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My world view, summarized to the simplest term, is “incentives”. You can find places and times where people act altruistically. We all do it regularly. We most

My world view, summarized to the simplest term, is “incentives”. You can find places and times where people act altruistically. We all do it regularly. We most reliably act altruistically when it comes to our own families, with our children as the highest recipient of our altruism. When you get beyond the immediate family, relying on altruism as the organizing principle starts to break down. Societies that provide incentives for delivering value to other citizens - going to work, doing a job, becoming wealthy if you drastically improve society - will win long term over those that provide disincentives to hard work and providing value. Web3 and crypto provide artificial scarcity to digital goods. This is an experiment in economics. I believe providing economic incentives, when properly aligned with the tasks desired, can result in a more efficient and successful internet. Relying solely on volunteers in any group has very rarely worked - even the largest non-profits have highly paid directors and legions of paid employees. This is not some revolutionary idea, other than the fact that digital goods can have artificial scarcity.

nh23423fefe 4y ago
But using the word scarcity seems to try and piggyback on what we all know scarce goods are. Goods become scarce because of excess demand or difficulty with production. A real finite thing. what is scarce about tokens? the hash? why are they desired, for speculative investing?
- throw_nbvc1234 4y ago
  "Excess demand" can be a 1st or 2nd order effect. If you artificially limit supply then a consistent amount of demand will suddenly become excessive.
- jsmith45 4y ago
  No, think scarcity in the "artificial scarcity" sense where only 1000 copies of a certain handbag were made so they can market it as "limited edition" and demand a higher price than if they were making as many as they could.
  - seibelj 4y ago
    Yes - Ferrari could make far more cars than they do. But new cars are limited edition and sold only to prior owners of Ferraris. This is a marketing strategy that keeps them artificially exclusive cars.
    - hdlothia 4y ago
      The problem is web3 hasn't yet come up with an experience as cool as owning and driving a ferrari and it's much easier to recreate/knockoff an nft than it is to make a facsimile ferrari
- ravivyas 4y ago
  Scarcity is desired to increase perceived value.
  - seibelj 4y ago
    I would pay a lot of money for a Crypto Punk, the very first NFT collection. The floor price is about $50,000 currently. I would pay around $10k, but maybe in the future I’d be willing to pay more. Owning a Punk is a status symbol in crypto. I know many wealthy crypto people who have them. It’s like an expensive watch or classic car - I want it because of what it signals to the community I’m part of. But at $50k… a bit too expensive for me at this moment. However I know people who have paid hundreds of thousands for them.
    - randomhodler84 4y ago
      Why would you want to tag your addrs like this. I just don’t get NFT as a conspicuous consumption device. What happens to someone who lights a flare in the dark forest?
    - rgbrgb 4y ago
      > I want it because of what it signals to the community I’m part of Curious, what does it signal?
      - seibelj 4y ago
        That you are a hardcore cryptocurrency enthusiast
- ppqqrr 4y ago
  And yet, our current medium of exchange relies on artificial scarcity as well, controlled by central banks. This is where your average crypto proponent will follow up with their spiel on the benefits of decentralization, but I personally believe decentralization is a distraction, or at best only relevant for those in charge of the supply of the currency. On the demand side, what cryptocurrencies really bring to the table is an alternative, asymmetrical channel for currency and values to move through; and in a capitalist system that naturally skews towards inequality, the more money changes hands, the more likely it is that the next hand to take it will be that of the rich. So as far as the rich are concerned, the incentives to bootstrap the crypto economy and keep it funded well enough to slowly suck up conventional economic activity is already there.
