1 00:00:00,000 --> 00:00:10,000 So, it mostly got a copy over from Windows to Mac, okay, but some things are a little weird, but I looked at all the slides and they're mostly fine. 2 00:00:10,000 --> 00:00:24,000 So, this talk is about my project, which is Bitcoin Hivemind. It was originally called Truthcoin. I was working on it before I was working on Drivechain, and I put it on hold. 3 00:00:24,000 --> 00:00:32,000 But it's a very different thing than what a lot of other people have worked on, and I worked on it very early. 4 00:00:32,000 --> 00:00:44,000 So, this presentation is going to be about the problem that Hivemind solves, because almost all of the blockchain projects out there today don't actually solve any problem at all. 5 00:00:44,000 --> 00:00:54,000 So, it's a complete waste of time. So, I'm going to try to talk about that. I'm going to talk about why Hivemind works is too complicated. 6 00:00:54,000 --> 00:01:00,000 Or at least I'm not very good at explaining it, even though I don't think it's that complicated in reality. 7 00:01:00,000 --> 00:01:06,000 So, governance. This project is about governance, and that's defined as group decision making. 8 00:01:06,000 --> 00:01:12,000 So, we have some people here. They have some will or some preferences, and then groups. 9 00:01:12,000 --> 00:01:18,000 They come to some agreement, and then there's a policy that's enforced on the entire group. 10 00:01:18,000 --> 00:01:26,000 Governance has a lot of problems, which include rational ignorance and preference aggregation. 11 00:01:26,000 --> 00:01:30,000 The goal is to solve these problems with conditional prediction markets. 12 00:01:30,000 --> 00:01:38,000 So, let's just check. See, this is what I didn't want to happen. 13 00:01:38,000 --> 00:01:42,000 It will blind it on both ends, which is not what I want to happen, but that's okay. 14 00:01:42,000 --> 00:01:46,000 So, here's what the talk is going to be about. I'm going to talk about... 15 00:01:46,000 --> 00:01:50,000 I'm really curious about if you may even have to do this first part, because I would like to know... 16 00:01:50,000 --> 00:01:55,000 So, could people raise their hands, please, if they consider themselves to be a libertarian? 17 00:01:55,000 --> 00:01:58,000 If you're a libertarian, could you please raise your hand? 18 00:01:58,000 --> 00:02:05,000 Raise your hand if you really just don't care at all about politics, and you just try to avoid talking about it as much as possible. 19 00:02:05,000 --> 00:02:09,000 That's great. The project is really dedicated to those people. 20 00:02:09,000 --> 00:02:16,000 So, is anyone here one of these fringe anarchists or anarcho-capitalists or something like that? 21 00:02:16,000 --> 00:02:22,000 There are many in the Bitcoin. Please don't be shy. I'm just curious how many, to what extent, there are in New York. 22 00:02:22,000 --> 00:02:25,000 You can just do a weird noncommittal hand gesture. 23 00:02:25,000 --> 00:02:31,000 So, maybe I won't need to go into this a lot, because the first part of the talk is really about that. 24 00:02:31,000 --> 00:02:37,000 And, unfortunately, what I plan to do is deliver it kind of professor-style and just give a talk, 25 00:02:37,000 --> 00:02:44,000 and then I was just going to read this with it blinded out, but when I press the blind thing, it blinds it out on mine, too, 26 00:02:44,000 --> 00:02:48,000 so I'd have to do it from memory, which I could probably do, but it wouldn't be great. 27 00:02:48,000 --> 00:02:50,000 So, maybe I won't emphasize that part. 28 00:02:51,000 --> 00:02:56,000 But then I'm just going to talk a little bit about how society reacts to problems in general, very quickly. 