Capitalogix

Is Cryptocurrency Here to Stay?

I've always been a fan of Blockchain, but I've always been a bit more cautious of cryptocurrencies. 

Blockchain is the technology foundation behind cryptocurrencies and an important enabling technology for the next generation of technological innovation.

This week Coinbase went public at an astronomical valuation.  They were backed by venture capital firms like Andreessen Horowitz and Union Square Ventures.

This makes sense to me because the VCs were able to capitalize on the "Fear of Missing Out" and "Animal Spirits" driving the market without the concentration risk of a particular cryptocurrency.  In a sense, it is the same reason I am bullish on Blockchain itself.

Making sense of cryptocurrencies, however, is tougher for me to justify. There are over 1000 currencies out there – and the list is growing.  But valuation isn't really about first-mover advantages or features ... You also must consider government policies and regulations and a host of other issues.

Consequently, it's hard to recommend putting money in any coin as an investment.

Speculating (or "trading") is a different conversation. 

Clearly, there is a lot of money being made and lost ... but how much of those gains and losses can be attributed to luck and how much to skill?  A better question is ... If you traded cryptocurrencies, how much of your gains or losses would be due to luck versus skill?

For the past few years, it felt as if the buzz had died down a little. Despite that, Bitcoin prices and many other cryptocurrencies continued to increase in value - though with much more volatility than normal investments. 

This week, Dogecoin (a cryptocurrency that started as a meme) jumped from $.07 a coin to $.35 a coin, capitalizing on press and support from Elon Musk.  But it's not the only cryptocurrency doing well. 

 

via How Much

A lot of the jump in the price of many coins recently coincided with the GameStop trading surge and was likely driven by the sentiment of those same retail traders. 

Crypto's are interesting, in part, because they're a digital currency decentralized over a peer-to-peer network.

The more people are willing to accept it as a medium of exchange, the more valuable it becomes (and the more it becomes a stable store of value).

Supposedly, decentralization provides it safety from censorship and government interference - meaning it has value as an international currency, and as a currency for black-market transactions.  But, in my opinion, that remains to be seen (and I consider it unlikely for most cryptocurrencies).

However, the worth of a Bitcoin clearly isn't just based on sentiment (on one hand, there are desires to avoid fiat currency vagaries, government interventions and scrutiny, while having a fair price discovery method, etc.  ... on the other hand, there are also the costs to mine a Bitcoin, transaction fees, etc. and crypto has recently been under fire for its huge environmental impact).

Compared to a reserve currency – whose worth is primarily influenced by trade value and other macroeconomic factors - watching crypto's volatility can be scary. 

That being said, as adoption increases and more businesses enable it, it's possible that it will continue to legitimize. For the time being, I remain a long-term skeptic because there is too much working against it. 

For an extra laugh, here's a still relevant video from 2017 on why you should invest all your money in Bitcoin. 

 

via AwakenWithJP

 

The Rise of Augmented Reality

Last week, Microsoft won a contract to provide the U.S. army augmented reality ("AR") headsets. It's worth up to $21.9 billion over 10 years, and they'll be providing over 120,000 AR headsets. Porn has been the leader in VR/AR innovation, but it's unsurprising that war is also being used to drive innovation. Human nature is human nature. 

Virtual reality (VR) and augmented reality have been around for a long time, but there's been a massive boom in innovation and interest over the last 3-5 years. Not only are the technologies becoming more affordable, but the animation is becoming more realistic, headsets are becoming more portable and longer-lasting, and our physical and virtual realities are beginning to blend. 

We're moving towards a world where technology envelops every aspect of our lives ... figuratively and literally. It's funny because I felt the same way in the late 90s as cell phones and the internet proliferated. It feels quaint in comparison to the ubiquity of technology today. Even our toasters are smart now. 

The following (still fictional) video is thought-provoking. What happens when these new technologies are used to influence behavior, decision-making, and even your identity?  

 

Keiichi Matsuda via  Vimeo

Like many things, these technologies make possible awesome new capabilities (if used well) and horrific consequences (if abused or used in authoritarian ways). 

