A Financial Singularity?
Is the cryptocurrency revolution a symptom of the financial singularity? For those of you not familiar with the term singularity, it's a word used to mean a point in time or space that is of utmost significance. Examples would be things like a black hole, the moment before the big bang occurred, or like the singularity I'm referring to, the coming technological singularity. Futurists like Ray Kurzweil, Vernor Vinge and others make the prediction that in the not-too-distant future we will see a technological singularity. It will be a time in which technology will advance at such a rate that humans today would not be able to perceive what is happening.
These predictions are based on the mathematical 'law' that technology progresses at an exponential rate, and that it will continue to do so indefinitely. Many people are familiar with Moore's Law, which says that computing technology for a given price will double every so many months and now your two-year-old smart phone is obsolete technology and the newest ones are more than twice as fast for the same or lower price. When you look at a graph of this kind of information technology advancement, it looks similar to this graph.
SourceThe part of the curve to the right, where it seems to go almost straight up for this time frame, that's the singularity. Things are happening so fast that us mere mortals would be unable to understand what's going on. Only an AI-augmented human might be able to get it, or so the theory goes.
Now I've been following this stuff since a band I like called Our Lady Peace made an album called Spiritual Machines, in homage to Ray Kurzweil's book, The Age of Spiritual Machines in 2000. Being the nerdy guy that I am, I had to buy and read the book because it sounded so damned interesting. And it was maybe the most interesting book I had ever read at that time, which is saying something. I was an avid reader of books up to that point. It's still at the very top for me.
So anyways, long story short, this kind of thing has been floating around in the old noggin for the better part of 20 years. While I was cruising Twitter today (ironically, Steemit got me addicted to Twitter, who woulda thunk?), I saw a couple of posts about finance and crypto that struck me. When you zoom out, the wealth curves are very obviously exponential in nature. Here's the Tweet that inspired me to write this post.
[Source](http://humanprogress.org/blog/the-most-important-graph-in-the-world?
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When you look at that graph, you see the similarity to the one that I use to illustrate the singularity. For centuries we look at the amount of wealth in the world and then we see in just a couple hundred years we suddenly have exponentially more wealth than we did before. How exactly is this possible?
Technology
Technology is what's behind this exponential growth in wealth. But what's most interesting to me about all of this, is that we've had a technological advancement recently that most people don't seem to understand, and it's strictly in the financial realm. Cryptocurrency and blockchain, Bitcoin, Ethereum, Steem; hell, Smart Media Tokens. These things are revolutionizing the way people think about money, and they're solving problems that are age old like storage, preservation of wealth, portability, ease and expense of transaction, etc. With cryptocurrencies and blockchain technology, it's easier to transact, preserve wealth, transport and store wealth, as well as many other things that I haven't researched enough yet to understand completely.
My lack of understanding, and time to do so, points to what I mean about cryptocurrency and blockchain as being a financial-technological singularity. Things are happening so fast that most people, even ones like me who have done some due diligence, don't completely understand what's happening. The financial world is being turned on its head, and those who don't try to understand and embrace what's happening will simply just be left in the shadow of what's unfolding before our very eyes.
If my theory is right, and we are in fact experiencing a financial-technological singularity, and it's name is cryptocurrency, in just a few years time, the crypto space won't even be recognizable. I say bring it on. Just because I don't understand it, doesn't mean it's inherently bad or doesn't have value. Even better than that, reflected in that exponential addition of value would be price. This sort of development would mean a very bright future indeed for the entire community and anyone wisely invested in it at the present time, because the rewards would be exponential. I don't know about you guys, but I don't intend to be left in the shadows.
I'll have to get that book. I do think the blockchain and cryptocurrency has the potential to turn the world upside down but there could be many false starts along the way. A lot of the coins out there at the moment seem to be serving little purpose. There's some that could be game changers but is it like the early days of the internet? Have the good ones started yet? Look at all the division, I'd like to see more cooperation instead of all the forks and devs working against each other. I have no idea what's going on with Bitcoin and Bitcoin Cash. I would be 100% behind Bitcoin but I don't understand why they didn't do more sooner to prevent the crazy high fees and long transaction times? However much I don't like the personalities behind Bitcoin Cash, I do think they have made some interesting points and we should see later this year if they can actually do better.
