The Ego and Incentive Engineering of a Cryptocurrency
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In what way does the ego impact on Satoshi’s Incentive Engineering?
Mining is a zero sum game. The only way to profit is by being first in line, to get your rigs started before everyone else and to sell just before that difficulty jump. You can eek out a profit but not without someone else losing out. It’s all about timing. Time. When is it time to start mining? When is it time to stop? When is it time to hold the coins? When is it time to sell?
What role does the ego play in all this?
My ego tells me that I know just the right time to buy the rig, and just the right time to sell. “Surely”, my ego says, “I am smarter than the market and surely I am clever enough to anticipate other people’s demands and decisions before everyone else.”
But when it comes to mining it isn’t just the ‘lucky’ that make the money it’s also the ones selling the shovels and spades. I’m talking about the manufacturers like KnC and Butterfly Labs; the ones who escape the rate race by giving the rats what they want. Surely that’s where the profit lies. They take your money up front (like the banks) and they teach you a lesson but you don’t see any profit until you learn from it.
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This heap of mining equipment was termed “Great Wall of Bitcoin” recently, http://cryptome.org/2014/05/bitcoin-suicide.pdf
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I think Scrypt ASIC is a large hole , I don’t want to buy any one :-X
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This heap of mining equipment was termed “Great Wall of Bitcoin” recently, http://cryptome.org/2014/05/bitcoin-suicide.pdf
Reading this now, it looks very interesting.
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This heap of mining equipment was termed “Great Wall of Bitcoin” recently, http://cryptome.org/2014/05/bitcoin-suicide.pdf
I have just skimmed through this, does the author understand how the longest chain rule works? It is the chain with the highest combined difficulty that is considered the longest and I don’t see him mention that anywhere.
Though he is right that the purpose of this movement as a whole is to discover the right incentive engineering and the problem with too many of these coins is that they have “blindly copied” Satoshi’s implementation as if it is perfect.
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>> I have just skimmed through this, does the author understand how the longest chain rule works? It is the chain with the highest combined
>> difficulty that is considered the longest and I don’t see him mention that anywhere.The way he put it didn’t sound like he understood it. And he confused me, too, I must admit. Thanks for your clarification. The doubts about the longest chain rule were the most disconcerting part of the article.
In any case, you said a mouthful about sellers of shovels and spades avoiding the rat race.
It is very interesting that you brought up “ego” here (I’m using the quotes as I do not want to play an amateur psychologist and I’m not sure about the correct meaning of the term). I think that in Satoshi’s case, there was an element of trying to save the world, but such an altruistic act is by no means “ego-less”, as it acts likely through narcissistic personality inventory, which is considered egotist. It is interesting how poorly I understand this. On one hand, narcissistic traits are connected with altruistic behavior such as saving the world. I might have been diagnosed with those traits by my peers (though they never told me directly). On the other hand these people sometimes have their sense of self-worth increased so much, that they justify any selfish act with it and they cause great damage to the society around them. This topic interests me very much recently, as I have had intense personal encounters with such people.
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But when it comes to mining it isn’t just the ‘lucky’ that make the money it’s also the ones selling the shovels and spades. I’m talking about the manufacturers like KnC and Butterfly Labs; the ones who escape the rate race by giving the rats what they want. Surely that’s where the profit lies. They take your money up front (like the banks) and they teach you a lesson but you don’t see any profit until you learn from it.
What one also have to understand, the manufacturers do make some bucks of the shovels and spades, however their business plan is based on using the newest equipment first (before anyone else have them) and then selling them just about when profit is barely possible with the tools they just used. The first few in line to buy one will make big bucks and get ROI, thus pumping the reputation of the tools. However, if you’re a bit down the line you’re giving money away without a gain.
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the problem with too many of these coins is that they have “blindly copied” Satoshi’s implementation as if it is perfect.
Exactly, it’s a basic “DNA” string, Like living tissue. Take humans for example, in our DNA we use, what 4 out a possible 20 different algorithms that we are pre-programmed with, I think it’s 20 different amino acids or whatever it is? Biology isn’t my forte, but I digress.
It needs to evolve, just like an amoeba to a human, the amoeba can be improved, nature’s proved that already (although in some cases I remain sceptical!), there is nothing we can do that doesn’t already exist, it’s nothing more than a tool, we can refine it, we can reshape it, we can do whatever we want to it so long as the basic principle remains the same.
Yes Chris, “ego” is very important, if you’re out to make money.
Some of us are not in it to become “rich” though, we are in this world, because we want to change reality, for the better (idealist BS I know but meh) I am one of them.
It’s a indisputable fact that the guys who made the most in the gold rush, made the most money. Why does that principle apply to crypto, Chris, I know you’re not a great fan of the monetary system, am I correct?
So, stop looking at it as money, look around you, see what jobs could be made easier by making the blockchains think, do some actual work, after all, isn’t it merely the shovel to move things around? We are already selling the picks, all of us when we start mining.
The potential I saw in the “worlds biggest social experiment” isn’t about ego, it isn’t about getting rich, you can’t value crypto against dying economies, the value of their currencies are flawed. Sure, we have means to transfer “money” but why is no one creating ideas that hash out major algorithms for companies yet? why not rent a blockchain to solve complex mathematical equations?
It’s open source, it’s malleable, changeable, thanks to society, our thinking is much slower to catch up!
Theorizing and discussion is all well and good, but for now, Feathercoin is but a mere currency, priorty jobs, require priority time
