Cryptoes – Page 10

Some slides from Redphone’s 69 theses: “FB, IG, and Reddit have entered the (NFT) chat”

For the last few years, the anon crypto twitter account @redphonecrypto has published a year end deck that is part reflection, part forecast, part call to arms.

Full deck here.

Here are some of my favorites (and notably, all the amazing art was generated by AI):

The Venn of blockchain and AI

I’ve been thinking about the relationship between blockchains and AI lately. Both are emerging foundational technologies and I think it’s no accident they are both coming of age at the same time.

Multiple writers have already expressed this view:

AIs can be used to generate “deep fakes” while cryptographic techniques can be used to reliably authenticate things against such fakery. Flipping it around, crypto is a target-rich environment for scammers and hackers, and machine learning can be used to audit crypto code for vulnerabilities. I am convinced there is something deeper going on here. This reeks of real yin-yangery that extends to the roots of computing somehow

From Venkatesh Rao: https://studio.ribbonfarm.com/p/the-dawn-of-mediocre-computing

I think AI and Web3 are two sides of the same coin. As machines increasingly do the work that humans used to do, we will need tools to manage our identity and our humanity. Web3 is producing those tools and some of us are already using them to write, tweet/cast, make and collect art, and do a host of other things that machines can also do. Web3 will be the human place to do these things when machines start corrupting the traditional places we do/did these things.

From Fred Wilson: https://avc.com/2022/12/sign-everything/

In both writers’ examples, blockchain helps solve some of the problems that AI creates, and vice-versa. I’m reminded of Kevin Kelly who said, Each new technology creates more problems than it solves.

Blockchains and AI have a sort of weird and emergent technological symbiosis and I’m here for it.

So the brain flatulence below is just my way to think aloud, using the writing process to work through the question(s).

*Note: when I say “blockchain”, I include what Fred Wilson calls web3 and Venkatesh calls crypto; there are just a few canonical applications that we’re all familiar with (namely, bitcoin and ethereum); and when I say “AI”, I am thinking about the most popular machine learning models like GPT3 and Stable Diffusion

*Note also: I am just a humble user of these new and powerful AI tools, and can barely understand the abstract of a typical machine learning research paper; so part of the reason why I’m writing this is to find out where I’m wrong a la Cunningham’s law

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A blockchain is a tool for individual sovereignty; while an AI is a tool for individual creativity

A blockchain operates at maximum transparency; while an AI operates largely as a black box

A blockchain clearly shows the chain of ownership and history; while an AI… (does something like the opposite in the way it aggregates and melds and mutates as much data as possible?)

A blockchain is “trustless”, in the sense that what you see on-chain is the agreed upon “truth” of all its users; while an AI is (?), in the sense that what it generates is more or less unique to the specific prompt / question / user (and even this can change as the model is updated, or new data is added]

An AI is much easier to use than a blockchain

An AI can create vast quantities of content, very cheaply; while a (truly “decentralized”) blockchain is limited by scalability and cost

An AI is centralized (to a specific company, or model, or data set) in the sense that decision making rests with a team or company; while a blockchain is decentralized and decision making is distributed

A surprising user experience – as in, an unexpected but delightful output – is typically net positive for a user of AI, while seeing something happen on a blockchain that you don’t expect would generally be pretty bad (yes, of course there are airdrops)

Blockchains are a competitive threat to industries with a high degree of centralization (such as fiat currency issuance, and payment networks); AI is a competitive threat to many individual online workers (such as language translators, and freelance writers, and basic QA/QC employees)

Both blockchains and AI have multiple open source products that can be forked by developers

Both blockchains and AI are platforms upon which many other products and services can be built

Both blockchains and AI are technologies that exploded into the popular consciousness in the last 10 years

Both “blockchain” and “AI” are very broad suitcase words, in part because they are both the product of many technologies combined in innovative ways: for blockchain that is everything from cryptography to smart contract programming to PoW mining to distributed consensus mechanisms; for AI that’s, uh…well everything listed here and more, I suppose

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I’ll end here for now, but let me know what I got wrong, what I’m missing, and what questions or ideas this might inspire

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Addendum #1: I asked ChatGPT

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Addendum #2: This NYT article notes that SBF (“Sam Bankscam Fraud”) donated at least $500M to organizations researching AI alignment and AI safety. Not exactly the kind of symbiosis I want to explore, but worth noting.

