15 ms·

Bitcoin study: Period of exclusivity encourages early adopters

143 points by InInteraction 9y ago

wyldfire 9y ago
Paper from Science [1] (registration or scihub required). Not clear to me whether "cash out" means that they sent funds from a MIT-controlled wallet into any other wallet or if they took it to addresses known to be exchanges. If the former then another explanation is that they were just being prudent to truly control the money. [1] http://science.sciencemag.org/content/357/6347/135 http://science.sciencemag.org/content/357/6347/135
- sputknick 9y ago
  My first thought as well. These NEAs probably already had a mechanism for managing their coin, and so wanted to consolidate, rather than have a separate "MIT wallet"
  - wyldfire 9y ago
    If a prerequisite for getting the funds from MIT was establishing your own wallet somewhere and providing a deposit addr, then perhaps they could designate "cash out" to mean "move from that initial deposit address to anywhere else". Aside from some bias caused by sweeping, it's a more reasonable way to draw these conclusions.
- antix17 9y ago
  http://science.sciencemag.org/content/sci/suppl/2017/07/12/357.6347.135.DC1/aal4476_Catalini.SM.pdf http://science.sciencemag.org/content/sci/suppl/2017/07/12/3...
- module0000 9y ago
  wyldfire: Justin M?
  - wyldfire 9y ago
    If you're asking about my identity -- no, that's not me.
module0000 9y ago
Bitcoin has come a long way... 7 years ago I was writing perl scripts to cobble together a depth-of-market program that operated on the mtgox API. I would get excited scalping coins from $17-19 USD back then. No SEC/CFTC, no regulation, no anything, just good old fashioned auction market theory - combined with a sucker being born every moment and winding up on the other end of a mtgox trade. The sky was the limit, it was an exciting time if you were an oddball breed of programmer crossed with day trader. Fast forward.... WTF is going on now? Regulated exchanges for bitcoin, dozens of btc clones, new exchanges being birthed/destroyed each month, and the dinosaurs of finance adopting it 10 years too late. It's a crazy mixed up world.
- surrey-fringe 9y ago
  > Regulated exchanges for bitcoin Working on it. See: Bitshares, or any other decentralized excange
  - nebabyte 9y ago
    He was answering his own question
- ghostbrainalpha 9y ago
  Are you comfortable saying how much you made with your program on mtgox?
  - module0000 9y ago
    Sure, it's not too impressive though...I think my net gains were in the 15k area. I was a really small fish back then, I ended up making more(in BTC) by selling the actual program for other people to use. At the time, there wasn't a depth-of-market setup available for mtgox, so the majority of trading was people looking at the last sale price and throwing their bid/ask based entirely on that. Nowadays I think every exchange has their own flavor of depth-of-market platform available, and there are plugins for major trading platforms(xtrader/ninjatrader/multicharts) that work with the BTC exchanges. There is still money to be made scalping BTC, but since the price is higher the margin required is much, much, much greater. And with more margin comes more possibility of loss, etc.
DiNovi 9y ago
like facebook only accepting university email addresses.
gtirloni 9y ago
I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity. How are we any better for it? A select group gets rich, there is rampant speculation and fraud... but we're fighting "the man" so it's all good? I can't see how society is better for this (or ever will be). I've mined some BTC and ETH while thinking about these issues and I can't see a future where anything is different so I've stopped. It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Sorry for thinking out loud all these disconnected thoughts. I really want to believe but I'm having a hard time. Meanwhile, it seems I'm doing better for society if I donate my spare resources to some distributed computing project to research cancer, AIDS, etc. Where do you see the future in 50-100 years if cryptocurrencies take off for good?
- jstanley 9y ago
  > doing useless computations at the cost of enormous electricity. The "cost of enormous electricity" is important - this is proportional to the amount it will cost to reverse transactions or double spend. > It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Miners and early adopters don't get to create coins out of thin air. That's the key difference. EDIT: And furthermore, there's absolutely nothing stopping the "Average Joe" from becoming an early adopter. Bitcoin is open to everyone.
  - tboyd47 9y ago
    Or, technically, they do, but only according to a predetermined schedule.
    - jstanley 9y ago
