Bitcoin as a medium of exchange

The recent rash of announcements of companies withdrawing support for Bitcoin payments is both totally expected, given the dynamics of the cryptocurrency, and in my opinion a harbinger of the end of Bitcoin as a payments system. More broadly, the combination of the validation timeframe for a given payment, the highly volatile BTC-to-fiat price, and the resulting contention for payment validation makes for an environment where it just doesn't make sense to buy things with Bitcoin, particularly if those things are relatively inexpensive.

On the consumer side, you are getting your goods in exchange for not just the traded value of your BTC, but also the opportunity cost you're sacrificing to use them today instead of holding them until tomorrow. For sellers, the trade is even worse - you need fiat currency to run your business and pay your bills, so you need to accept the transfer and convert it as quickly as possible. You therefore want to get it validated immediately, but this means paying more in miner fees. If it doesn't get validated fast enough, however, the price difference between the BTC transferred and the fiat price will be too wide. This situation makes Bitcoin untenable as a medium of exchange. In some ways, it's a victim of its own success: even if there wasn't a speculative surge in price, this issue would likely have still come up as more merchants joined the system, increasing validation times.

Bitcoin as a store of value

Bitcoin as a store of value is much more interesting. It shares many characteristics with gold: scarcity, liquidity, and no counter-party risk. Unlike gold, it has no threat from extraterrestrial mining. Also unlike gold, it is infinitely subdivisible. There is no obvious reason it would be tied to market performance, so it serves as a reasonable hedge. The mind share and brand it commands means that it already has quite a lot of stored value.

Assume Bitcoin fails entirely as a medium of exchange. Where can it go from here? Let's look more closely at gold as a comparison point. This is not a perfect match, because gold has some utility beyond being a store of value, such as jewelry and industrial applications, but it should provide a good order-of-magnitude estimate.

An estimated 187 kilotonnes of gold has been mined. As of today, the gold exchange rate is $43.38/g, or $43,381/kg. That means the world's supply of gold is worth about $8.1T. Of that, roughly 20% is attributed to private investment - that's about $1.6T.

Bitcoin has a fixed supply of 21M BTC. Let's assume that Bitcoin becomes as popular a store of value as gold, and thus has a total supply value of $1.6T. In that case, each BTC would be worth about $77,000. More realistically, it would split that market share with gold and other stores of value. Nevertheless, a price of $50,000 per BTC seems acceptable to me, and even $100,000/BTC doesn't seem wildly outrageous.

One implication is that, even if Bitcoin completely fails as a medium of exchange, it could still have quite a bit of headroom on the price due to its utility as a store of value. In that case, the prices would not be wholly speculative.

Gift giving is an interesting and emotional topic. People have a strange compulsion-cum-arms race to give gifts, to the point where the gifts given often lose the importance they should have. Who hasn't been guilty of this - in the panicked moments before Christmas, buying some silly bauble because you can't think of anything better? I know I have, and as a quasi-minimalist, it bothers me.

What could we do instead? I've come up with a few things that can improve gift giving, things that I myself am going to try to implement.

1. Decouple gift giving from dates

A prime motivator for buying that unnecessary (and often unwanted!) gift is an impending event. With your partner's birthday in three days, what can you get her?! Better run to Walmart and buy something disposable, wasteful, and unneeded! I think this motivation to give a gift is artificial. Instead of getting them a gift, write them a letter. Open yourself up to them. Give them some of yourself.

Instead, give gifts as the gift presents itself. People are constantly telling us about things they secretly want or need, but won't get for themselves. These are exactly the perfect gifts for someone. When you hear a declaration like that, buy the person the gift! Don't wait!

2. Give intentionally

Closely related to the last point, stop giving people things just to give them something. Instead, only give people things they truly want or need. It's better to not give anything than to give something unwanted. In my opinion, the best gift is something the receiver deeply desires, but is too much of a luxury for them to get for themselves. As an example, I mentioned wanting a small fountain pen to carry with me. I had a Fisher Space Pen when I was younger, and loved it, but didn't love the ball-point. I did a little research and discovered the Kaewaco Liliput in copper. What a beautiful pen! And it's the same size as a Fisher! The price put me off though. What pen is worth $100?

My best friend got me one for christmas. And a Fisher. He was listening, and he found me a perfect gift. You too can give perfect gifts! It's simple - just start listening to your friends talking about things they want. Not everyday things, but things they desperately want but won't get for themselves. I've started keeping a list, for when I inevitably fail to follow rule #1.

3. Give best-in-class presents

Avoid giving throwaway gifts, which are wasteful and exploitive, by instead giving gifts of very high quality. Think about this: of the things you own, how many are the best in the world? Or even the best in their given class? When faced with an opportunity to give someone a gift, give them something they'll give to their children: something best in class. Things in this category tend to last forever, and tend to get used and enjoyed more than more disposable things. They also tend to be more expensive. The price of these gifts can actually serve as a strong reminder not to impulse-buy things, but instead to follow rule #2 and give mindfully.

