People Will Listen

I think my dislike of Bitcoin and the poor arguments I've heard on behalf of its value has clouded my judgement on this topic. I still don't understand the actual value argument for Bitcoin. It doesn't work as money both due to its volatility and the transaction rate limit. It's basically digital gold.

But why is that valuable? I don't want to hold gold unless the financial system is collapsing and inflation is spiraling out of control or something like that.

My current theory for what happened is that everyone bought into this delusion about the value of bitcoin, but that unlike other bubbles it didn't burst because Bitcoin has a limited supply and there is literally nothing to anchor its value. So there's no point where investors give up and sell because there is literally no point at which it's overpriced.

Am I still missing something? I just have no idea how to apply lessons from Bitcoin to anything else. What lesson is there to draw from this other than "buy into things with fixed supplies and no intrinsic worth that are going up in price"?

Another of my biases that caused me to miss the train was my belief that Bitcoin is fundamentally bad for the world. The only way the price goes up is if everyone buys into the delusion that it has value. And once you're bought in you have the incentive to pressure other people to buy into the same delusion. And what is the end-result? The only thing Bitcoin ever facilitated was Silk Road and other black market exchanges. And even for those use-cases it has been superseded by other crypto designed to actually function as money.

The end-result of Bitcoin getting more valuable is that a ton of talented people spend time building exchanges and building mining rigs and thinking about Bitcoin and consuming a shit ton of power to mine more Bitcoin. On net it's just a huge loss for world productivity.

Furtheremore, everyone I talked to or whose work I read on this subject made these really poor-sounding arguments as to why I should buy bitcoin that just set off all my epistemic alarm bells. I disliked these arguments so much that it made me start to actively dislike the idea of cryptocurrency.

What is your advice now? Do I just buy in anyway and give the proceeds (if there any) to some effective charity? It seems like the only limit on the price of Bitcoin is the liquidity of the entire world economy. How do I think about when to sell?

My advice is to accept that 'haters are gonna hate' and just take the hit. Make your arguments as clear and your advice as easy to follow as possible. But understand that no matter what you do, if you tell people to buy bitcoin at $230, the top comment might be critical. Some people will listen and benefit.

I've just been thinking about this with respect to two posts I recently authored. First I wrote "Forcing yourself to keep your identity small is self-harm [LW · GW]" and this got a bunch of negative response (e.g. currently a score of 17 with 24 votes; my guess based on watching things come in is that it's close to 50% downvotes). In response I wrote "Forcing Yourself is Self Harm, or Don't Goodhart Yourself [LW · GW]" and so far it's doing "better" by some measures (score of 25 right now, but with only 11 votes, all positive as best I can tell).

The thing is both posts say exactly the same thing other than that the first post is vary concretely about a particular case while the latter is a general article that covers the original article as a special case. I basically wrote the second version by taking the original text and modifying it to be explicitly generalized rather than just about one case.

Now if I ask myself which one I think is better, I actually think it's the first one even though the latter is better received in terms of karma. The second one lacks teeth and I think it's too easy to read it and not really get what it's saying in a concrete way. The reader might nod along saying "ah, yes, sage advice, I will follow it" and then promptly fail to integrate it into even a single place where it matters, whereas the former is very in your face about a single place where it matters and confronts the reader to consider that they may have been screwing up at doing a thing they value.

I like this kind of stuff that confronts readers because, although it may draw greater controversy, it also seems more likely to land for the person who will benefit from reading it, and managing criticism/downvotes only matters insofar as I draw too much negative attention and negatively impact the visibility of the post to people who would have benefitted from having seen it in a world where it was less criticized and less downvoted.

Of course in this isolated case of two articles there are confounding factors. For example, maybe people "came around" on my arguments by the time the second post came out since they saw the first one, or maybe more people just ignored the second post since it looked so much like the first one. But I've noticed this sort of trend over and over in my own writing and the writing of others: saying something direct that challenges the reader will draw the ire of readers who dislike having been challenged on something they hold dear, and saying the same thing in a less direct way that avoids triggering their displeasure also is actually worse because it less well lands for anyone and the people who were going to criticise it now don't but without that meaning anything.

This post addresses none of the valid criticisms in comments on your recent posts, especially challenges to the accuracy of your assessment of counterparty risk. These were all different ways of saying, "Your posts do not contain enough information to allow me to determine the likelihood that you are a genius versus a crank."

You can't just keep invoking Scott Alexander's Bitcoin regrets. Those opportunities are gone.

This post, in which you instead conclude that "haters gonna hate," does not advance your cause. I am just irritated that you keep posting without seeming to absorb the community's epistemic values.

