” by being sent to a blockchain address from which they are irretrievable, and the Weightless Spear NFT is minted according to its ERC-721 smart contract that says “create one Weightless Spear NFT and assign it to this user’s Ethereum account, when that user sends three mithril bar NFTs to the burn address on the Ethereum blockchain”. Exactly as you said, gamers get to own these NFTs in their wallets outside the game as they wish, and those ATGTOAB persist even after everyone stops playing that particular game, or the assets are transferred into a new game where they appear as something else according to that new game’s parameters. Furthermore, these ATGTOAB could be commuted into fungible, currency-like tokens via another “burn x to get y” smart contract, traded on markets outside of any game, taken as payment in kind for retail products via a Shapeshift or similar service… the lines between currency and other uses of ATGTOAB are increasingly blurred.

    Bringing it back to communications-- where notarization, indelible timestamp, or verifiable proof is required, absolutely, attach a blockchain network transaction fee in ATGTOAB to the message and enjoy the benefits thereof. If not (as with 99.999% of messages that fly around), don’t bother as it’s not needed.

    It is used for prediction markets, as the smart-contract based architecture that defines, executes, and financially settles a bet on a future outcome or event. Augur is the first and best known platform in development for this, but there are plenty of other niche projects getting further ahead, due to the benefit of focus on sports and e-sports betting.

    As much as blockchain is a solution looking for a problem, it’s increasingly a discovery looking for refinement, innovation, and foundational building. The extreme hype surrounding it is due in my opinion to a few things:


    anyone can participate in it
    the value living on it fits so strangely with our existing systems, that massive wealth opportunities (and risks) are created
    it can disrupt expensive systems we always thought were solid forever… but not ALL systems, just a few
    it can empower formerly disadvantaged people by disrupting some of those systems

    We haven’t seen a money revolution like this, and only a few network revolutions like this–written word, printing press, telegraph, radio, TV, internet-- so, being in the early days as I agree we are, we have real trouble using past performance to predict future effects of networked ATGOAB, or networked money, if you’re willing to accept my expanded definition of what money is becoming.

  18. Literally true with crypto.

    What are more easily represented as coins, are in fact rights to spend.

    That we call them coins, is just an easier way to split and recombine an infinitely divisible value as required by the value of a proposed spend, and then forward to someone else, the Unspent Transaction Outputs or UTXOs we control into new UTXOs that person now controls.

  19. @notsofast crypto - thank you for the insight, very educational.

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