regulating the regulators, always a need
nice! love having great enriching content to watch or listen to as you know!
Good interview on the topics of Bitcoin, Regulation 2.0, AirBnB, Kickstarter, immigration, investing in restaurants & learning that GG is a character.But I still don’t fully understand the endgame on BitCoin’s volatility & why it’s a good thing in the long term.
“BitCoin’s volatility & why it’s a good thing in the long term.”Probably not the answer or reason you are looking for but one advantage of volatility being good is because volatility gets mainstream press and public attention (if a story bleeds it leads). Nobody wakes up in the morning and cares if the widows and orphan stocks are trading up or down an 1/8 over the day before.Any press mention, good or bad is generally good.
Kickstarter exists so people can help make the things they wished to see in the world existPoetic!
i don’t think bitcoin is really based on math. i think rather it’s based on a belief in anarchy: that the market is entirely self-regulating. speculators are going to have a field day with bitcoin, as they already are. and that is why bitcoin won’t work, because ultimately you need a central bank to minimize volatility in order for a currency to really work. shares in a fund that trades bitcoin could in a way solve this problem, but it will be regulated to death.transparency is not necessarily a solution to regulatory conflict. transparency is often a privacy violation, and often interferes with competitive business strategies. it is of course also humorous that you are so pro-anarchy when it comes to keeping government out of your market opportunities, but so pro-tyranny when it comes to anything else — i.e. soda size, firearms, etc. all we need is airbnb for soda and then we’ll hear cries about how great it is to have the soda market regulate itself. lol
Complete transparency + computer memory = Living with every mistake you have made forever
Now that derivatives instruments such as binary options with bitcoin as the underlying have entered the scene, you can expect to see heightened volatility. Know your Greeks 🙂
.Brilliant comment. Well played.JLM.
Your comment just got me thinking.What if there was a way to crowdfund lobbyists that would support your point of view?What if you were able to get a group of like minded people together to pay the salary for a time period of a “kid mercury” who would go to Washington (or if enough money was raised would live in Washington) to advocate and inform legislators and the government of the issues that you and others find important.Would you contribute to that crowdfund campaign for the right individual? Industry groups do this but then they are industry groups with offices, staff and other agenda.Stripping it down to the basics we just have a person who is able to effectively present a particular idea or ideas. Very lean. Would get great play in the mainstream media no doubt.
.Makes perfect sense to me. Can’t imagine why it would not work.There would be some registration issues but they are very simple.Lobbying is most effective when it comes with the ability to bundle campaign contributions.JLM.
Great idea. A marketplace of public advocacies.But can’t one already cast themselves that way as a Kickstarter project?
Sure but a niche site dedicated to just doing this concept (as a stand alone) would get much more focus and attention.That will no doubt continue to happen with Kickstarter anyway since in a sense it’s a department store and any viable channel will inevitably end up breaking out to it’s own big box.
What do you think of what Causes.com is doing in this area? (They acquired Votizen)
I don’t know much about that (just skimmed the site because you mentioned) but this isn’t really the idea that I’m thinking of although I guess you could use it. What I fear is something becoming to dilutive and serving to many masters which is why the site I propose is a niche for one purpose only.One thing I can tell you is what I think of the two examples that I just saw on causes.comRoger stood his groundWhen Drummondville town officials declared front yard vegetable gardens to be illegal, Roger Doiron started a petition on Causes. 29,000 signatures later, officials reversed their decision. Paul protected the rainforestsWhen Talisman Energy began harmful drilling in the Amazon, Paul Paz y Miño used Causes to raise funds to send indigenous Peruvians to confront the oil company. Soon after, Talisman halted its operation. What I don’t like about things like this is that people are really quick to jump on any issues (as lemmings) that others raise without identifying whether the facts presented are even true. Total knee jerk reactions (not above since I haven’t researched!) but just in general. I mean I’m always skeptical and what I don’t like is petition drives where someone reads a paragraph or hears a spiel and jumps on board of what a total stranger says. (As opposed to “I trust Fred’s judgement so I support what Fred says”.) So I really really don’t like things like this and how companies have to reverse course for fear of a PR disaster. Not the way it should work at all. There is a reason trials take so long. The reason is facts and details matter and someone’s one sided plea is almost never full of all the facts and people agreeing are never going to take the time to fully vet anything at all. They will sign on and how do we know the right thing will happen? We don’t and it can’t.Of course the same thing could happen with the lobbying but the idea is that if someone gives money you would hope that they have more skin in the game of the ideas they are supporting. And I would want full disclosure on the site of both sides of the issue as well.
