Lover of ideas

This problem exists in many more contexts than people might otherwise think of. I came to this realization recently while talking with someone about why I really did think her choice to shop around based on price was an admirable one even if I, personally didn't do it.

In that context, I'm a free rider. I reap the benefits of the people who do shop around because they create an incentive for merchants to lower prices. But I do not engage in behavior that will create those incentives myself because it's costly in terms of time and attention.

Similarly, people who use technology that's closed and locked down are free riders on people who consciously make choices to not use such technology. It can be argued that almost every innovative thing we've seen on the Internet in the last 10 years is a direct result of openness and a lack of concern, or even outright hostility towards the idea of 'intellectual property'. Oh, it's true that individual innovators sometimes try to achieve locks. But because of people like me, that generally causes their product to not succeed as well as those who don't. And once the open product achieves critical mass, network effects and the overwhelming advantages of openness do the rest and drive the close product to the fringes of the market.

I don't think free riders are actually necessarily bad. A significant number of them can make markets inefficient. But maybe then people don't actually care about those kinds of inefficiencies. If they did, they would make different choices.

But looking at these things as a free rider problem is a really interesting perspective. And I think the idea is much more broadly applicable than it has been.

It also explains why free riders will not necessarily kill the creation of new and interesting stuff. There are many parts of the market that thrive even when there are a significant number of free riders. When something in the market changes enough that people get upset over the inefficiency created, they stop being free riders.

I've been paying a lot of attention to bitcoin recently. It's a fascinating idea, and I'm really curious as to where it will go. But reading the comments on the Internet about it is even more interesting, though also kind of upsetting. People say the most ridiculous and stupid things, and it's all out of nearly violent emotion. I don't really understand.

Some people say ridiculous things like "It can only go up!" (in reference to the USD/Bitcoin exchange rate) or "It can't fail!". Optimism beyond the point of sanity. Bitcoin can fail. It can fail if it turns out that nobody wants to accept it. Currency that nobody will trade anything for is just as useful as a small piece of paper, and in bitcoin's case, even less useful. And that's a very definite possible future of bitcoin.

People also go through all kinds of logical contortions to declare it a scam. But it doesn't fit the definition of a ponzi scheme any more than any other currency does, nor does it fit the definition of a pyramid scheme at all. The closest it comes to is a hot tech stock. And nobody calls those scams unless they accuse them of 'pump and dump'. But 'pump and dump' doesn't fit the profile of most people who are interested in bitcoins and are trading them either.

And then people declare it valueless, as if any currency (even gold) has any intrinsic value beyond people's willingness to trade stuff for it.

Very few people talk about the worthiness of the cryptography. But even the ones who do paint either incredibly rosy pictures or ridiculous apocalyptic scenarios, neither of which really approach the truth of things.

I just find the way people ignore any reason and base their opinions on pure emotion to be kind of upsetting. And I notice this in a lot of arguments. But the arguments over bitcoin are almost comical in just how incredibly intense this phenomena is. The only thing that makes it not comical is that you realize these people are deadly serious.

I think a lot of people have a lot of unexamined hang-ups about the meaning of money. It's deeply tied to their fundamental beliefs about politics, ethics, morality, and even self-worth. I think most people are terribly unequipped to tease these things apart and examine them separately. Money is 'magic'. People do not see it as the societal cooperation tool that it is.

I think, perhaps, that is one of the most valuable parts of the bitcoin project. Its nature provides a handle or a window for examining money as a societal and organizational tool. I suspect most people won't be able to take advantage of this, but I suspect many will, and our society will become richer for it.