      Sure, but not for free :). Having social status as a "miner" doesn't grant you any privileges. Expending time, effort, and money on mining gives you a chance of mining blocks.
basseq 9y ago
I'm struggling with the findings here. From the article: all late adopters ("NLAs") and non-delayed early adopters ("NEAs") had a cash out (or abandonment) rate of ~10%. (Ironically, higher for NEAs at 11%, but likely not statistically significant.) But delayed NEAs cashed out at 18%, and at even more significant rates where social ties were stronger (e.g., dorms). And these delayed NEAs can affect NLA adoption in the long term. Separately, we could say that general exclusivity schemes (e.g., gmail, facebook) can accelerate broader market demand. But, of course, it's not causation: plenty of "exclusive" products never gain traction. So this suggests there's a certain class of people who care deeply, potentially more about "status" of being an early adopter than the underlying tech, and will be toxic if they don't get what they want. So... identify these people carefully?
- tom_mellior 9y ago
  > But delayed NEAs cashed out at 18%, and at even more significant rates where social ties were stronger (e.g., dorms). One possible explanation that immediately came to my mind was that these "delayed NEAs" were thinking something along the lines of "we were promised an instantaneous peer-to-peer payments system, but it was not instantaneous at all; screw this, it is obviously broken" and got out for this reason. There is no detail in the press release about what explanation for the delay was given. It's hard to judge people's motivation without that. > exclusivity The press release tries to make this about exclusivity, but I don't see how their far-reaching guesses follow from the data.
nebabyte 9y ago
Also known as the late gmail study
EGreg 9y ago
The value of money is the aggregate feeling of each person that a seller will agreeto accept it in exchange for something they need. The more people do this, the more the network effect. In a sense, money is like an app that spreads through a population. Just another app :) It can be local currency in a community. So paying in this currency helps keep the community vibrant.
londons_explore 9y ago
It's only at MIT where an experiment like this can hand out effectively 400k in cash, just to see how participants react...
The3rdHand 9y ago
"More than 50 percent held on to their bitcoins ... The $100 in Bitcoin they were given in 2014 is now worth more than $700" HODL!!!
freeflight 9y ago
I'm not a coder so my understanding of the technology is very limited, but couldn't we use the blockchain to P2P host something besides a crypto currency, something like a public discussion platform that's tamper/censorship proof? The crypto currency feature could still be kept in place as a payment for people doing the actual hosting, but it would only be there to help facilitate the platform itself and not it's sole purpose. Is that idea even viable or am I vastly misunderstanding the technology behind BC?
- n3x10e8 9y ago
  That totally works today. Its one of the many applications of blockchain tech due to its "immutable ledger" property. Egs: ipfs.io Besides this there are even many cool applications such as "golem.network- airbnb for computing", "filecoin.io - airbnb for storage" ,"ethereum dapps" etc.
  - freeflight 9y ago
    After a quick glance ipfs.io looks exactly what I've been thinking about but in a much more dry way. As I see it, right now there is an opportunity window for a P2P hosted social discussion platform. That's because many big social media companies have been increasingly cracking down on user submitted content, leaving a lot of people to wonder where they could participate without having all their content at the whims of some commercial third party, which can be bullied to censor/delete by state actors at any point in the future. One could argue Thor offers such a place, but imho in terms of usability Thor is far off from something everybody can use easily.
- runeks 9y ago
  The challenge is getting the market to value the token that miners are paid in, such that the chain is sufficiently protected by their proof-of-work. Digital money may be the only thing valuable enough to absorb the capital loss associated with the energy spent on proof-of-work, whereas a messaging board -- or any other application that creates relatively little value -- will not generate enough profits to cover the miners' work. The only reason the Bitcoin blockchain is mined so heavily is because of its tokens' high price -- and sufficient market depth, which can absorb miners cashing out their earnings -- which basically sets in motion something that can't be stopped until it reaches non-profitability, unless the entire world decides to forego profitable Bitcoin mining.