They are probably not very strict on curating these projects evidently.
I love this whole thread and the discussion of reg 2.0 in the video as well. The concept is very cool. Figuring out how to execute it has had me scratching my head a bit. To kid’s point about transparency, I’m assuming Fred isn’t saying open it all up but even a more contained view could have differing objectives. The one he notes relative to Airbnb is the form to head off and/or appease regulators. You demonstrate fairness or consumer protection then there’s less need for regs. The other form is transparency that delivers a new value that would not be otherwise realized. It has the same potential for fairness as the former but expands on the concept. Maybe thats reg 3.0?
When we say Bitcoin is based on math, I believe that’s referring to the means of getting a distributed group of participants to create a public transaction log, in which it is very hard to cheat, for example by attempting to double spend or fool someone with a fake version of the transaction log. The math underlying this is a combination of the difficulty of finding a number with a hash value satisfying pre-chosen criteria, and an extremely clever approach to the Byzantine Generals problem.Compared to that clever bit of engineering, I think the economics are pretty straightforward and and well-known. It’s the perfect abstract commodity which has no intrinsic utility, no controlling authority, but can be traded easily and almost instantly worldwide.It’s a new asset class. Whether it’s a “currency” could affect whether prices are denominated in it; if they’re not it could still be a convenient means of payment, even with a conversion step.If it moves in a different way than other assets, that’s one more reason to have some of it — it makes a more diversified portfolio. I could imagine financial advisers telling their clients “put X% of your money in bonds, Y% in stocks, Z% in cash, and perhaps also a small percentage in bitcoin (or other digital assets, if/when some others show up)”. The percentage will obviously depend on comfort level.
bitcoin is a “pure” market in that there is no regulatory authority implementing price controls. the closest there is is the 21 million final output. but within that 21 million, supply and demand and run freely. what you are seeing and will continue to see more of is speculators driving the price down, via DDoS attacks and many other methods, so they can accumulate more. then run it back up, dump, repeat. the same thing happens in many other markets, the market for silver is probably the clearest example. it is way too volatile for this to be a currency. the problem will only get exacerbated as bitcoin becomes securitized via binary options and whatever other derivatives people want to make up. the math makes it seem like something special and different but in reality it is a function of supply and demand just like any other market.
I agree, from what little I thought I have put into it – its a commodity.
I want a guest post (or even series by @kidmercury on bitcoin) My instinct is that the whole math-based distinction of bitcoin versus commodity or trust in the state is cute, but misleading. I’d love to hear from kid in what is going on and why it will or will not work in greater detail!
actually i am working on a bunch of content pertaining to bitcoin for marketing purposes — need to ride the meme 🙂 here is an one article i wrote: http://www.informedtrades.c… i’ll have a bunch more that will be prettier with images and fun UX stuff but this is the first article i wrote a couple days ago.
Karmic returns too!
