Look for the Next Tech Gold Rush?

I would have thought you did, based on your research.

No, my monetary policy views were firmly mainstream, which considers rapid unpredictable changes in prices, in either direction, to be a really bad thing for a currency. So I designed b-money to have a stable value relative to a basket of commodities, and until Bitcoin came along, never thought anyone might deliberately design a currency to have a fixed total supply.

EMH is over generalization; markets aren't magical machines that react instantly. Someone notices an opportunity first, and receives nearly all of the benefit. Those 1% are finding gold rushes and making tons of money. The 99% who follow are living off scraps.

The advice you were following comes from a reasonable observation: assume you are drawn randomly from that set, do you find it more likely that you are in the 1% or the 99%? But that totally ignores the fact that there are people beating the market, and indeed there has to be (for every loser there's a winner).

So how do you beat the market? Assume you the smartest, most bad-ass person on Earth. Don't trust what other people tell you is a good opportunity, because (a) they are stupid, and (b) if they are not then by the time you heard about it it's already too late. Look around yourself, do some original calculations (weak inside view), make your own decision, and follow through.

EMH says the market can be beaten with exceptional information. If anyone is exceptionally informed on cryptocurrencies (in 2011, and maybe 2014), it is certainly Wei Dai.

after stumbling into assets with returns in the 100x-1000x range, twice, it seems time to update a bit.

How many assets have you purchased that didn't turn out to be valuable? A friend just looked up the price on a lego set that had been sitting in his room unopened since he was a kid (right after he opened it and built it...) and found that it was worth ~500x what it originally sold for. But most toys people buy and leave unopened are going to be nearly worthless a decade later.

Some people win the lottery on their first try. Some even win twice. Doesn't mean that you win on average or that there is a way of consistently winning.

Getting into deeper theory now. Is the EMH dependent on the number of participants? It most certainly is contingent on the flow of information. But even then, we see the EMH at play with regard to startups in the VC stage: After correcting for risk, they don't make any more money. I argue that these companies are in a pre-market stage.

Then again, my argument is not contingent on the efficiency of any one price. If you invested a little bit in everything that pops up in your inbox and after five years gives you a risk-adjusted return higher than the average market I'd be highly surprised. So I'd be willing to accept that there are plenty of inventions and products in the pre-market stage that are wrongly priced, but as a whole the price is very correct near zero.

Why would governments want to promote uptake of decentralized currencies in the first place?

Western countries have no interest in Bitcoin directly.

There is an interest to prevent fake medical drugs from being sold. I could imagine laws that force every sold drug to have a verifiable chain of ownership from the factory that produces the drug to the pharmacy that sells it. A chain that's backed up by the blockchain.

In developing countries it can be useful to be able to verify how money travels through the system. Stellar and Ripple provide technologies that enable that. I can imagine a government deciding to pay every of it's employees via Stellar to prevent a boss from taking part of the paycheck from his underlings. Taking tax payments via the Stellar network would further make it the default system.

A government cares about a bunch of long-term predictions about how it's economy is going. It might be worth for creating subventioned prediction markets in Augur for climate changes 10 years from now or for various economic forecasts for which it's good to have reliable data. Subventioned prediction markets might work better than paying government burocrats to do forecasts in many cases.

If usdcoin (the digital construct) is successful at the expense of bitcoin, why would bitcoin be used at all?

My "bitcoin value collapses" scenario list includes the cryptocurrency space being won by an altcoin. I should probably give some more analysis to the specific altcoin of "something pegged to fiat, with government backing".

But if that coin succeeds, won't it be the fee currency? Why would btc coexist in a meaningful but not dominant position?

(I can see BTC coexisting with USD and EUR if you can't pay taxes in BTC, but if BTC succeeds in that scenario, I think there's still lots of headroom for the price.)

one can imagine that the cities will empty out and people will choose to live on big plots of land in the middle of nowhere

That was predicted decades ago, when telecommuting was hyped, and the opposite happened.

cars themselves have been getting cheaper and cheaper

True. I imagine that this too should decrease people's (often very strong) emotional attachment to their car, though. But who knows?

No, having a site has historically produced very high returns. Not having the exact domain name.

Huh? I registered the domain for <$10, last year it was worth $50,000, and now it's worth $100k. How is that not "historically produced very high returns" just from having the exact domain name? Are you thinking of "return" as including just income and not appreciation?

You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?

By not selling the domain, I still own it, and it's still worth $100k. The effect of selling it is just to increase the diversification of my investment portfolio (i.e., I would no longer have a substantial chunk of my investments in a single asset), which is a good thing since I'm risk averse, but that benefit is certainly not worth $100k.

(Actually, thinking about it more, I'm not sure that selling the domain is actually good for diversification. Domain names are a different asset class from everything else I own, so ideally I ought to have some exposure to it.)

wei: place, seat, not, because, become, tiny, tail, yes, taste
dai: doctor, belt, dynasty, stay, wait, going to, bag, wear, dangerous, lazy

Yeah, there was a certain spread for the difficulty already present at the time in getting one's money back out of Mt Gox.

Sorry, in my head I somehow read the original post as "where are slots I can put money in to participate in a gold rush", where the actual text is clearly more broad than that.

EDIT: Although most often buying into a technology like this involves buying equity in companies, which is not normally a good way to get in on a high-velocity gold rush -- if you're a normal investor you can't buy into them until they go public, which is normally well-past the true "gold rush" stage. (This is less true if you're an accredited investor but it substitutes different problems.)

Things like bitcoin and domain names, the original examples, don't involve buying equities at all, but were other asset classes entirely, and so didn't have the same issue.

You make your own luck as the saying goes.

This brings to mind Ed Schieffelin, who struck silver in Arizona and correctly predicted there would be gold in Alaska (but didn't find enough to overcome the bitter cold, and so left).

True :-) OTOH, if anyone could answer that question reliably they'd be rich.

Disclosure: I am long on both bitcoin and freicoin.

You got me! I am, in fact, the co-author of Freicoin, and obviously very bullish, although my estimate of its future value has non-trivial discounts due to outstanding risks. In the economic model of Freicoin, the two currencies perform different, non-competing functions (store-of-value vs medium-of-exchange) and are perfectly capable of co-existing. Indeed, one can argue from inside the Freicoin perspective that both currencies are inevitable.

There is no proof that no other mutually compatible coin is possible, but nor is there any example other than Freicoin. Altcoins generally fall into three categories: those which are param tweaks of bitcoin (e.g. Litecoin), those which add features (e.g. Darkcoin), and those whose differing monetary policies from bitcoin make them stand apart as generally useful and compatible. The first two categories are useless as anything which tweaks params or adds features could be done in bitcoin directly or in a side chain, and Freicoin stands alone as the only example of the third case.

I try to say this from as unbiased a perspective as possible, but of course accusations of bias are incredibly easy to make here. I co-created Freicoin and still hold a large but decaying number of freicoins. However I spent as much time as I did on Freicoin because I believe the above.

Every other alt out there is junk -- including the ones you mention -- although I won't rule out the possibility of a another coin which differentiates from bitcoin and freicoin in a compatible manor. Although honestly I don't know what that would look like.

That's a very nuanced view though. So honestly it's just easier and less likely to be misunderstood to simply say "all alts are junk", and leave off the special case of Freicoin unless I have time to explain in sufficient detail.

I figured that, I'm wondering whether i should ignore the questions or look for answers.