Will EOS be better than Ethereum and if it is, wont something better than EOS come along soon? Perhaps just investing in a cryptocurrency market tracker would be better than gambling on individual coins at the moment?
Yeah I think when we've all grown up in a world filled with hierarchical structures only, it's going to involve some growing pains adjusting to decentralized communities. I imagine we'll see at some point a healthy diversification of coins rather than the current deluge of shitcoins we've been seeing lately. At that point Bitcoin nor any other coin will have such dominant market share, and the incentives to fix problems with these networks will become great enough that the developers will need to either fix them or be rendered obsolete by competing coins. Similar to what we see when corporations stagnate and stop innovating, competitors come in and chip away at their market share until you see a management shakeup and the company either turns around or eventually declares bankruptcy. The dominant coins in crypto will go through a similar cycle. It will be interesting to see how it all shakes out.
The things with these coins is that the code can change they can make the technology better, which you cant really do with cash unless you want a lot of hassle and expense. The coins themselves will have to stay at the top by improving and having greater perks then the coins that are similar.
I hate the entire idea of singularity.
Because people miss the really important part, and instead point at the blow off top.
Lets look at a graph (sorry you will have to envision it) where someone's wealth increases and increases. Just like the graphs above. However, their happiness doesn't increase along with it. In fact, after a bit, more money may actually make this person more unhappy. So, the real graph is an S curve.
Also, Moore's law is breaking down. From both ends.
We have reached the limits of making a chip smaller. If we make them any smaller we get into problems for quantum tunnelling.
Further, we have reached a plateau were we have enough computing power for 99% of users. A 2D windows experience can only use so much processing. There is only so much screen you can look at. So, computers are pretty much at an evolutionary dead end. But, they have become good enough, and that is all that matters.
I think you're right about the wealth thing. I don't remember where, but I read recently that once you get to a particular threshold of wealth, an upper-middle class level I imagine, there's little to no increase in happiness as it goes up from there. The return on happiness diminishes at some point in regards to wealth. Developing nations however have a long way to go before we all collectively can claim to have achieved that level. Hell, we don't even have that level of wealth in the richest nation on earth.
I disagree on the computation front however. Moore's Law is just one paradigm on the road to exponential increases in computational power for a given cost (before that we had vacuum tubes, and there are several examples of mechanical computers before that). For current applications, microprocessors are more than adequate, and there's still a little bit of head room to be found in going massively parallel, a trend we're starting to see with Intel's i5/i7 and now AMD's Ryzen line, but there's a big drive to increase power for more advanced AI that current hardware won't be able to handle. My guess is that the next paradigm in computation will be invented by some newcomer to the space. I'm not sure what it will be as quantum computing seems to be a dead end and there's not much news out there, but that's sort of the nature of exponentially increasing technologies.
I highly recommend reading one of Kurzweil's books. The most relevant to the current time would probably be The Singularity Is Near, but The Age of Spiritual Machines would probably still be entertaining, especially looking back on the predictions of the last 20 years and seeing which ones were right vs. the ones he missed the mark on. They're not super technical books either, and he's a good storyteller, so a quick, easy read and easy to digest as well.
I like Kurzweil, but I disagree with him. Mostly in that I know a lot more about spirituality that just nullifies many of the basis of his arguments (told in narrative)
Like, if we want to end poverty, we don't just make more money.
It would be a collective effort of people making enough for everyone.
We don't need money, we need refrigerators (and electricity) everywhere.
And, house building will probably take a giant step backwards.
With all of our modern equipment, cob houses will probably be the thing of the future.
The shift from not enough to enough. That mental shift will turn most of our structures on their heads.
Yes, I believe, as you wrote above, the cryptos will make that possible. Just because they will stop the bleeding done by the central banks. We will see real savings as never before. Which will beget real capital as never before.