Gold is a decent counterexample to this, however, as it serves as a relatively stable currency without a central bank.As far as soda: Government’s job should be limited to educating people about the health consequences of various food choices, not regulating what they consume. I guarantee you that 80% of the population has no idea that drinking soda increases their risk of getting heart disease, cancer, diabetes, acne, and a myriad of other conditions. There is even evidence that a sugar-laden diet makes one less reproductively attractive (aka UGLIER). Education, not tyranny, I say 🙂
even gold has its issues, as illustrated by its 5%+ decline on friday. between gold, silver, and related stocks, i saw my net worth decline about 6% on friday in less than 8 hours. i’m prepared for this and am glad in a way because it affords buying opportunities, but it still hurts. :)i believe gold will eventually be formally reintroduced into the monetary system. i love anarchy but some form of governance is needed when it comes to money to ensure stability, it is i many ways the ultimate community resource that binds our trust to do business and participate peacefully in the same society.i do like your comments about education and agree, although i think lots of people won’t care anyway. i mean, all the info on how bad the food supply is is already out there and generally freely available. we all see the cancer rates rising, the autism rates rising. education is powerful, perhaps more powerful than anything else but only if we are eager students ready and willing to learn.
The average dude on the street is not literate in causal inference. There’s a lot of data, which means the reality appears chaotic. Chaotic environments obfuscate truth. IF the dude has sufficient interest THEN a trusted referee is sought. Some think that should be the government. Others trust private resources. Some only their moms. Sugared water is no different from currencies. Who do you trust? Government? Goldman? Mom? Your survival instinct? But remember, the referee too could be incorrect / confused / bought.
in the case of currencies or any asset, the market sets the price unless government does. if the market sets the price for currencies, it’s going to be volatile, and that’s going to create lots of problems. bitcoin fluctuates 50%+ in a day. no business can plan in that environment. it is true that government may get the price wrong, and in fact most nation-state governments usually do, and that will create other problems. so IMO what’s really needed is a government that creates good monetary policy.
I agree fully re good monetary strategy. This is not about that, though.IMHO, Bitcoin is an experiment. The creators, all five of them /kidding, hypothesized an algorithmic method for voting plus some other stuff (the economics of voting is a most interesting area of study, most people never get around to giving it sufficient study -wish I had more time to study it myself).I’m guessing the creators didn’t intend Bitcoin to be a production currency, rather of a proof of concept for both (a) satisfying a trust constraint (voting) and (b) gauging interest in a non-sovereign currency. That said, and this is speculation and opinion not fact, putting on offer the machine’s golden nectar, if only an experiment, may have been a deceptive – though necessary – requirement in performing a proper experiment. I say may because it’s not clear, the creators may have intended the actual sale of Bitcoins, it wasn’t an experiment, in which case there would be no deception. If a deception was intended, for scientific purposes or whatever, it could explain all or some of the machine producer’s need for anonymity.Much of the present attention is of course the result of the ferocious appetite of punters diving head first into the nectar before realizing they were, assuming the deception theory, culled unwittingly to be part of the experiment. BTW, think Zuck’s amused re the winklecoin scenario? Anonymous inventors. Known transaction facilitators. Greed. Thefts. Numbered accounts. Computers. Conspiracy. Trading halts. #waitingforthemovie http://allthingsd.com/files…
gotta hit them with the education when they are 7-10, before behavior patterns have formed that are nearly unbreakable. we hit them with all other types of propaganda at that age (pledge of allegiance), might as well hit them with health propaganda while we are at it.
Yeah, gold has essentially been financialized with all the money invested in it via ETFs. On the plus side, investors in GLD and the like have had the capability to hedge (and were able to do so pretty cheaply before Friday), but on the negative side, they get days like Friday.Some Bitcoin guy was quoted in the FT on Saturday saying that Bitcoin holders need a way to hedge. That might make a promising pitch for someone looking to raise OPM for a fintech startup.
i think government and regulation has a place in our society. i said that again and again in this interview. we may disagree where it is good and where it is bad, but that’s why we need to have these conversations.
