🔵 Bubbles on the Brain Inspired by a recent conversation with a friend, I've been spending more time reading papers and blog posts from the early 80s up to the mid-2000s, respectively, to better understand how people made forecasts and anticipated changes in their industries with the limited amount of knowledge available to them and without hindsight bias.
I just read one of Marc Andreessen's posts (which didn't make the Pmarchive but still lives on the Internet Archive), on the popularization of "Web 2.0" in 2007 entitled Bubbles on the Brain. Here were some of the more interesting (and familiar) arguments made:
We are hardwired to assume most things end badly
"The human psyche seems to have a powerful underlying need to predict doom and gloom. I suspect this need was evolved into us way back when.
If there is a nonzero chance that a giant man-eating saber-tooth tiger is going to come over the nearest hill and chomp you, then it's in your evolutionary best interest to predict doom and gloom more frequently than it actually happens.
The cost of hiding from a nonexistent giant man-eating saber-tooth tiger is low, but the cost of not hiding from a real giant man-eating saber-tooth tiger is quite high."
Calling a bubble means calling something rare
"Bubbles are very, very rare.
It's significant that in books and papers that talk about bubbles, there are simply not that many examples over the past 500 years of capitalism.
You've got the South Sea bubble, the Dutch tulip bulb bubble, the bubble in Japanese stocks in the1980's, the dot com bubble, and a few others. They just don't happen that often, at least in relatively developed economies. And they don't tend to happen more than once in a generation.
Interestingly, modern economic research is in the process of debunking a number of historical bubbles...it turns out that the Dutch tulip bubble is largely a myth.
Generally speaking, if one is going to seriously call a bubble, one has to be aware that one is calling something that is extremely rare."
In the technology industry, lots of startups being funded with some succeeding and many failing does not equal a bubble.
"It equals the status quo."
READ OF THE DAY
In Quest for Digital Gold Former JP Morgan Head of Global Macro on his initial apathetic outlook towards bitcoin and why he now thinks it's well on its way to a permanent status of digital gold.
LAUNCHES OF THE DAY
💰 OTCoinbase Coinbase is launching an agency-only OTC trading desk in response to client demand.
📃 Messari Just opened its disclosure registry for crypto projects to provide investors with more transparency.
💻 Bitski Developer Beta Providing developers with an SDK for usable, single-sign on wallets secured in hardware.
THING TO KNOW
A timelock restricts the spending of certain bitcoins until a specified future time or block height. Meaning you can initiate a transaction now that pays someone next month. Currenty, there are 4 different timelock options, 2 of which are script-level and 2 that are transaction-level.