Your doctor or nutritionist could help you make better choices for yourself. Your therapist or coach could help you perceive and respond differently to the challenges life presents you. Marketers could better influence your purchases. Employers could better monitor and measure your performance and productivity. And governments will not be far behind ... doing what they do. It all toes the line between beneficial and creepy. 

Because of where we are in the adoption curve, it is becoming more common to discuss bioethics and AI ethics.  Likewise, as we accelerate into an age of exponential technologies and mindsets, be prepared for increasing scrutiny of the promise versus the peril of various new technologies and capabilities.

We live in interesting times, and only getting more interesting as it goes!

 

 

Mindfulness & Exponential Technologies

Have you noticed that it's easier for most people to identify and solve someone else's problem than it is to do the same for themselves?

Humans are emotional creatures.  As a result, our decision-making often suffers from fear, greed, and discretionary mistakes. 

As an entrepreneur, I strive to be objective about the decisions I make. Towards that goal, using key performance indicators, getting different perspectives from trusted advisors, and relying on tried-and-true decision frameworks all help. 

Combining all three creates a form of "mindfulness" that comes from dispassionately observing from a perspective of all perspectives.

That almost indifferent and objective approach is also where exponential technologies like AI excel.  They amplify intelligence by helping make better decisions, take smarter actions, and continually improve performance. 

I shot a video about mindfulness and the future of A.I.

 

Artificial intelligence is cool. The truth, however, is that AI is still relatively limited. Individual techniques (or algorithms) are good at "something".  The challenge is that they only focus on what they need to come up with their answer, without considering a different perspective. While it is good at what it is good at, it isn't necessarily good at empathetically understanding that a different technique, which comes up with a different answer, might be "right" as well.

The future of AI likely will be based on swarm intelligence, where many specialist components communicate, coordinate, and collaborate to view a situation more objectively, better evaluate the possibilities, and determine the best outcome in a dynamic and adaptable way that adds a layer of objectivity and nuance to decision making.

One of the lessons I teach to our younger employees is that an answer is not THE answer. It's intellectually lazy to think you're done simply because you come up with a solution. There are often many different ways to solve a problem, and the goal is to figure out the one that comes up with the best results.

Even if you find THE answer, it is likely only THE answer temporarily.  So, it is really just a step in the right direction that buys you time to learn, improve and re-evaluate.

Hope that helps. 

 

Here Are Some Links For Your Weekly Reading - April 4th, 2021

Happy Easter!

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• CDC Says Travel is Safe for Fully Vaccinated People, But Opposes Non-Essential Trips. (NPR)
• Here's the Story Behind the Amazing Moscone Center Vaccine Playlist. (SF Chronicle)
• April Fools' Day: 10 Stories that Look Like Pranks But Aren't. (BBC)
• How NFL Teams Use Sophisticated AI Projections in the Draft. (ESPN)
• Mark Cuban On the Company that Made Him a Billionaire: Why He Knew It Would Succeed Despite Many Naysayers. (CNBC)

 

Trading Links:

• The Microchip Shortage Explained: How It's Impacting Car Prices and the Tech Industry. (USAToday)
• The New Stock Influencers Have Huge and Devoted Followings. (Wall Street Journal)
• 3D Printed Architecture that Shows Why this Trend is the Future of Modern Architecture. (YankoDesign)
• What the U.S. Can Learn From China's Infatuation With Infrastructure. (Wall Street Journal)
• The Death of the American Mall Was a Warning Sign that Our Dystopian Future Was Closer Than We All Thought. (BusinessInsider)

 

What Are NFTs?

This month an NFT by an artist named Beeple sold at Christie's for over $60 million. That sentence raises more questions than it answers. 

To make it even stranger, here's an example of Beeple's art. 

via Beeple

Yes, that is Tom Hanks wearing a Bubba Gump shirt punching Covid-19. 

So, what is an NFT, and why are they becoming so popular?

NFTs stand for non-fungible tokens, which are unique digital assets on the blockchain. They've been around since 2014, but only recently blew up in popularity.  They're essentially collectibles ... but digital.

An NFT might be an image, a gif, a video, etc. But, because they're given a unique code on the blockchain, the ownership and validity of that item can be tracked. 

Surprisingly, owning that NFT does not give you copyright of that digital asset. In fact, some images have been made into multiple tokens, and some tokens include multiple pieces of art which have been sold individually. The digital files themselves are still infinitely reproducible ... but that code on the blockchain is not.