4. Give consumables

If you find yourself in a situation where rules #1 and #2 can't apply, and you don't have time for finding a best-in-class present that fits, don't reach for disposable stuff like consumer tech, cheap clothes, plastic household items, or otherwise. Instead, grab some consumable luxuries - coffee, cheese, booze, chocolate, or the like. Consumables like these are almost universally appreciated, and don't end up in a thrift store (or worse, landfill). With a bit of thought, you can take this concept wider and give an amazing gift of nothing but consumables.

As an example, my mother built me a "wine party in a box" - 12 bottles of wine, hidden in paper bags, with pairing notes, tasting cards, and the like. It wasn't just 12 bottles of wine, it was an evening of fun with my friends. And the gifts don't need to be nearly as lavish - my sister got me a bottle of champagne, some fresh oranges, and a handmade citrus reamer.

5. Give giving

This doesn't always apply, but a good gift for some people is a donation in their name to a cause they are passionate about. In some ways, this is the anti-gift of the impulse buy Walmart gift: instead of exploiting resources and people, and instead of clogging the landfill with yet another unneeded or broken widget, it serves double purpose, as both meaningful gift and benefit to society.

In 2018, I'm trying to do all these things, for my sake, for the sake of the environment, but also for the sake of the recipients of the gifts themselves. By bringing intention to the gift-giving process, it becomes much more meaningful to everyone involved.

I've been pondering the idea of authenticity. I started thinking about the concept after listening to Noah Kagan's podcast with Jason Fried. Jason, a lover of cars, was asked about his favorite cars. He answered Aston Martin, and one of the reasons he gave was Aston's dedication to what he called authenticity of materials - if it looks like wood, it is wood; if it looks like metal, it is metal. In contrast, in many cars, even high-end cars, chrome elements are really chrome-plated plastic; woodgrain is veneer. Jason talked briefly about the cost of this authenticity of materials. The cars still need to be largely handmade, and of course are rather expensive.

More generally, this is an example of what I'd call authenticity of design. Authenticity of this type is imbued in a made thing by the creator, and the creator's dedication to authenticity is what prompts it. Therefore, authenticity of design is externalized. Beyond authenticity of materials, skeuomorphs - design elements that evoke other made objects of a different type - are an example of inauthenticity of design; affordances - if it looks like you interact with something, you can - are an example of authenticity of design.

A week or so later, I was listening to another podcast, The Tim Ferriss show with Adam Robinson. Adam and Tim discussed battling depression, and Adam explained that one of the breakthroughs that helped him emerge from depression was also one of authenticity - his authenticity of self-image. In my own words, the idea is that we are often so focused on selling ourselves, on creating an image of ourselves, that we embrace that image regardless of how well it reflects who we really are. This creates an internal conflict, because if we believe in a false image of ourselves - an inauthentic image - we compare our real actions and feelings to it and find ourselves lacking. This discord likely affects people differently, but I imagine one of those ways is depression and self-loathing.

I'd characterize this type of authenticity as authenticity of self. Authenticity of this type is both representative and the creation of the same maker - it is about one's own representation of one's self. In this way, it is internal authenticity, in contrast to the external authenticity of design. I'll discuss some more examples of this type of authenticity below.

One thing I find interesting about both of these types of authenticity is that they are both of intrinsic value, sometimes to the detriment of extrinsic economic interests. By that I mean that often the world around us often rewards inauthenticity. As a result, efforts to remain authentic must be motivated by an intrinsic force, an assignment of value to authenticity itself. As I write this, I feel like there is an almost moral overtone to the entire concept, though I don't feel like authenticity (or its lack) is really related to ethics, which are about our relationship with those around us. Instead, I feel like authenticity is kind of like an inward-facing morality.

Since hearing the discussions above and thinking about them for a while, I've come to see authenticity, and the struggle for authenticity, everywhere, and particularly in business. Companies often market themselves as something they aren't truly. Tech companies in particular often like to pretend that their work is wildly innovative and groundbreaking, and that they are leading the charge in some new direction. In reality, many of those companies, particularly larger companies, do very little innovation. Instead, they provide relatively reliable if somewhat prosaic software with great account involvement and great support. These benefits are super valuable, so why the inauthenticity? In my opinion, it costs these companies quite a lot, both in terms of dollars to maintain this facade, and in terms of a deeper conflict in the organization itself - akin to the internal conflict we feel when we are inauthentic with our image of ourself. This conflict manifests in disjointed strategy and wasted efforts as the business units, products, and employees seek to find relevance within the image the company presents for itself. On the other hand, the benefits are dubious at best - who is being fooled? Surely not the customers, at least the ones you can retain.

I think companies should seek to be authentic in their marketing. If it looks like wood, it is wood; if it looks like metal, it is metal; if you say you're innovative, you are; if you say you support your products rabidly, you do. Instead of presenting your company as something you aren't, present it as what you actually are. If you want to be something else, become it (or a least invest in becoming it) before you start saying it. Incidentally, this is just as true for individuals as it is for companies. Say what you are, and be who you say you are.