29 00:02:56,000 --> 00:02:59,000 Then I'm going to talk about the governance problem in particular, 30 00:02:59,000 --> 00:03:03,000 and then I'm going to talk about prediction markets, which I think is where we'll really get going, 31 00:03:03,000 --> 00:03:09,000 and then I'm going to talk about, in particular, these conditional prediction markets that are on the blockchain 32 00:03:09,000 --> 00:03:16,000 as the solution to this problem, and then just like two or three slides about, in practice, 33 00:03:16,000 --> 00:03:21,000 how to actually get any of this done in the real world, which is the goal. 34 00:03:21,000 --> 00:03:30,000 The goal is to use this project to basically fix the U.S. Congress, so it's a very big project. 35 00:03:30,000 --> 00:03:40,000 But before that, you do often run into people who say that there's a sort of total moral objection to governance existing at all, 36 00:03:40,000 --> 00:03:46,000 and they say, I don't want to have any decision forced on me, and I didn't sign any social contract or whatever, 37 00:03:46,000 --> 00:03:51,000 and these people believe that every individual should have a pure veto on everything, 38 00:03:51,000 --> 00:03:55,000 or rather that consent can never be estimated. 39 00:03:55,000 --> 00:03:59,000 But I think since there's not a lot of people, and this is like a room for more practical people, 40 00:03:59,000 --> 00:04:02,000 I might be able to skip all this, which is great, because it's a lot of text. 41 00:04:02,000 --> 00:04:06,000 I think what I'll do is I'll come back to it at the end, if anyone cares. 42 00:04:06,000 --> 00:04:09,000 So I do talk a little bit about – I will say one thing. 43 00:04:09,000 --> 00:04:14,000 We do have one example of where governance is very clearly useful, 44 00:04:14,000 --> 00:04:20,000 which is we had the ozone layer that we tore a hole into in the 1980s, 45 00:04:20,000 --> 00:04:27,000 and then everyone met in Montreal and agreed to replace the CFC gases in refrigerators with something else, 46 00:04:27,000 --> 00:04:31,000 and that reversed the destruction. 47 00:04:31,000 --> 00:04:41,000 If I'm remembering correctly, there were already animals dying and people getting skin cancer in Cuba, Chile, and other places. 48 00:04:41,000 --> 00:04:46,000 As a result of the ozone layer, it was a very rapid problem, and the deal is you only have one Earth. 49 00:04:46,000 --> 00:04:52,000 It's not like all the Earths compete on their carbon tax policy and their climate policy, 50 00:04:52,000 --> 00:04:54,000 and you can just teleport from one Earth to another. 51 00:04:54,000 --> 00:04:56,000 We're all trapped in one. 52 00:04:56,000 --> 00:05:00,000 So as much as I hate saying that as someone who has a strong background in economics, 53 00:05:00,000 --> 00:05:06,000 sometimes we are all in it together, and that is – so in those cases, you absolutely have no choice. 54 00:05:06,000 --> 00:05:09,000 You have to use governance. You have no alternative. 55 00:05:09,000 --> 00:05:13,000 There's this other thing like a giant nuclear explosion that obliterates the planet or something. 56 00:05:13,000 --> 00:05:16,000 You can come up with this grey goo, self-replicating nanotechnology. 57 00:05:16,000 --> 00:05:20,000 You can come up with these weird cases where – but I think basically I'll just skip a lot of this 58 00:05:20,000 --> 00:05:23,000 because this is a cool part about Karl Popper. 59 00:05:23,000 --> 00:05:26,000 Everyone should read Open Society and Its Enemies. It's really short. 60 00:05:26,000 --> 00:05:28,000 It's described by all the isms. 61 00:05:28,000 --> 00:05:34,000 Every ism is a waste of time, including anarchism and libertarianism and everything. 62 00:05:34,000 --> 00:05:39,000 So this is kind of like dedicated to all the people who don't care about isms because they're all false. 