Yes I understand you say that, though I don’t really understand what you want and it seems like you just want your industry (Hailo, kitchensurfing, airbnb, bitcoin, etc) to be able to do whatever they want to. Which is fine and is generally what I want too, I just want it for all businesses regardless of your participation. There are already rules for all these industries, you want them removed at least temporarily, although I don’t see why… it is not like we don’t know what is going to happen. I.e. if you eat at an unsanitary place there will be problems. There are already rules in place to protect against this. I don’t understand the argument to remove them outside of the anarchy argument. word of mouth and independent consumer guides have been around a long time, I don’t see what is new here and why the rules should be removed now if they were ok before.
I don’t get the same sense from Fred as you. My read is that he’s quite happy for regulation that actually protects consumers, but not that which bundles protection for the incumbents under the guise of consumer protection. Seems an eminently sensible position to me.
all regulation is marketed as protection for consumers. the taxicab stuff that hailo doesn’t like, the hotel stuff that airbnb doesn’t like, the restaurant stuff that kitchensurfing doesn’t like, etc. one could argue this just protects incumbents, although i think one could make the same argument for all regulation — since regulation always comes with fees/taxes that raise the barrier to entry.
I wonder… It looks to me like regulation helps ones take advantage of others. If you tell someone an investment is regulated they *feel safe* about it. So, they forego their due dilligence and rely on the regulations. This leaves them in a compromised position. One in which they can be easily taken advantage of. If you say “buyer beware” then they become alert and inquisitive because they know *they* are their only safety net. Anyone have any insight on this as it’s just some basic ponderings on for me.
I think it might have been worth mentioning that bitcoin is fundamentally 2 things as stated in Satoshi’s paper. A currency ( which is the implementation of Wei Dai’s B-money from 1998 (this paper is inspired by Tim May’s Crypto Anarchy and Nick Szabo’s blog post on how to recreate a gold digitally from 2008) and a payment system, and as such is competing with paypal etc.
“it is of course also humorous that you are so pro-anarchy when it comes to keeping government out of your market opportunities, but so pro-tyranny when it comes to anything else”That’s what’s nice about a free country. Fred, or anyone else, can have whatever opionion they want and as long as they don’t try to *force* it on anyone it’s fine.
Volatility is the death of any thinly traded market.Bitcoin needs to move center a bit to survive and flourish.It’s like derivatives for geeks.
Good talk. It is hard to talk reg/dereg without sounding contradictory.
it starts with bitcoin and ends with personal data. both are currencies, and the latter is by far the most valuable and important.
Fred Wilson is the king of the unflattering screen shot!
Great chat, it was a wonderful opportunity to be there, and I blogged about it some at http://whynotbalu.tumblr.com/
Bitcoins genesis seems like a natural product of a system that wants to liberate itself from the regulatory bodies. Will it work is yet to be seen, but what is clear is that civilization is not only evolving into a collective free network society, but old dogmas are being questioned faster and faster, where ideas that “solve” dogmas quickly become so popular that they easily destabilize strong markets, like airbnb. Planet is in a quake state, while we, generation X, are pushing it more more without ever understanding the consequences of our own actions. We are the children exploring new uncharted frontiers. Fun fun fun
really enjoyed the taping Fred..always nice to see you
Fred–just got around to watching this.A big thanks…I’ve been asked about Bitcoin a lot. This puts it in context. Cash for the internet resonates well.
I really don’t get this – empty calories here; is it clear that bitcoin solves an unserviced need…
hat-tip to fellow portfolio company shelby.tv – the new interface looks awesome and i can really begin to see the value in the current offering.
I’m pretty new to bitcoin. Haven’t paid much attention so far but am digging in a bit and trying to learn. I have a question – how does bitcoin ever grow beyond an experiment if the various branches of government don’t recognize it?Regardless of how you manage a business transaction – $, bitcoin, barter, whatever – the various tax departments are going to come calling for their cut and I imagine the only currency they’re going to accept in my lifetime as payment is US $.Any thoughts on how bitcoin coexists with our various taxation systems?