Outsite in Canggu, Bali, Indonesia
I woke up at 5am this morning to fly from Atlanta to Chicago. The next time I’ll sleep in a bed is two and a half days from now - Sunday night.
Andy and I took a Lyft to the airport.
I’m flying ATL to MDW, where I’m working from Industrious for the day.
It’s snowing in Chicago.
Tonight at 12:30am, I’ll leave O’Hare and fly to Taipei, and then onward to Bali.
Fall in Atlanta. Winter in Chicago. Summer in Bali.
Some people think of Bitcoin as a Giffen Good.1 The more expensive it becomes, the more in demand it becomes. Sort of like gold.
But that’s the wrong view of cryptocurrencies. They are not Giffen Goods.
Blockchains at their hearts are computing services. To use the distributed computing network, you need coins. If coins get more expensive, then the demand for the coins goes down because the computing on the network gets more expensive.
The demand curve slopes downward.
This means there’s always a downward pressure on cryptocurrency coin prices. The more popular a network becomes, the more expensive it becomes. The more expensive it becomes, the less demand there is for that network.
As a coin’s price rises, one of two things will eventually happen.
But what about network effects? Could more people using Bitcoin, for example, increase the value of the network and increase the price of Bitcoin?
I think it depends on what the value of Bitcoin is. If it’s a store of value - if it’s a digital gold - then this might be true.
But there are three arguments for why blockchains are valuable:
If it’s a store of value, then perhaps it’s a Giffen Good and will behave like digital gold. If this is true, I think only Bitcoin will survive.
If it’s a currency, it will struggle to find adoption because cryptocurrencies are naturally deflationary. Currencies need to naturally, slowly inflate in order to encourage spending.
And if it’s a computing network, I wouldn’t expect much price appreciation. Computing tends to get cheaper, not more expensive, over time. The demand curve slopes downward, after all.
Giffen Goods are goods that have increased demand as they become more expensive.↩
Instagram might be the downfall of “status”.
Anybody can upload airbrushed selfies. Anybody can post pictures from the gym or from the new breakfast spot or from a stage at Lollapalooza.
If you can edit pictures and photoshop your life and make Everything Look Amazing and blah blah blah, then aggressively showing off your status to win approval no longer works.
Instagram and Snapchat have broken the metric of status.
Perhaps listening and learning will become more valuable than ever.
Sam Harris asked Yuval Noah Harari about how he is able as a professor of history to draw on biology and chemistry and sociology while writing Sapiens.
“I’m interested in questions, and questions don’t have boundaries,” he said.
It’s simple and it’s obvious.
We use problems as a way to learn about the world and gain new skills through a bunch of different lenses.