In a sense, that means that NFTs are the digital equivalent of an autographed item. 

In the past, when I've talked about Blockchain, digital art wasn't something I actively considered. Blockchain made sense to me as a way of proving provenance and helping establish the authorship and authenticity of an object - but I assumed it would be high-end physical art. 

At the end of the day, if someone will pay for it, then you can sell it. That's part of the beauty of Capitalism. Most collectibles don't make sense from a macroeconomic value sense. They're worth something because of their value to their collectors. 

Think about Beanie Babies, or Pokemon Cards, or even more mainstream collectibles like Sports Memorabilia or Whiskey. 

While I won't say that "I get" the appeal of NFTs ... I get it. As the world becomes increasingly digital, "real" and "tangible" have new meanings.

Is something not "real" just because it's digital? 

It reminds me of a painting by René Magritte called "The Treachery of Images."  The painting shows an image of a tobacco pipe. Below it, Magritte painted, "Ceci n'est pas une pipe," which is French for "This is not a pipe."

 

The famous pipe. How people reproached me for it! And yet, could you stuff my pipe? No, it's just a representation, is it not? So if I had written on my picture "This is a pipe", I'd have been lying! — René Magritte

 

If you're still a little lost, SNL had a funny skit last night with an NFT rap song. Enjoy. 

 

via SNL

 

 

 

 

The Power of Naming Things

I remember when my son finally got smarter than our dog. For the record, it took longer than I thought it would.

With respect to human intelligence, language is likely the first domino. It allows "chunking" and makes learning new things more efficient, effective, and certain.

Language is powerful in-and-of-itself. Using language consciously is a multiplier. Today, I want to focus on one such use of language – the power of naming things. 

The Power Of Naming Things

“I read in a book once that a rose by any other name would smell as sweet, but I've never been able to believe it. I don't believe a rose WOULD be as nice if it was called a thistle or a skunk cabbage.” - L.M. Montgomery, Anne of Green Gables

Before I go into detail, I shot a video on the subject, with a few examples from our business. 

 

Having a shared language allows you to communicate, coordinate and collaborate more efficiently. But it's hard to have a shared language when you're discussing something intangible. 

That's where naming comes in. When you name something, you make the "invisible" visible (for you, your team, and anyone else who might care). 

I've often said the first step is to bring order to chaos. Then, wisdom comes from finer distinctions. Naming is a great way to create a natural taxonomy that helps people understand where they are – and where they are going.

I like thinking of it in comparison to value ladders in marketing. 

Each stage of the value ladder is meant to bring you to the next level. By the time someone gets to the top of the value ladder, they're your ideal customer. In other words, you create a natural pathway for a stranger (meaning someone who doesn't know you well) to follow, to gain value, trust, and momentum onwards ... ultimately, ascending to become someone who believes in, and supports, what you offer and who you are. 

Ultimately, successful collaboration relies on common language. That is part of the reason naming is so important.  The act of naming something makes it real, defines its boundaries and potentialities, and is often the first step towards understanding, adoption, and support. 

Creating "Amplified Intelligence"

There are always answers. We just have to be smart enough. - John Green

Here is an example from our business.  When we first started building trading systems, all we had was an idea. Then we figured out an equation (and more of them). Next, we figured out some methods or techniques ... which became recipes for success.  As we progressed, we figured out a growing collection of useful and reliable ways to test, validate, automate and execute the things we wanted to do (or to filter ... or prevent).

For someone who didn't understand the organizing principles, it probably seemed like a mess.  Compounding the problem is that fear, uncertainty, and doubt are inhibitors to potential customers and stakeholders (like the employees working in a business).

Coming up with the right organizing principle (and name) makes it easier to understand, accept, and adopt. For example, many traders and trading firms want to amplify intelligence – meaning they were looking to make better decisions, take smarter actions, and ultimately to perform better (which might mean making and keeping more money).  To help firms amplify intelligence, we created the Capitalogix Insight Engine (which is a platform of equations, algorithms, methods, testing tools, automations, and execution capabilities).  Within that platform, we have functional components (or modules) that focus on ideas like portfolio construction, sensible diversification, alpha generation, risk management, and allocation strategies.  Some of those words may not mean much to you, if you're not a trader, but if you are it creates an order that makes sense and a path from the beginning to the end of the process.

