Weekend Reading: Bubbles, the Magic of Hobbies, and Legitimacy

June 18, 2021 • #

🗯 Well-Behaved Bubbles Often Make History

Byrne Hobart wrote this piece in the inaugural edition of a16z’s new publication, Future. On bubbles and their downstream effects:

Bubbles can be directly beneficial, or at least lead to positive spillover effects: The telecom bubble in the ’90s created cheap fiber, and when the world was ready for YouTube, that fiber made it more viable. Even the housing bubble had some upside: It created more housing inventory, and since the new houses were quite standardized, that made it great training data for “iBuying” algorithms — the rare case where the bubble is low-tech but the consequences are higher-tech. But, even so, there’s always the question of price: how can you tell when it’s worth the hype?

💡 A Project of One’s Own

There’s something special that happens when you allow your kids to treat hobbies like serious endeavors instead of playtime or games. Paul Graham’s latest:

Instead of telling kids that their treehouses could be on the path to the work they do as adults, we tell them the path goes through school. And unfortunately schoolwork tends be very different from working on projects of one’s own. It’s usually neither a project, nor one’s own. So as school gets more serious, working on projects of one’s own is something that survives, if at all, as a thin thread off to the side.

It’s a bit sad to think of all the high school kids turning their backs on building treehouses and sitting in class dutifully learning about Darwin or Newton to pass some exam, when the work that made Darwin and Newton famous was actually closer in spirit to building treehouses than studying for exams.

My interests in history and tech trace straight back to my time in high school building computers to play Civilization II. Personal projects have long term benefit if nurtured.

The Most Important Scarce Resource Is Legitimacy

On the heels of finishing Schelling’s collection of essays on game theory, I read this piece from Vitalik Buterin on legitimacy, a force that underpins any successful coordination game, of which the world of cryptocurrencies and DAOs are prime examples.

In almost any environment with coordination games that exists for long enough, there inevitably emerge some mechanisms that can choose which decision to take. These mechanisms are powered by an established culture that everyone pays attention to these mechanisms and (usually) does what they say. Each person reasons that because everyone else follows these mechanisms, if they do something different they will only create conflict and suffer, or at least be left in a lonely forked ecosystem all by themselves. If a mechanism successfully has the ability to make these choices, then that mechanism has legitimacy.