143 points by InInteraction 9y ago

Paper from Science [1] (registration or scihub required). Not clear to me whether "cash out" means that they sent funds from a MIT-controlled wallet into any other wallet or if they took it to addresses known to be exchanges. If the former then another explanation is that they were just being prudent to truly control the money. [1] http://science.sciencemag.org/content/357/6347/135 http://science.sciencemag.org/content/357/6347/135

sputknick 9y ago
My first thought as well. These NEAs probably already had a mechanism for managing their coin, and so wanted to consolidate, rather than have a separate "MIT wallet"
- wyldfire 9y ago
  If a prerequisite for getting the funds from MIT was establishing your own wallet somewhere and providing a deposit addr, then perhaps they could designate "cash out" to mean "move from that initial deposit address to anywhere else". Aside from some bias caused by sweeping, it's a more reasonable way to draw these conclusions.
antix17 9y ago
http://science.sciencemag.org/content/sci/suppl/2017/07/12/357.6347.135.DC1/aal4476_Catalini.SM.pdf http://science.sciencemag.org/content/sci/suppl/2017/07/12/3...
module0000 9y ago
wyldfire: Justin M?
- wyldfire 9y ago
  If you're asking about my identity -- no, that's not me.

module0000 9y ago

Bitcoin has come a long way... 7 years ago I was writing perl scripts to cobble together a depth-of-market program that operated on the mtgox API. I would get excited scalping coins from $17-19 USD back then. No SEC/CFTC, no regulation, no anything, just good old fashioned auction market theory - combined with a sucker being born every moment and winding up on the other end of a mtgox trade. The sky was the limit, it was an exciting time if you were an oddball breed of programmer crossed with day trader. Fast forward.... WTF is going on now? Regulated exchanges for bitcoin, dozens of btc clones, new exchanges being birthed/destroyed each month, and the dinosaurs of finance adopting it 10 years too late. It's a crazy mixed up world.

surrey-fringe 9y ago
> Regulated exchanges for bitcoin Working on it. See: Bitshares, or any other decentralized excange
- nebabyte 9y ago
  He was answering his own question
ghostbrainalpha 9y ago
Are you comfortable saying how much you made with your program on mtgox?
- module0000 9y ago
  Sure, it's not too impressive though...I think my net gains were in the 15k area. I was a really small fish back then, I ended up making more(in BTC) by selling the actual program for other people to use. At the time, there wasn't a depth-of-market setup available for mtgox, so the majority of trading was people looking at the last sale price and throwing their bid/ask based entirely on that. Nowadays I think every exchange has their own flavor of depth-of-market platform available, and there are plugins for major trading platforms(xtrader/ninjatrader/multicharts) that work with the BTC exchanges. There is still money to be made scalping BTC, but since the price is higher the margin required is much, much, much greater. And with more margin comes more possibility of loss, etc.

DiNovi 9y ago

like facebook only accepting university email addresses.

gtirloni 9y ago

I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity. How are we any better for it? A select group gets rich, there is rampant speculation and fraud... but we're fighting "the man" so it's all good? I can't see how society is better for this (or ever will be). I've mined some BTC and ETH while thinking about these issues and I can't see a future where anything is different so I've stopped. It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Sorry for thinking out loud all these disconnected thoughts. I really want to believe but I'm having a hard time. Meanwhile, it seems I'm doing better for society if I donate my spare resources to some distributed computing project to research cancer, AIDS, etc. Where do you see the future in 50-100 years if cryptocurrencies take off for good?

jstanley 9y ago
> doing useless computations at the cost of enormous electricity. The "cost of enormous electricity" is important - this is proportional to the amount it will cost to reverse transactions or double spend. > It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Miners and early adopters don't get to create coins out of thin air. That's the key difference. EDIT: And furthermore, there's absolutely nothing stopping the "Average Joe" from becoming an early adopter. Bitcoin is open to everyone.
- tboyd47 9y ago
  Or, technically, they do, but only according to a predetermined schedule.
  - jstanley 9y ago
    Sure, but not for free :). Having social status as a "miner" doesn't grant you any privileges. Expending time, effort, and money on mining gives you a chance of mining blocks.

