Thoughts in Between

by Matt Clifford

TiB 186: Crypto-governance; Einstein's incentives; the history of progress; and more...

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The limits of cryptoeconomics

Can crypto escape the problem of politics? That’s the question behind this excellent recent paper by Nathan Schneider, an academic at the University of Colorado. Vitalik Buterin, one of the co-founders of Ethereum, has an equally interesting response here. I highly recommend both pieces. Each is thoughtful and fascinating, whether you know a lot or a little about crypto.

Schneider looks at the promise of crypto protocols to replace the “problem of trust” in social systems with cryptoeconomic incentives. Schneider’s starting point is somewhere between “open minded” and pro-crypto, but he offers a critical evaluation of the various mechanisms that different protocols have created to influence the collective action of their participants. His core concern is whether crypto’s reliance on economic incentives can produce socially desirable outcomes or if this approach erodes the non-economic values that make political cooperation possible.

Buterin is sympathetic to the problem (see also our discussion in TiB 158 of Buterin’s essay on the challenge of legitimacy in crypto-governance). He draws a distinction between “financialised” and “non-financialised” systems, where the former is defined as systems that “do not attempt to prevent collusion” between participants. His argument is that in the off-chain world, non-economic incentives do a pretty good job of presenting collusion (e.g. the role of judges in most modern states) - but it’s possible to design crypto-native systems with similar features, such as TheGraph, which Schneider discusses too. There’s room for lots of innovation here. As Buterin says:

“There is plenty of room for blockchain-based systems that do not look like money, and indeed we need more of them.”

What can we learn from the history of the bicycle?

Way back in TiB 76 we covered the OpEd by Tyler Cowen and Patrick Collison that launched the Progress Studies movement. Since then, there’s been a huge amount of innovation and community building. This week’s TiB podcast episode is a conversation with Jason Crawford of Roots of Progress, which has become one of the most important and interesting nodes in the progress studies ecosystem. Roots of Progress is a not-for-profit “dedicated to establishing a new philosophy of progress for the 21st century”.

In one of my favourite segments of the conversation we discuss what we can learn from the history of the bicycle. The bike seems like a low tech innovation, but it took a remarkably long time for it to be invented, despite many of its components being apparently “obvious”. Jason walks us through the story of its development and what it tells us about the contingent and uncertain path of innovation.

We also discuss:


What would Albert Einstein do today?

We’ve talked a lot in Thoughts in Between about incentives problems in science and how they (potentially) lead to stagnation. I was fortunate to spend yesterday at a one-day workshop on the topic (loosely based on this event held recently in the US). Most of the content was off-the-record, but I was struck and encouraged by how many smart and ambitious people are working in this space and what a broad range of ideas are being explored, including many TiB favourites such as the role of venture customers, new types of scientific career and even cryptoeconomic incentives (see above).

One bias that my day job at Entrepreneur First has given me is to focus less on how institutions and incentives shape the behaviour of people already in a system and more how they shape who enters the system in the first place. As we discussed in TiB 165 and 167, I think there’s more leverage in changing who becomes an entrepreneur than there is in trying to make existing entrepreneurs more successful.

There’s a similar but distinct dynamic at work in science. Yes, it would be valuable to give today’s researcher’s more scientific freedom à la Don Braben, but the second order effect of encouraging brilliant people who would otherwise pursue non-academic careers could be even more important. One of the participants in yesterday’s session posited that the Albert Einstein or Niels Bohr of the early 21st century might have given up academic physics in disgust and be living a happy and lucrative existence at Jane Street or similar. If you believe there’s even a small chance that’s true, figuring out how to reverse it likely has enormous societal benefits.

Quick links

  1. The best news of the century so far? The WHO approves a malaria vaccine.
  2. Not remotely decentralised. Venture capital remains geographically concentrated.
  3. Playing favourites. Which country do EU citizens think the EU favours? Each country gives the same answer... except one.
  4. Up and to the right. Despite the tech crackdown, Chinese startups have a record year (more here)
  5. Fake views. Interesting paper on the phenomenon of "survey trolls", who tell pollsters whatever is most amusing.

The bit at the end

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Until next week,

Matt Clifford

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