The times, they are a'changing. Not something I have to tell you. But recent happenings in crypto markets - most notably the revelation of the first $1 dog coin - have created timely circumstances to deliver a ramble about what these unprecedented times mean for us, the token-purchasing pre-rich. Many of the ideas presented here are things I've said in piecemeal on 𝕏, so hopefully this functions to tie some of my idiotocratic decrees together into a larger picture.

Today's rant focuses on two main statements and their impacts:

1. Advances in technology and changes in behavior norms are causing decades-long social consensus to fall out of favor at an accelerating rate across a multitude of disparate fields.

2. Changes in social consensus - particularly those caused by concrete revelations - often spurn innovation in unforeseen ways, thus increasing volatility and opportunity.

The TLDR here is something I've been yelling from the rooftops a while: global silliness levels are reaching breakneck velocity and won't be slowing down anytime soon.

tervo

@tervoooo

next cycle can’t possibly be crazier than the last? normies are paying money to watch the mmm ice cream so good yes yes yes girl and you think next cycle can’t possibly be crazier than the last?

1,840

7:32 PM • Jul 13, 2023

An Irrational Framing

Most every decision, from whether to go to war to whether to bring your umbrella, is a risky one. Traditional decision making theories focus on expected value (or utility) for uncertain outcomes.

In this set of options, there is an obvious answer if you compute the expected values. Any rational individual who stops to do 3 simple computations can see so.

In reality, though, lots of potentially rational individuals are nothing of the sort - crypto participants need not be told this, we see it on display constantly. Trusting rational assumptions of expected value when making risky decisions involving demonstrably irrational market participants - as all humans are prone to be at times - may not be great.

Decisions involving utility are even tougher - at least with value (money) there is a correct answer. If there is a 30% chance of rain, that can't possibly be used to say 30% of people will bring an umbrella. Some people don't own umbrellas, others bring them even in the sun, and a few whackos probably say they are against umbrellas for political reasons. Probabilities aren't useful for predicting preferences or beliefs, but behaviors are.

And in the 1979, Daniel Kahneman and Amos Tversky decided they didn't trust EV. They reformed decision-making theories to account for irrationally, or at least try to, by focusing on actual behavior under uncertainty. Prospect theory, their most well-recognized work, is often pointed to for exemplifying the exact behavior we see on display in Ansem's poll, which they call the certainty effect: individuals are risk-averse when presented with positive outcomes of varying levels of certainty, exchanging expected value for more peace of mind. Inversely, individuals are risk-seeking when presented with negative outcomes of varying levels of certainty, exchanging expected value for a chance at a smaller loss.

Their research, much of which is collected in the 1982 compilation Judgement Under Uncertainty, set the basis for much of our understanding of cognitive heuristics and biases, including contributions to theories like anchoring, the peak-end rule and sunk costs. I'm not as well-read on this stuff as I might sound and it certainly isn't groundbreaking news that humans are irrational. Predicting (and manipulating) this irrational behavior is an incredibly profitable business - ask Google or TikTok. Or Blockgraze.

With the understanding that these "rational market participants" are controlled by monkey brains evolutionarily inclined to make poor choices, we are ready to discuss the subject at hand: choices made collectively by huge groups of people who are evolutionarily inclined to make poor choices.

The Age of "Why Not?"

When I say "social consensus," I'm talking Overton Window type stuff - what behavior is generally acceptable in civilized society. One must stop and actively think about it to realize how much things have changed in just the past 24 years - less socialization, more screen time, blah blah, all the classic tropes you know and love. An indelible few may have predicted we'd be where we are, but the vast majority of people lack not only the vision to imagine the possibilities but the time required to do said imagining. As such, they go about their daily lives as normal, noticing "oh look new thing over there, neat" once a week until they wake up in a different reality 20 years later.

"That sounds hyperbolic, terv," you say as you log in to ESPN Bet and plug in another 7-leg player prop parlay. 30 years ago, Al Michaels was taking a risk even hinting at the spread during the Super Bowl broadcast. Now society has become alright with shoving No Sweat Bets down your throat every other commercial. That's a pretty big shift in social consensus.

In my mind, shifts in social consensus can be categorized into two broad and simple buckets: those brought on by objective revelations - technological developments, research findings, anything related to new information - and those brought on by less tangible, more subjective cultural beliefs and preferences. Much like the difference between expected value and expected utility mentioned above, objectivity is easier to handle. Revelations tend to change social consensus in a rather irrefutable manner. Why does an apple fall from a tree? Because of gravity.

Shifts in societal beliefs and preferences, meanwhile, cause controversy of all kinds because they are subjective decisions made en masse. When you examine these subjective consensus beliefs, many of which double as government-enforced laws, it's best to do so from a historical point of view. Asking an individual for an answer to a subjective question is a great way to discover a load of information that supports their bias. Instead, look to primary sources to figure out how and why it became social consensus.

You'll find that the vast majority of our societal framework is built on decisions that were made frivolously, usually with the aim of maximizing and maintaining the power of incumbent decision makers. Norms that remain consensus long enough eventually become engrained in a culture, becoming a de facto default option, which are effective tools in inducing desired behaviors.

