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Language: en
so let's ask the hi philosophically just
about money yeah
what at the highest level is money what
is money it's a kind of game and it's a
game where we have points and like if
you have points there's this one move
where you can reduce your points by a
number and increase someone else's voice
by the same number and these it's a fair
game hopefully well it's one kind of
fair game like for example you know you
can have other kinds of fair games like
you're gonna have a game where if I give
someone a points and you give someone a
points and instead of that person
getting two points that person gets four
points and that's also fair is but no
money is easy to kind of set up for and
it serves a lot of useful functions and
so it kind of just survives in society
as a meme for thousands of years it's
useful for this storage of wealth useful
for the exchange of value and it's also
useful for words and nominating future
payments a unit of account
a unit of account so what if you look at
the history of money in human
civilization what just if you're a
student of history like how has its role
or just the mechanisms of money changed
over time in your view even if we just
look at the 20th century before and then
leading up to cryptocurrencies that's
something you think about yeah and I
think like the big thing in the 20th
century is kind of we saw a lot more
intermediation and yes thank you I mean
the first part is and if the move from
bang yeah adding more of different kinds
of banking and then we saw the move from
and if dollar is being backed by gold to
dollars being backed by gold that's only
redeemable by certain people to dollars
not being backed by anything sue and
it's just this new system where you have
a bunch of free floating currencies and
then people like I'm getting and of bank
accounts and then those things becoming
electronic people getting accounts with
payment processors that have I can
bank accounts so so what do you make of
that that's a fascinating so
philosophical idea that money might not
be backed by anything what is that like
the fascinating to you that money can
exist without being backed by something
physical it definitely is what do you
make of that like how how is that
possible is that stable if you look at
the future of human civilization is it
possible to have money at the large
scale it's such a hugely productive and
rich societies be able to operate
successfully without money being backed
by anything physical I feel like the
interesting thing about the 21st century
especially is that a lot of the
important valuable things are not backed
by anything like if you look at like
tech companies for example like
something like Twitter and like you
could theoretically imagine that if all
of the employees wanted to or they could
have kind of come together they would
quit and you know start working on
Twitter 2.0 and then the e of how you
will and just kind of build the exact
the the exact same product source
possibly build a better product and then
just kind of continue on from there and
the original at the original Twitter
would just not have people left anymore
right like that
there is theoretically kind of code and
like IP that's owned by the company but
in reality like good programmers could
probably read up rewrite all that stuff
in three months so the like the reason
why the thing has value is just kind of
network effects and coordination
problems right like this employees in
reality aren't going to switch all at
once and also the users aren't all going
to switch at once because it's just
difficult for them to switch at once and
so there's these enough metastable and
of equilibria in interactions between
thousands of millions of people that are
just actually quite sticky even though
if you try to kind of assume that
everyone's a perfectly rational and kind
of perfectly slippery spherical cow they
don't seem to exist at all this that's
thinking is do you have a sense a grasp
of the
sort of the fun fundamental dynamic like
the physics of that stickiness it seems
to work but and I think some of the
cryptocurrency ideas kind of rely on it
working yeah it's you know it's the sort
of thing that's definitely been have
economically modeled a lot they want to
be a kind of analogy of something as
similar that you often see in textbooks
as like what is say yeah government like
if for exactly
80% of people in a country just like
tomorrow suddenly had had the idea that
like the laws that are currently the
laws in the government there currently
is the government are just people and
some of us and some other thing it is
the government and they just kind of
start acting like it then that way kind
of become the new reality and then the
question is well what happens if and if
between 0 and 80 people are it were an
80% if people start believing that and
like what is the thing you also you see
instead if there is one of these kind of
switches happening is kind of revolution
then if you're the first person to join
then like you probably probably don't
have the incentive to do that but then
if you're the 55th percentile person to
join and then suddenly becomes quite
safe too and so this definitely is the
sort of thing that you can and if try to
analyze and understand mathematically
but one of the and if results is that
the sort of like when the switch happens
definitely can be chaotic sometimes yeah
but still like to me the idea that the
network effects that the fact that human
beings scale like millions billions is
sure even the idea of currency like you
all agree that's just I know I can
almost model it I'm a skeptic on
economic and it's like somebody my
favorite sort of field maybe
recreationally psychology is trying to
take human behavior and I think
sometimes people just kind of pretend
that they can have a grasp on human
behavior even though we it's such a
messy space that all the models that
psychology or
economics those different perspectives
on human behavior you can have or are
difficult it's difficult to know how
much that's wishful thinking and how
much it is actually getting to the core
of understanding human behavior but on
that idea what do you think is the role
of money in human motivation so do you
think money from an economics
perspective from a psychology
perspective is core to like human
desires money is definitely very far
from the only motivator it is a big
motivator and it's one of the closest
things you have to a universal motivator
think because ultimately in the almost
any person in the world if you ask them
to do something they'll be more inclined
to do it if you also offer some offer
the money right and that's big there's
definitely many cases where people will
do things other than things that
maximize how much money they have and
that happens all the time but like
though a lot of those other things are
kind of but much more specific to and if
who that person is and if where their
situation is the relationship between
the motive in the action and these other
things what do you think is the
interplay of the other motivator I'm
like Nietzsche perspectives power do you
think money equals power do you think
those are conflicting ideas do you think
I mean that's the one of the ideas that
decentralized currency decentralized
applications are looking at is who holds
the power yeah money is definitely a
kind of power and there's definitely