Unfortunately, as I said above I think the value of authenticity is first an intrinsic one. This means that companies in particular, but also individuals to some extent, are often incentivized to operate outside of authenticity. Authenticity costs something as well, and that cost combined with the frequent external reward for inauthenticity make it hard to stay the course. However, I think the rewards are much more long-lasting than the external rewards. These rewards are both internal and external.

Externally, authenticity is often reward by rabid enthusiasm from others, as in the case of Aston with Jason Fried. People tend to admire these products, want to talk about them, want to show them to others. I think a lot of the recent popularity in buying higher quality products (selvedge denim, or Darn Tough socks, for example) is a reflection of the market desire for authenticity, and possibly even a backlash against inauthenticity. For companies where metrics like net promoter scores are beginning to take such an important position, this kind of reward can recommend authenticity over the more fleeting reward for inauthenticity.

Beyond external rewards, maintaining an authentic image promotes an inner harmony of sorts. I think this is what Adam Robinson was referring to, and I think it extends beyond just ourselves to our organizations at large. In many companies, a mission statement serves as a good starting point, but I think it's important for the entire company to reflect the authentic value of the company internal as well as externally - from leadership to HR to PR to marketing to sales to engineering to operations. When everyone in the company is aligned, and everyone is saying the same thing, and the thing they are saying is an honest description of what the company is, every action that is taken is on-mission. Without that, a mission statement is as divorced from reality as the marketing. When a company devotes itself to authenticity, nothing is a lie and nothing is pretense.

I'm very happy to announce that today, Feb. 4, 2017, I crossed another item off my 35 by 35 list (and yearly goals) by sending my first outdoor V8-grade boulder problem, Right Exit to Fontainezoo, alternatively called W Goes to Fontainzoo. It represents over a year of effort and attempts, a very Dave MacLeod approach to climbing. Since I first attempted it, I've worked on my climbing roughly 3 days a week on average, including a period with a torn pulley.

Ultimately, I succeeded on this problem ("solved" it, if you will) with a reductionist approach quite similar to the root cause analysis of software failures I've done: in the event of a failure, ask why until you arrive an issue you can address directly. Start at the beginning of the climb, try your hardest, fall off. Why did you fail? Because my foot slipped. Why? Because my center of gravity was too far to the right. Why? Because I was letting my core sag. Pick yourself up, try again, conscious of keeping your core tight.

I performed that process for almost every move of the climb, which was two grades harder than my previous hardest ascent when I started. By reducing the climb to a series of fundamental, actionable improvements, I was able to make progress, despite initially feeling as though the end result was out of reach. Even today, a year later and much stronger, I subtly adjusted my footwork and my angle of attack on holds. And today, all the pieces came together, and it was beautiful.

I'm struck by the similarity to building software and processes. Deliver a release to customers, find out it's failed for some case. Why? Because... Why? Because... Why? Because... Implement the changes at both the software level (so it works next release) and at the process or team level (so that the problem doesn't happen again. No wonder so many climbers work in software.

This may be a mild form of apophenia, but any time I see a recommendation or idea several times within a short period of time, I take note. Recently, I've been listening to a lot of podcasts by people who are (by some metric) more successful than I am. One of the interesting themes I've picked out is the idea of intentionally building the network of people with whom you interact, with the goal of surrounding yourself with people who can inspire and teach you. I am a big believer in the value of networking, and I try to follow up and stay in touch with people I think bring value to my life, but I've previously taken a more passive approach, meeting people at conferences and in chance encounters.

The theme I've noticed among high achievers is that they not only see the value of networking, but they actively and intentionally build their networks. Instead of waiting to meet someone interesting, they apply systems to meet these people sooner and follow up with them to build their relationships. By building out their networks in this way (and actively pruning them), they wind up with relationships and interactions that help them achieve their goals, whatever they might be.

Obviously, seeking out specific people who are high achievers or innovators in the area of your goals is a direct way to do this. However, I propose (and am seeking to implement) a second approach as well: greedily look for people who are inspiring among your existing network, regardless of why they are inspiring. Ask your existing network three simple questions:

1. Who is the most interesting or inspiring person you know?
2. Why are they interesting or inspiring?
3. Can you introduce me to this person?

If you think of the directed approach of connecting with high performers in the area of your goals as optimizing your network, this approach provides a complementary exploration component. As I've learned from my studies in reinforcement learning, striking this balance between optimization and exploration is key to any endeavor for which we do not have perfect information; building our networks to enrich our lives certainly falls in that category. Another analogy in my own life is my efforts to read books and papers outside of computing and software. These books and papers often inspire cross-domain ideas that produce much better results in the original problems I was seeking to solve. Likewise, interacting with interesting and inspiring people, regardless of where their success lies, broadens our view of the world and enriches us in ways that single-topic interaction cannot.

I challenge you, and myself, to get out and ask someone in your network for an introduction to the most interesting person they know. Have a coffee or beer with that person and talk to them about their lives, their habits, and what they're passionate about. Offer to help this person in some way if you can. Build out your network to be both deep and broad, and surround yourself with interesting, inspiring people.