Bitcoin and the Byzantine Generals Problem
Before the Bitcoin protocol was invented, most computer scientists thought a system like Bitcoin was impossible because of a famous problem in computer science called the Byzantine Generals Problem.
The problem, in a nutshell, is how to coordinate among distributed nodes to come up with a consensus that is resistant to attackers who are trying to undermine that consensus. A significant component of the solution is the proof-of-work algorithm, which is the main purpose of so-called Bitcoin miners.
The mainstream press has ignored the importance of this computer science breakthrough. When the mainstream press writes about mining, it either ridicules it:
Bitcoin is digitally “mined” by computers running an algorithm. (If you just rolled your eyes, you’re not alone.)
Or calls it wasteful:
One thing I haven’t seen emphasized, however, is the extent to which the whole concept of having to “mine” Bitcoins by expending real resources amounts to a drastic retrogression — a retrogression that Adam Smith would have scorned.
How much does the existing banking/payment infrastructure cost? One reasonable measure are the fees charged. Standard online payment fees are 2.5%, not including the added costs fraud (chargebacks plus transactions blocked out of fear of fraud). Bitcoin payment fees are close to zero and fraud is impossible since Bitcoin is a bearer instrument.
Andrew Weissman on services like Khan Academy and Quizlet, which allow users to learn morsels of information at their own pace:
At a specific level, they each work in a way that is consistent with how people think and, 20 years into the web, desire to find information. For example, someone may think to herself, “I forget how to subtract fractions.” They then conduct a search for it, and Khan delivers a 4 minute video lesson. The whole process may take 5 minutes and is hardly interruptive.
This really resonates with me. When I think about how I learn and more importantly, re-learn, things now, it’s mainly through a quick Google search. I’m not saying it’s a better or worse way to learn, it’s just different. And it’s the way a lot of people gain (and, again, re-learn) knowledge now.
Something about this also reminds me a bit of the brain uploads in The Matrix.
The internet is for snacking.
A history of the entertainment business could be framed as a series of experts asking, “Who the hell wants to watch that?” When the answer is “more people than you think,” the definition of profitable entertainment changes.
Creative people are ones who are willing and able to metaphorically buy low and sell high in the realm of ideas. Buying low means pursuing ideas that are unknown or out of favor, but that have growth potential. Often, when these ideas are first presented, they encounter resistance. The creative individual persists in the face of this resistance, and eventually sells high, moving on to the next new, or unpopular, idea. In other words, such an individual acquires the creativity habit.
Why I like video games
I like video games because I like software, and some of the most creative software designers make video games.
When Electronic Arts was founded in the 80s, the concept behind the company was to showcase software designers as serious artists. The name “Electronic Arts” came from the movie studio United Artists, who at the time was known for celebrating the creative people behind movies. EA’s games shipped in album covers that included interesting details about the designers and their thinking behind the game.
Today, EA makes mega games like FIFA and Madden. The production costs run in the hundreds of millions of dollars. The teams are huge and divided into functional units. These games are wonders of technological achievement and organizational design (and great games!), but it’s difficult to feel like you’re interacting with the mind of the designer the way you did with EA’s early games.
One of the great things about the rise of smartphones and tablets is that - for a variety of reasons - it is again economically viable for small teams to create games that reach hundreds of millions of people. Some of these games are funded on Kickstarter, some are self funded, and some are funded by big publishers.
I play a lot of these games. My favorite site for finding indy games is Touch Arcade. I’ve played every game on the site that got 4.5 or 5 stars. My favorites are Rymdkapsel, Bridge Constructor, Cut the Rope, Carcassonne, Helsing’s Fire, Pirates, FieldRunners, World of Goo, Little Inferno, Microminers, Ridiculous Fishing, Modern Conflict, Peggles, Plants vs Zombies (1, not 2), and Solipskier.
I just wish they included liner notes the way EA used to do.
There are many people who live in order to work, who consume in order to produce, if we like to use those terms. Most people who are reasonably well off derive more satisfaction in their capacity as producers than as consumers. Indeed, many would define the social ideal as a state in which as many people as possible can live in this way.
You and I both know, learning to code is the best way to pull oneself up by one’s bootstraps. Hell, look at me. Other than my affluent Orange County family, my Stanford bachelor’s degree, and the $10 million that my uncle invested as seed capital for my innovative advice column start-up, I have nothing but my ability to code.
Horace Dediu on Apple:
Q: What will do most for the share price – a buyback or a blockbuster new device?
A: Neither. What will do most for the share price is a change in the perception that Apple is not going to survive as a going concern. At this point of time, as at all other points of time in the past, no activity by Apple has been seen as sufficient for its survival. Apple has always been priced as a company that is in a perpetual state of free-fall. It’s a consequence of being dependent on breakthrough products for its survival. No matter how many breakthroughs it makes, the assumption is (and has always been) that there will never be another. When Apple was the Apple II company, its end was imminent because the Apple II had an easily foreseen demise. When Apple was a Mac company its end was imminent because the Mac was predictably going to decline. Repeat for iPod, iPhone and iPad. It’s a wonder that the company is worth anything at all.
Wall Street favors companies that benefit from structural advantages over companies that simply create better products. For example, investors loved how, in the 90s, Microsoft charged tariffs on the inventions of others (Intel, Dell, application vendors).
Apple’s vertical integration leads to higher quality products but also fewer opportunities to charge tariffs. Unless you happen to have one of the greatest geniuses of the 20th century running the company, competing without tariffs means competing on a level playing, something Wall Street hates.