people who want money because it gives
them power and then even if my money
doesn't seem to and have explicitly be
about money a lot of things that people
spend money on are ultimately about and
of social status of some kind
I definitely view those two things as
and if interplaying and then there's
also money as just a way of like
measuring how successful you are I guess
a scoreboard right so this kind of gets
back to the game
like if you have four billion dollars
then the main benefit you get from going
out one of the big benefits you get from
going up to six million dollars is that
now instead of being below the guy who
has five year above the guy who has five
good so you think money could be kind of
in a game of life it's also a measure of
self-worth it's like how we it's
definitely how I have a lot of people
perceive it define ourselves you know
hierarchy of yeah I'm not yeah not
saying it's kind of a healthy thing that
people define yourself worthless money
because it's definitely and of far from
a perfect indicator of how much you like
you value you provide the Society or
anything like this but I definitely
think that they as a matter of kind of
current practice a bunch of people do
feel that way so what does utopia from
an economic perspective look like to you
what is the perfect world look like
I guess The Economist's utopia would be
one where kind of everything is an
incentive aligns in the same in the
sense that there aren't enough conflicts
between what satisfies your goals and
kind of what is good for and if everyone
in the world in the world as a whole
what do you think that would look like
this does that mean they're still poor
people on rich people they're still in
income inequality do you think sort of
Marxist ideas are strong you think sort
of ideas of Objectivism
like where the market rules is strong
like what is there is a different
economic philosophies that just seem to
be reflective what utopia would be no I
definitely think that existing economic
philosophy is do end up kind of
systematically deviating from the Utopia
in a lot of ways yeah like one of the
big things I talked about for example is
public goods right and public goods are
especially important on the Internet
right yes like the idea is what kind of
money as this game where you know I was
a few coin a few points and you gain the
same number of coins is that this
usually happens in a trade where I wish
some money you gain some money you lose
a sandwich and I gain a sandwich and
this and if model works really well when
the thing that we're using money to
incentivize this out of private goods
right things that you provide to one
person really benefit comes to one
person but the like on the internet
especially but also many many contexts
and if off the internet
there's actions that and if individuals
or groups can take where instead of the
benefit going to one person the benefit
just goes to many people at the same
time and you can't control where the
benefit goes to right so for example
this podcast I know we publish it and
when it's published you don't have any
fine-grained control over like oh these
38,000 people can watch it and then like
these other 29,000 people can't it's
like once the number goes high enough
then you know people just like copy it
and then when I write articles on a blog
then they're just like free for everyone
and that stuff's even harder to prevent
anyone from copying so and aside from
that things like you know scientific
research for example and even taking
more pedestrian examples like climate
change mitigation would be a big one so
there's a lot of things in the world
where you have these kind of individual
actions with have concentrated cost and
distributed benefits and money as a
point system does not do a good job of
encouraging these things and one of the
kind of other things even tangentially
connected to crypto but kind of
theoretically outside of it that I work
on is this sort of mechanism called
quadratic funding and the way to think
about it is I and I've imagined a point
system where if like if one person gives
coin gives poins to one other person
then it works the same way as money but
if
multiple people and give coins to one
person and they do so anonymous way so
it's kind if not in consideration for a
specific service to that person
themselves then the number of Quinns are
received by that person is and if
greater than just the sum of the number
of coins that have given by those
different people so the actual formula
is you take the square root of the
amount that each person gave then you
add all the square roots and then you
add a square the sum squares yeah and
then you give that and the idea here
would basically be that if let's say for
example you just started going off and
kind of planting a lot of trees and
there's a bunch of people that are
really happy that you're planting trees
so that's how they go and all kind of
throw a coin your way then the like
there is like basically the facts that
kind of you get more than the sum you
get this kind of square of some of these
of square roots of these tiny amounts as
that this actually and if compensates
for the tragedy of the Commons rightness
there's even this kind of mathematical
proof that it's sort of optimally
compensates for it
what is the tragedy of the Commons this
is just this idea that if there is this
situation where there's some public good
that lots of people benefit from then no
individual person wants to contribute to
it because if they contribute they only
get a small part of the benefit from
their contribution but they pay the full
cost of their contribution in which
context is this sorry what is the term
quadratic quadratic funding like what's
in which context is this mechanism
useful so obviously you said to combat
the tragedy of the Commons but you know
in which context do you see it as useful
in practice yeah theoretically public
goods in general right so like like
services like what do we what are we
talking about what's a public within the
etherium ecosystem for example like
we've actually tried using this
mechanism I wrote a couple of articles
about the center von vitalik CA where it
goes through some of the most recent
rounds and it's been really interesting
some of the top ones that people
supported and there
or things like you can just unwind user
interfaces that make it easier for
people to interact with aetherium there
was documentation there are podcasts
there were you know software and of
clients like kind of implementations of
the etherium protocol of privacy tools
just like lots of things that are useful
to lots of people wouldn't a lot of
people are contributing for like funding
a particular particular entity yeah and
it's really actually interesting is
there something special about the
quadratic the the the summing of the
square roots yeah so another way to
think about it is like imagine if n
people each give a dollar then the
person gets N squared right and and so
each individual person's contribution
gets multiplied by n right because you
have n people and so that kind of
perfectly compensates for the kind that
kind of enter one tragedy over the
Commons I just wonder if the the squared
part is yeah fundamental though it is an
Ida recommends you go to a Vitalik CA I
have this article called quadratic
payments of primer and highly
recommended it's kind of at least my
attempt so far and of explaining the
intuition behind this intuition
you