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Addendum #3:

Blockchains can only give precise answers, while AI can give approximate answers or even fabricate answers

Blockchains are censorship resistant, while AI is centralized (most are created by small doxxed teams) and have implemented restrictions on usage (most have rules against, for example, CSAM or nudity)

Crypto isn’t the only clown show: Rest of the world has $65 TRILLION in US dollar liabilities — far more than previously estimated

i only have 6 fingers but i’m just a regular guy nothing to see here

Report comes from the BIS, which is like the Central banks’ Central bank. It also releases the best research, but Powell gets 100x more msm coverage, because Amurica.

Hidden leverage…liquidity issues…10x more debt than capital…reminds me of something 🤔. Only we’re talking TRILLIONS here, not a measly bankman fraud scam of just billions.

Full report here (it’s brief): https://www.bis.org/publ/qtrpdf/r_qt2212h.htm

Verbatim excerpts below:

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The missing dollar debt from FX swaps/forwards and currency swaps is huge, adding to the vulnerabilities created by on-balance sheet dollar debts of non-US borrowers. It has reached $26 trillion for non-banks outside the United States, double their on-balance sheet debt. Moreover, it has grown smartly since 2016, despite the often significant premium demanded on dollar swap funding. For banks headquartered outside the United States, dollar debt from these instruments is estimated at $39 trillion, more than double their on-balance sheet dollar debt and more than 10 times their capital.

Dollar dominance is striking in this FX market segment, greater than in any other aspect of dollar use. As a vehicle currency, the US dollar is on one side of 88% of outstanding positions – or $85 trillion. An investor or bank wanting to do an FX swap from, say, Swiss francs into Polish zloty would swap francs for dollars and then dollars for zloty.

Off-balance sheet dollar debt may remain out of sight and out of mind, but only until the next time dollar funding liquidity is squeezed. Then, the hidden leverage and maturity mismatch in pension funds’ and insurance companies’ portfolios – generally supposed to be long-only – could pose a policy challenge. And policies to restore the flow of dollars would still be set in a fog.

SBF (FTX) interviewed by Andrew Ross Sorkin – my meandering and annoyed takes

Worth watching in full. I’ve heard Stephanopoulos’s interview was harder hitting but haven’t watched it yet.

I downloaded an MP3 version of it, so the reactions below are based on his voice and replies alone and not body language, though I’m notably handicapped when it comes to eq:

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Repeatedly distanced himself from Alameda, made clear he ran FTX but claimed not to know what was going on in detail at Alameda — beggars belief considering he owned 90% of Alameda and every prior Alameda CEO was Sam’s close personal friend or *perhaps cough cough* more

Tries to blame the collapse on leverage, which I assume is a hot button issue with regulators and easier to understand by the general public, but annoying that Sorkin doesn’t dig deeper into the obviously fraudulent evidence (like systemic co-mingling and improper usage of customer funds; Alameda front-running / VIP status on FTX exchange; taking out multiple BILLIONS in personal loans, where did those funds go?; the role of close senior execs including Nishad and Gary)

Within FTX structure, shifts blame to regulators (repeatedly claims FTX US and FTX Japan, etc, were ok and solvent because there were stringent regulations). It’s sorta like saying I stole my classmate’s lunch money because the teacher wasn’t in the room

With two Stanford law professors as parents, he clearly understands the importance and practice of “plausible deniability”

His public track record proves beyond a doubt that he is a very effective and disciplined communicator. Just read his many tweet threads. So why would we suddenly assume he’s NOT being disciplined and purposeful in conducting these interviews, despite his *claims* that his lawyers don’t want him to do this?

Hilarious bit at the end where he complains about hypocritical “do-gooderism”, when his publicly stated life’s work was to promote an over-intellectualized neo-facade of do-gooderism known as ineffective altruism. Merriam Webster literally defines a “do gooder” as “an earnest often naive humanitarian or reformer” gtfo of here

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I hope he ends up in jail. I hope it takes many years before he steps foot in a cell, so he has to spend time and brain cells and stress and money defending himself in court and outside it.

But knowing how the American penal system works he’ll probably receive a light sentence served in a cushy minimum security getaway with plenty of utilitarian philosophy books and vegan couscous or whatever the f he pretends to eat

Category: Cryptoes

Some slides from Redphone’s 69 theses: “FB, IG, and Reddit have entered the (NFT) chat”

The Venn of blockchain and AI

Crypto isn’t the only clown show: Rest of the world has $65 TRILLION in US dollar liabilities — far more than previously estimated

SBF (FTX) interviewed by Andrew Ross Sorkin – my meandering and annoyed takes

Recommended crypto reads – and a soon-to-be-published podcast