It's been written about many different times, and from many different angles, so it'd be ambitious (read: delusional) for me to think I could spill any new ink on the "discourse shapes reality" argument. The language we use is important. It goes beyond describing reality - it affects it. But here are four examples I've specifically been thinking and reading about lately.
Motivations vs Incentives
The textbook difference between motivations and incentives places motivation in the "behavioral" bucket and incentives in the "tools" bucket. Incentives are a means (tool) to get someone motivated (behavior). Paying someone isn't motivating them, it's incentivizing them.
A person who is incentivized by being paid is generally motivated by a belief that their assets will help them achieve something else: security, status, self-worth, etc. And their loyalty can be bought by the highest bidder. If you think this is flamingly obvious, it is not. At least not to the many open-source projects that obsess over financial incentives and pay less attention to equally (and arguably more) important motivation-generators like: company mission, community size, and company structure.
One of the most interesting experiments on how incentives can run orthogonal to motivation started with dividing two groups of students to complete an activity they enjoy (like solving a crossword puzzle). The students who were paid to finish the puzzle were less likely to work on more puzzles after the experiment ended whereas those who weren't paid were more likely to continue after the fact. As it turns out, the extrinsic reward of payment had interfered with the intrinsic reward of the activity itself.
Bubbles vs Cycles
I've written about Marc Andreessen's post on this before, but to call a bubble is to call something extremely rare.
We call them at a more-often-than-is-statistically-possible rate since our brains are hardwired to give greater weight to negative experiences. This, historically, has served us well. It's why most of us decide to not race, say, a tiger and instead opt to continue our lineage.
Collaborative Fund's Morgan Housel takes this thought a step further, and explains that what we usually classify as a bubble is, in reality, a cycle. He notes that it's not unlike labeling someone clinically depressed when they're just in a bad mood. Below is an illustration of a regular cycle in our capitalist system.
When the cycle breaks, you have a bubble. Specifically, Morgan identifies a bubble occurring only when: return prospects don’t improve after prices fall. It’s when an asset class offers you no hope of recovery, ever. It's important then to assume most asset prices will experience more of an ebb and flow overtime - not a complete bust.
Regular vs Predictable
Three things happen when a market dips. Some people lose money. Some people make money. And a slew of Monday morning quarterbacks come out of the woodwork to pontificate about how predictable the whole thing was. When what they really mean is they could have seen it coming because it's a regular occurrence. Not a predictable one. Assuming something is predictable - and trusting others to make those predictions - is dangerous because it allows us to more easily lean into autopilot, become complacent, and gives us an artificial sense of control over the future. When thinking about market predictions, I often think back to Ryan Selkis' Nostradamusian comment:
"January 27th at 7:56am ET" to illuminate the absurdity of expert predictions. Yes, cycles tend to be more regular. But the reason it's tough for people to get ahead and buy or sell before they turn is, as Morgan Housel succinctly puts it, "regular does not mean predictable."
Skepticism vs Cynicism
Skeptics probe ideas for potential weaknesses and are on a mission to find the capital-T Truth, whatever that may be. Cynicism isn't driven by a desire for truth as much as it's driven by a desire to prove something or someone wrong. As has been pointed out before, criticizing, negating, or refuting another person or entity is perceived as acting independently or "untethered by social constraints." But what's tragic (amusing?) about cynicism is that instead of escaping the herd, the cynic's view is, by definition, controlled by the herd -- the script is the same each time: to reject that which has been accepted or popularized. The cynic's position is already chosen for him by the very people he wishes to disempower.
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READ OF THE DAY
📖 Delphi Digital UTXO Analysis Delphi Digital's most recent report takes a deeper dive into the UTXO analysis presented in their State of Bitcoin report. The team analyzed UTXO age trends relative to prior cycles to forecast when selling pressure from long-term holders will likely wane, in an attempt to calculate a rough estimate for when BTC prices should bottom.
LAUNCH OF THE DAY
🚀 CryptoKitties x Gods Unchained Hello, interoperability. If you have a CryptoKitty, you're now eligible to buy a pack containing a Kitty Talisman as your player statue in Gods Unchained.
WATCH OF THE DAY
Man, I miss College Humor. Hadn't realized Jake and Amir did a bitcoin episode years ago. So did Hardly Working. Their sketch below is great, you can click on the image to play. I'd say 2:03-2:21 sums up Crypto Twitter pretty well.