  - seibelj 4y ago
    You and I have fundamentally different world views. I don’t see an increase of commerce = more inequality. I see it as more services and goods being provided and more needs being met. I like when commerce happens. It means people are voluntarily exchanging useful things and mutually benefiting.
    - ppqqrr 4y ago
      Despite my cynical tone, I don’t see inequality as a primary outcome of commerce, either; I do see the increased exchange of goods that the crypto economy brings as a general positive. But it’s almost always been the case that the more commerce happens, the more extreme the gap between the rich and the poor becomes; arguably it’s not always a bad thing, as long as everyone’s getting a piece of the pie. I’m just speculating on why there’s big money rolling into crypto, and there will continue to be.
      - selimthegrim 4y ago
        I question your assumption about the velocity of money belonging to rich people. Barring flash trading, if they’re not hoarding it and collecting interest, they’re spending it on real goods or investing? Isn’t that more along the lines of what seibelj said? Aren’t the rich mode likely to sit and let it collect interest?
simonw 4y ago
Part of the problem here is that good incentive design is incredibly, incredibly difficult. We've learned this lesson over and over again. If you apply an incentives layer to anything, people will attempt to game it. Watch what happens at any company that starts rewarding developers for number-of-issues-closed or lines-of-codes-written. The only responsible way to work with incentives is to constantly monitor and re-balance them. I use Duolingo a lot and I find it really interesting watching how they tweak the various gamification models over time as people's behaviour alters. They need to balance their models such that people who game them will also learn the language most effectively. The token model - represented by things like DAOs - generally requires this incentive design to be perfect up front. It assumes that people can design a perfect incentive system from day one - which obviously they cannot. This goes right back to the beginning of smart contracts: Vitalik was famously inspired to create Ethereum after his World of Warcraft character got nerfed. But nerfing is essential to how game design works! If you don't constantly rebalance things your game ends up being broken.
- seibelj 4y ago
  I am a member of many token projects that have successfully altered their rules via governance vote. These include contract upgrades and fundamental changes to structure. It is possible to fix and augment post-launch, and in 2022 is quite common.
  - simonw 4y ago
    Yeah that's a good point - I'm wrong here to suggest that the rules are set in stone for every (or even most?) project.
Barrin92 4y ago
the entire language used here, from altruism, to value, to efficiency makes no sense in a world that isn't scarce. You don't need efficiency or altruism when resources aren't limited. Imposing artificial scarcity on the internet is like imposing the caste system on a modern society. It's a way to differentiate people by status in a world that has no need for that distinction any more. Literally putting a rotten economic system on a domain that could be free of it and practically limitless, like people driving cars with the break pulled so others can feel faster. What we really need to do is get the ideology out of people's heads that burning energy so you can get a hexagonal twitter avatar to set yourself apart from all the round avatar people is a way to organize society.
- seibelj 4y ago
  Proof of Stake will come to Ethereum soon, and when it does, the environmental argument against NFTs and other ETH-based tokens will be moot. On the concept of creating artificial scarcity, this is a philosophical debate and we will not agree.
k__ 4y ago
"My world view, summarized to the simplest term, is “incentives”." This. Money has finally entered software for good.
- marssaxman 4y ago
  For evil, I think.