I'm interested in two things here:

1. What do you think is the base rate of investment advice value on LW? If we'd invested the same amount of money in each piece of advice the day it was given, and sold the stock today, what would our net profit/loss be?
2. Why is our community's inability to separate good advice from bad an indictment of its rationality, rather than an indicator that this is a really hard problem?

My advice is to accept that 'haters are gonna hate' and just take the hit. Make your arguments as clear and your advice as easy to follow as possible. But understand that no matter what you do, if you tell people to buy bitcoin at $230, the top comment might be critical. Some people will listen and benefit.

Yes. If the people are in the following categories:

• already disagree with the idea;
• not aware of the idea, after explanation disagree;
• not aware of the idea, after explanation agree;
• already agree with the idea;

then the best you can do is help the last two groups buy the Bitcoins or whatever.

Given an investment that will double forever your investment and money in the bank with the 20 percent rule will be, starting with 100:

Number of doubling: 0; Invested: 100.00; Bank: 0.00; Pure HODL: 100; ratio: 1.00
Number of doubling: 1; Invested: 160.00; Bank: 40.00; Pure HODL: 200; ratio: 1.00
Number of doubling: 2; Invested: 256.00; Bank: 104.00; Pure HODL: 400; ratio: 0.90
Number of doubling: 3; Invested: 409.60; Bank: 206.40; Pure HODL: 800; ratio: 0.77
Number of doubling: 4; Invested: 655.36; Bank: 370.24; Pure HODL: 1600; ratio: 0.64
Number of doubling: 5; Invested: 1048.58; Bank: 632.38; Pure HODL: 3200; ratio: 0.53
Number of doubling: 6; Invested: 1677.72; Bank: 1051.81; Pure HODL: 6400; ratio: 0.43
Number of doubling: 7; Invested: 2684.35; Bank: 1722.90; Pure HODL: 12800; ratio: 0.34
Number of doubling: 8; Invested: 4294.97; Bank: 2796.64; Pure HODL: 25600; ratio: 0.28
Number of doubling: 9; Invested: 6871.95; Bank: 4514.63; Pure HODL: 51200; ratio: 0.22
Number of doubling: 10; Invested: 10995.12; Bank: 7263.41; Pure HODL: 102400; ratio: 0.18
Number of doubling: 11; Invested: 17592.19; Bank: 11661.46; Pure HODL: 204800; ratio: 0.14
Number of doubling: 12; Invested: 28147.50; Bank: 18698.33; Pure HODL: 409600; ratio: 0.11
Number of doubling: 13; Invested: 45036.00; Bank: 29957.33; Pure HODL: 819200; ratio: 0.09
Number of doubling: 14; Invested: 72057.59; Bank: 47971.73; Pure HODL: 1638400; ratio: 0.07
Number of doubling: 15; Invested: 115292.15; Bank: 76794.77; Pure HODL: 3276800; ratio: 0.06
Number of doubling: 16; Invested: 184467.44; Bank: 122911.63; Pure HODL: 6553600; ratio: 0.05
Number of doubling: 17; Invested: 295147.91; Bank: 196698.60; Pure HODL: 13107200; ratio: 0.04
Number of doubling: 18; Invested: 472236.65; Bank: 314757.77; Pure HODL: 26214400; ratio: 0.03
Number of doubling: 19; Invested: 755578.64; Bank: 503652.42; Pure HODL: 52428800; ratio: 0.02

Generated with:

investment = investment0 = 100
bank = 0
pure_hodl_ratio = 1

percentage_to_sell_at_each_doubling = 0.2
for i in range(20):
   print(f"Number of doubling: {i}; Invested: {investment:.2f}; Bank: {bank:.2f}; Pure HODL: {investment0*2**i}; ratio: {pure_hodl_ratio:.2f}")
   investment *= 2
   bank += percentage_to_sell_at_each_doubling * investment
   investment -= percentage_to_sell_at_each_doubling * investment
   pure_hodl_ratio = (bank + investment) / (investment0*2**i)/2

You can change the 20% to another value, 50% is a critical value to stay below.

Not investment advice, have fun with this.

I HEREBY DECLARE: Kalshi and PredictIt still have room for LW-style rationalist investors, I reckon. Mostly based on the lowish trade volumes and sometimes being slow/inaccurate to react to new information. Kalshi more so.

(I would've added "And FTX's real-money prediction market", but they have literally 2 markets as of this writing, and they aren't available for non-US citizens. Then again, if your a non-US-citizen interested in Bolsonaro's reelection, that market is likely much less adequate than the Trump market, so go forth!)

Solana is no longer a truly amazing investment but it's still worth buying/holding

There doesn't seem to be much evidence backing this claim. And the recent trajectory of Solana all but backs this.