It makes sense. It explains where we are – while informing what might come later.

The point is that naming things creates order, structure, and a contextual map of understanding.

It a compass heading that we can use to navigate and guide in uncertain territory.

Hope that helps.

 

 

 

 

 

Here Are Some Links For Your Weekly Reading - March 7th, 2021

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• This Wild Video Maps the Entire Internet and Its Evolution Since 1997. (SingularityHub)
• These are the Most Desirable Countries and Cities For Workers Looking To Relocate In 2021. (CNBC)
• All Peanut Butter, All the Time: Reese's Peanut Butter Cups Without Chocolate Arriving In April. (USAToday)
• Scientists Made an AI that Reads Your Mind So It Can Generate Portraits You'll Find Attractive. (TheNextWeb)
• New AI Deep Nostalgia' Brings Old Photos, Including Very Old Ones, To Life. (TheVerge)

 

Trading Links:

• A Fed President Predicts the Bitcoin Boom Won't Last. (NYT)
• Why Central Banks Around the World Want To Get Into Digital Currencies. (CNBC)
• Jack Dorsey Trying to Sell 1st Tweet As NFT, Highest Bid at $2.5M. (TMZ)
• NFTs, Explained. (TheVerge)
• We Expect 300,000 Fewer Births Than Usual this Year. (New York Times)

 

 

Here Are Some Links For Your Weekly Reading - February 28th, 2021

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• Why Teaching Robots to Play Hide-and-Seek Could Be the Key to Next-Gen A.I. (DigitalTrends)
• AI Teaches Itself Diplomacy. (Spectrum)
• What is Web 3.0 and How Will It Help You? (MakeUseOf)
• Highest-Resolution Images of DNA Reveal It's Surprisingly Jiggly. (Gizmodo)
• Salesforce Says the 9-To-5 Workday is Dead' and Will Let Employees Go Fully Remote. (TheVerge)

 

Trading Links:

• Here's How Much Wealth You Need to Join the Richest 1% Globally. (Bloomberg)
• Thousands of Bots May Have Played Role In GameStop Hype. (Benzinga)
• Investors are Suddenly Obsessed With 'SuperCycles'. (Fortune)
• Dalio: How To Spot a Bubble. (Ritholtz)
• The Number of Public Listings By Zero-Revenue Companies Valued Above $1 Billion Currently Exceeds the Dot-Com Era. (Markets)

 

What The Perseverance Rover Reminded Me About

Last week, the Perseverance rover landed on Mars. It's not the first time we've landed a rover on Mars, but it's still incredible to see. 

via NASA Jet Propulsion Laboratory 

It's a feat of engineering and human will. It's also a good reminder. 

History is littered with tales of once-rare resources made plentiful by innovation. The reason is pretty straightforward … scarcity is often contextual.

Imagine a giant orange tree packed with fruit. If you pluck all the oranges from the lower branches, you are effectively out of accessible fruit. From that limited perspective, oranges are now scarce. But once someone invents a piece of technology called a ladder, the problem is solved.

When we first went to the moon, calculators referred to people charged with doing the complex math needed for the Rocket to make it into Space (rather than the device that could do the math instantly with no errors) and the computing power it took to get to the moon took up many rooms at NASA. 

In comparison, you now have dramatically more computing power in your pocket than NASA used to get to the moon. 

Likewise, we now have people living in space, posting videos from the ISS, and the ability to stream high-resolution images (and even movies) of space and galaxies near and far. 

What was once scarce and unobtainable has become abundant and accessible.   It is a story repeated countless times.

Still, as humans, we're wired to think locally and linearly. We evolved to live our lives in small groups, to fear outsiders, and to stay in a general region until we die. We're not wired to think about the billions and billions of individuals on our planet, or the rate of technological growth - or the minuteness of all that in contrast to the expanse of space. 

Nonetheless, we have created better and faster ways to travel, we've created instantaneous communication networks across vast distances, and we've created megacities. Our tribes have gotten much bigger - and with that, our ability to envision and enact massive change has grown as well. 