nh23423fefe 4y ago

But using the word scarcity seems to try and piggyback on what we all know scarce goods are. Goods become scarce because of excess demand or difficulty with production. A real finite thing. what is scarce about tokens? the hash? why are they desired, for speculative investing?

throw_nbvc1234 4y ago
"Excess demand" can be a 1st or 2nd order effect. If you artificially limit supply then a consistent amount of demand will suddenly become excessive.
jsmith45 4y ago
No, think scarcity in the "artificial scarcity" sense where only 1000 copies of a certain handbag were made so they can market it as "limited edition" and demand a higher price than if they were making as many as they could.
- seibelj 4y ago
  Yes - Ferrari could make far more cars than they do. But new cars are limited edition and sold only to prior owners of Ferraris. This is a marketing strategy that keeps them artificially exclusive cars.
  - hdlothia 4y ago
    The problem is web3 hasn't yet come up with an experience as cool as owning and driving a ferrari and it's much easier to recreate/knockoff an nft than it is to make a facsimile ferrari
ravivyas 4y ago
Scarcity is desired to increase perceived value.
- seibelj 4y ago
  I would pay a lot of money for a Crypto Punk, the very first NFT collection. The floor price is about $50,000 currently. I would pay around $10k, but maybe in the future I’d be willing to pay more. Owning a Punk is a status symbol in crypto. I know many wealthy crypto people who have them. It’s like an expensive watch or classic car - I want it because of what it signals to the community I’m part of. But at $50k… a bit too expensive for me at this moment. However I know people who have paid hundreds of thousands for them.
  - randomhodler84 4y ago
    Why would you want to tag your addrs like this. I just don’t get NFT as a conspicuous consumption device. What happens to someone who lights a flare in the dark forest?
  - rgbrgb 4y ago
    > I want it because of what it signals to the community I’m part of Curious, what does it signal?
    - seibelj 4y ago
      That you are a hardcore cryptocurrency enthusiast
ppqqrr 4y ago
And yet, our current medium of exchange relies on artificial scarcity as well, controlled by central banks. This is where your average crypto proponent will follow up with their spiel on the benefits of decentralization, but I personally believe decentralization is a distraction, or at best only relevant for those in charge of the supply of the currency. On the demand side, what cryptocurrencies really bring to the table is an alternative, asymmetrical channel for currency and values to move through; and in a capitalist system that naturally skews towards inequality, the more money changes hands, the more likely it is that the next hand to take it will be that of the rich. So as far as the rich are concerned, the incentives to bootstrap the crypto economy and keep it funded well enough to slowly suck up conventional economic activity is already there.
- seibelj 4y ago
  You and I have fundamentally different world views. I don’t see an increase of commerce = more inequality. I see it as more services and goods being provided and more needs being met. I like when commerce happens. It means people are voluntarily exchanging useful things and mutually benefiting.
  - ppqqrr 4y ago
    Despite my cynical tone, I don’t see inequality as a primary outcome of commerce, either; I do see the increased exchange of goods that the crypto economy brings as a general positive. But it’s almost always been the case that the more commerce happens, the more extreme the gap between the rich and the poor becomes; arguably it’s not always a bad thing, as long as everyone’s getting a piece of the pie. I’m just speculating on why there’s big money rolling into crypto, and there will continue to be.
    - selimthegrim 4y ago
      I question your assumption about the velocity of money belonging to rich people. Barring flash trading, if they’re not hoarding it and collecting interest, they’re spending it on real goods or investing? Isn’t that more along the lines of what seibelj said? Aren’t the rich mode likely to sit and let it collect interest?

simonw 4y ago

Part of the problem here is that good incentive design is incredibly, incredibly difficult. We've learned this lesson over and over again. If you apply an incentives layer to anything, people will attempt to game it. Watch what happens at any company that starts rewarding developers for number-of-issues-closed or lines-of-codes-written. The only responsible way to work with incentives is to constantly monitor and re-balance them. I use Duolingo a lot and I find it really interesting watching how they tweak the various gamification models over time as people's behaviour alters. They need to balance their models such that people who game them will also learn the language most effectively. The token model - represented by things like DAOs - generally requires this incentive design to be perfect up front. It assumes that people can design a perfect incentive system from day one - which obviously they cannot. This goes right back to the beginning of smart contracts: Vitalik was famously inspired to create Ethereum after his World of Warcraft character got nerfed. But nerfing is essential to how game design works! If you don't constantly rebalance things your game ends up being broken.

seibelj 4y ago
I am a member of many token projects that have successfully altered their rules via governance vote. These include contract upgrades and fundamental changes to structure. It is possible to fix and augment post-launch, and in 2022 is quite common.
- simonw 4y ago
  Yeah that's a good point - I'm wrong here to suggest that the rules are set in stone for every (or even most?) project.

Barrin92 4y ago

the entire language used here, from altruism, to value, to efficiency makes no sense in a world that isn't scarce. You don't need efficiency or altruism when resources aren't limited. Imposing artificial scarcity on the internet is like imposing the caste system on a modern society. It's a way to differentiate people by status in a world that has no need for that distinction any more. Literally putting a rotten economic system on a domain that could be free of it and practically limitless, like people driving cars with the break pulled so others can feel faster. What we really need to do is get the ideology out of people's heads that burning energy so you can get a hexagonal twitter avatar to set yourself apart from all the round avatar people is a way to organize society.

seibelj 4y ago
Proof of Stake will come to Ethereum soon, and when it does, the environmental argument against NFTs and other ETH-based tokens will be moot. On the concept of creating artificial scarcity, this is a philosophical debate and we will not agree.

k__ 4y ago

"My world view, summarized to the simplest term, is “incentives”." This. Money has finally entered software for good.

marssaxman 4y ago
For evil, I think.