Consensus beliefs are a product of the time and place they are formed. The relative power between those who form the social consensus and those who must adhere to them is one of the important factors to note when examining their historical rationality. Those that are enforced on the many by the few tend to change with violent volatility - like the French Revolution - while those enforced by the many on the many tend to change slowly, gradually - like marijuana legalization.

The longer consensus belief goes before it is re-evaluated using the knowledge and preferences developed since it's inception, the more likely it is to be outdated by the time somebody thinks to question it. This seems intuitive, but is the topic of another common heuristic pitfall: the longer a subjective consensus belief remains the same, the more likely an individual is to assume it applies with certainty the same way an objective fact does.

If, in 1994, you proclaimed that in 30 years, ESPN would be a sportsbook, Saudi Arabia would sell alcohol (to diplomats, I know), the Vice President of the United States would be a woman, almost nobody goes to church, and the most popular person on the planet is a guy who gives away money for fun, they'd put you in a straight jacket. Not because those things were categorically impossible, but because it simply sounds insane. If, in 1994, you told a stock trader the in 30 years, multiple digital tokens that do not even pretend to provide a traditional value proposition would be worth over $1B, he'd laugh you out of the room.

tervo

@tervoooo

i think meow saying jup token does nothing is pretty sweet. there is no need for veneer of legitimacy anymore. why token? bc token. no need for charade of it all. have been yelling about this for +6 months now. there are no rules anymore. they sell alcohol in saudi arabia

139

11:55 PM • Jan 29, 2024

Rightly so then, but by now, the social consensus around what can have value has shifted. Given that this consensus was previously formed by the few and imposed on the many, I expect it to be a violently volatile shift.

And that brings us to the dog and his hat. Well, almost.

The Impact of Modern Revelations

Changes in objective social consensus are far more definitive. They can be pointed to, identified specifically. Revelations of this sort, like the invention of a new technology or the discovery of a previously unknown scientific theory, flip a binary switch from impossible to possible.

A funny thing seems to happen in humans when the see this switch flip: they reevaluate their assumptions. If a revelation renders other assumptions used in decision-making models inaccurate, this single new fact may cause a domino effect that necessitates much broader change.

This is business as usual in scientific communities. It becomes more interesting when observed in disciplines where possibilities are judged not by experimentation, but by historical reference. In such cases, the consensus belief may be that something is impossible only because it has not yet happened.

The 4 minute mile, for example, was once thought impossible. It took 99 years of recorded mile races and much anticipation before the record was broken by Roger Bannister in 1954, proving that a human being was indeed capable of the feat. 46 days later, Bannister's record fell. The next year, three racers logged sub-4 minute times in the same race. Human physiology has not changed - but a mental barrier had fallen. The never-before-seen was now verifiably possible. Since 1954, over 1,700 individuals have completed a 4 minute mile.

Another, more recent and relevant example of how revelations can encourage increased productivity was observed last year. Researchers analyzed a dataset of millions of decisions made by professional Go players and found that since the introduction and subsequent domination of AI bots such as AlphaGo in 2016, the number of matches that contained a "novel move" went up by 15%. Players were not only learning new moves from AlphaGo, but creating a significant amount of new moves on their own. The introduction of new possibilities gave way to yet more possibilities.

Exponential Silliness

It took 11 years to prove $1 valueless dog coin is possible. In the time between Doge's inception and WIF's rise, many consensus beliefs fell. With the way things are going, more will follow. Gen Z is a truly digital generation that will grow up on TikTok and ChatGPT. AI, crypto, AR/VR and every other rapidly developing technology will undoubtably bring more revelations while simultaneously providing a wider range of preferences and beliefs a seat at the table.

The sheer and utter inability for humans to estimate exponential functions is clear enough with regard to values - that is, situations with numbers and predictable, computable, rational answers. Yet some feel as though they are capable of calling the top on the global silliness chart. An ever-increasing number of digital assets that do not even pretend to include a traditional value proposition are winning mindshare at an increasing rate and have been doing so for, arguably, 11 years. That is not a trend I'd try to call the top on - I'm not sure there will be a top.

"What else is there for them to dream of?" Not 48 hours after those words were muttered, $TRUMP broke $10, becoming the first two-figure memecoin (of notable size and relevance, to my knowledge). Guess that gives the hat something left to dream of - but why stop there?

The core mission established in the Bitcoin whitepaper centers around shifting the social consensus of value from subjectivity to objectivity. One may say Ethereum does the same thing transactions and agreements. We are all here to help replace the frivolously constructed societal frameworks that so often folds in on themselves when a simple assumption is proven wrong. At times it feels like we witness first-of-their-kind events on a weekly basis. None of this was possible 25 years ago. Much of it wasn't possible 5 years ago. That which seems impossible today may not be tomorrow. That's the business we are in here, kid. Take a chance. Believe in something.

Just because 9 out of 10 monkey brains agree, and have for a long time, and are yet to be wrong, does not guarantee they will be right in the future.

Now, let's get back to the show.

tervo

@tervoooo

alright listen, here’s the pitch

45

2:27 AM • Dec 15, 2023