Our quest to conquer Space became the poster child for a type of innovation we now call "moon shots".  While 'moon shot' originally meant "long shot," it's increasingly being used to describe a monumental effort towards a lofty goal — in other words, a "giant leap."

Today, with technology as a catalyst, we see those leaps happen in many areas (like A.I., medicine, longevity, space exploration, etc.). 

It's hard to comprehend the scale of the universe or the scale of our potential ... but that's what makes it worth exploring.

Pretty cool!

Onwards!!

 

 

Who Can You Trust?

Information is Power.

Consequently, your choice of information source heavily contributes to your perceptions, ideas, and worldview.

Coincidently, news sources are a lightning rod for vitriol and polemic.

I am still a little surprised by the abject hatred I hear expressed towards a particular news source by those who hold an opposing bias.  This often leads to claims of fake news, delusion, and partisan press. Likewise, it is common to hear derision toward anyone who consumes that news source.

Perhaps the reality is that that most sources are flawed – and the goal should simply be to find information that sucks less?

It's to the point where if you watch the news, you're misinformed; and if you don't watch the news, you're uninformed. News sources aren't just reporting the news, they're creating opinions and arguments that become the news.  And many don't care enough to think for themselves - or to extract the facts from the opinion.

Here's a chart that shows where news sources rank on various scales. You can click the image to go to an interactive version with more details.

 

via Ad Fontes Media

I once spent fifteen minutes in an argument about how you know whether the information in this chart is true.  If you're curious about their methods, click here. 

Distrust toward news agencies, big companies, the government, and basically anyone with a particularly large reach is the "new normal." 

Perhaps even more dangerous is the amount of fake news and haphazard research shared on social media. Willful misrepresentations of complex issues are now a too common communication tactic now on both sides ... and the fair and unbiased consideration of issues suffers.  

Social media spreads like wildfire, and by the time it has been debunked (or proven to be an oversimplification) the damage is done. People are convinced ... and some will never go beyond that. 

The reality isn't as bleak.  People agree on a lot more than they say they do.  It is often easier to focus on "us" versus "them" rather than what we agree upon jointly.  This is true on a global scale.  We agree on a lot.  Most Democrats aren't socialists, and most Republicans aren't fascists ... and the fact that our conversation has drifted there is intellectually lazy.

This idea that either side is trying to destroy the country is clearly untrue (OK, mostly untrue). There are loonies on the fringes of any group, but the average Democrat is not that unlike the average Republican. You don't have to agree with their opinions, but you should be able to trust that they want our country to succeed. 

I don't know that we have a solution. But there is one common "fake news" fallacy I want to explain at least a little. 

It's called the Motte and Bailey fallacy. It's named after a style of medieval castle prioritizing military defense.

Launceston Castle via Chris Shaw, CC BY-SA 2.0

On the left is a Motte, an artificial mound often topped with a stone structure, and on the right is a Bailey, the enclosed courtyard. The Motte serves to protect not only itself but also the Bailey. 

As a form of argument, an arguer conflates two positions that share similarities. One of the positions is easy to defend (the motte) and the other is controversial (the bailey).  The arguer advances the controversial position, but when challenged insists they're only advancing the moderate position. Upon retreating the arguer can claim that the bailey hasn't been refuted, or that the critic is unreasonable by equating an attack on the bailey with an attack on the motte. 

It's a common method used by newscasters, politicians, and social media posters alike. And it's easy to get caught in it if you don't do your research. 

Conclusion

As a society, we're fairly vulnerable to groupthink, advertisements, and confirmation bias. 

We believe what we want to believe ... so it can be very hard to change a belief, even in the face of contrary evidence. 

But, hopefully, in learning about these fallacies, and being aware, we do better. 

I will caution that blind distrust is dangerous – because it feels like critical thought without forcing you to critically think.

Distrust is good ... but too much of a good thing is a bad thing. 

Not everything is a conspiracy theory or a false flag.

Do research, give more credence to experts in a field - but don't blindly trust them either.  How well do you think you're really thinking for yourself?

It's a complicated world, and it's only getting more complicated.  But, hopefully, it encourages you to get outside your bubble and learn more about those you disagree with.