basseq 9y ago

I'm struggling with the findings here. From the article: all late adopters ("NLAs") and non-delayed early adopters ("NEAs") had a cash out (or abandonment) rate of ~10%. (Ironically, higher for NEAs at 11%, but likely not statistically significant.) But delayed NEAs cashed out at 18%, and at even more significant rates where social ties were stronger (e.g., dorms). And these delayed NEAs can affect NLA adoption in the long term. Separately, we could say that general exclusivity schemes (e.g., gmail, facebook) can accelerate broader market demand. But, of course, it's not causation: plenty of "exclusive" products never gain traction. So this suggests there's a certain class of people who care deeply, potentially more about "status" of being an early adopter than the underlying tech, and will be toxic if they don't get what they want. So... identify these people carefully?

tom_mellior 9y ago
> But delayed NEAs cashed out at 18%, and at even more significant rates where social ties were stronger (e.g., dorms). One possible explanation that immediately came to my mind was that these "delayed NEAs" were thinking something along the lines of "we were promised an instantaneous peer-to-peer payments system, but it was not instantaneous at all; screw this, it is obviously broken" and got out for this reason. There is no detail in the press release about what explanation for the delay was given. It's hard to judge people's motivation without that. > exclusivity The press release tries to make this about exclusivity, but I don't see how their far-reaching guesses follow from the data.

nebabyte 9y ago

Also known as the late gmail study

EGreg 9y ago

The value of money is the aggregate feeling of each person that a seller will agreeto accept it in exchange for something they need. The more people do this, the more the network effect. In a sense, money is like an app that spreads through a population. Just another app :) It can be local currency in a community. So paying in this currency helps keep the community vibrant.

londons_explore 9y ago

It's only at MIT where an experiment like this can hand out effectively 400k in cash, just to see how participants react...

The3rdHand 9y ago

"More than 50 percent held on to their bitcoins ... The $100 in Bitcoin they were given in 2014 is now worth more than $700" HODL!!!

freeflight 9y ago

I'm not a coder so my understanding of the technology is very limited, but couldn't we use the blockchain to P2P host something besides a crypto currency, something like a public discussion platform that's tamper/censorship proof? The crypto currency feature could still be kept in place as a payment for people doing the actual hosting, but it would only be there to help facilitate the platform itself and not it's sole purpose. Is that idea even viable or am I vastly misunderstanding the technology behind BC?

n3x10e8 9y ago
That totally works today. Its one of the many applications of blockchain tech due to its "immutable ledger" property. Egs: ipfs.io Besides this there are even many cool applications such as "golem.network- airbnb for computing", "filecoin.io - airbnb for storage" ,"ethereum dapps" etc.
- freeflight 9y ago
  After a quick glance ipfs.io looks exactly what I've been thinking about but in a much more dry way. As I see it, right now there is an opportunity window for a P2P hosted social discussion platform. That's because many big social media companies have been increasingly cracking down on user submitted content, leaving a lot of people to wonder where they could participate without having all their content at the whims of some commercial third party, which can be bullied to censor/delete by state actors at any point in the future. One could argue Thor offers such a place, but imho in terms of usability Thor is far off from something everybody can use easily.
runeks 9y ago
The challenge is getting the market to value the token that miners are paid in, such that the chain is sufficiently protected by their proof-of-work. Digital money may be the only thing valuable enough to absorb the capital loss associated with the energy spent on proof-of-work, whereas a messaging board -- or any other application that creates relatively little value -- will not generate enough profits to cover the miners' work. The only reason the Bitcoin blockchain is mined so heavily is because of its tokens' high price -- and sufficient market depth, which can absorb miners cashing out their earnings -- which basically sets in motion something that can't be stopped until it reaches non-profitability, unless the entire world decides to forego profitable Bitcoin mining.