63 00:05:42,000 --> 00:05:45,000 So that's good. So I can just skip all that because normally you wouldn't believe, 64 00:05:45,000 --> 00:05:48,000 if you're in the Bitcoin world and you give a talk about something, 65 00:05:48,000 --> 00:05:52,000 people will just – they won't be undecided from the beginning 66 00:05:52,000 --> 00:05:56,000 and just think governance is totally a waste of time, problem to solve 67 00:05:56,000 --> 00:05:59,000 because we just need to go on vacation to Anarchapulco 68 00:05:59,000 --> 00:06:04,000 and that will make all the bad policies in the world just go away somehow. 69 00:06:04,000 --> 00:06:09,000 So that's a little bit about the second part, which is just about problems in general. 70 00:06:09,000 --> 00:06:14,000 So I have an example about this where there's no rain and a bad harvest. 71 00:06:14,000 --> 00:06:18,000 So what I'm saying is there are different ways of looking at a problem. 72 00:06:18,000 --> 00:06:22,000 The best way is to just solve the problem where you have more knowledge and technology 73 00:06:22,000 --> 00:06:25,000 and then the problem is just solved. 74 00:06:25,000 --> 00:06:28,000 But at first, you really may not understand your problem at all, 75 00:06:28,000 --> 00:06:31,000 and you may waste a lot of effort, 76 00:06:31,000 --> 00:06:37,000 and you may misunderstand it to such a great degree that your misunderstanding of the problem 77 00:06:37,000 --> 00:06:42,000 becomes almost part of the culture or is used as a kind of pretext. 78 00:06:42,000 --> 00:06:45,000 So that is when – in this example that I'm about to show you, 79 00:06:46,000 --> 00:06:50,000 it's sort of like the idea of praying for rain. 80 00:06:50,000 --> 00:06:53,000 Culture may eventually rely on these false solutions 81 00:06:53,000 --> 00:06:56,000 because that's just what people have always done, 82 00:06:56,000 --> 00:06:59,000 and anyone who does something different sort of looks strange. 83 00:06:59,000 --> 00:07:05,000 But the point is you really may not know what's going on in the uppercase here, which is red, 84 00:07:05,000 --> 00:07:08,000 and then you may reach a zone where you know that there's a problem, 85 00:07:08,000 --> 00:07:11,000 but you don't know what to do about it, so you just sort of deal with it. 86 00:07:11,000 --> 00:07:13,000 But then finally you do know what to do about it, 87 00:07:13,000 --> 00:07:16,000 and then you feel like an idiot for all those other things that you were doing before. 88 00:07:16,000 --> 00:07:24,000 So if there's bad rain, you can either pray where you're not doing anything to get more water to the plants. 89 00:07:24,000 --> 00:07:26,000 You think the problem is not water. 90 00:07:26,000 --> 00:07:32,000 You think it's just the problem of you not behaving the right way or not praying enough or something. 91 00:07:32,000 --> 00:07:36,000 And people use the false solution as an opportunity for socialization. 92 00:07:36,000 --> 00:07:41,000 So I think that that summarizes most of politics, really, that no one is trying to get anything done. 93 00:07:41,000 --> 00:07:47,000 If you are a Democrat, you just want to show people how much you care about the poor and minorities, 94 00:07:47,000 --> 00:07:55,000 and if you are a Republican, you just want to show people how much you care about kind of like grit or duty or something like that. 95 00:07:55,000 --> 00:08:00,000 And if you're a libertarian, you want to show off how much of a wacky free thinker you are, 96 00:08:00,000 --> 00:08:06,000 and it's not really about doing anything, and so that's where I think this is. 97 00:08:06,000 --> 00:08:09,000 Yeah, it's very much of a signaling type thing. 98 00:08:09,000 --> 00:08:15,000 And then the other thing is if you're not getting enough rain reliably, you can just say that you're just going to settle. 99 00:08:15,000 --> 00:08:20,000 You're going to give up, basically, and you're going to say rain is just not reliable, 100 00:08:20,000 --> 00:08:27,000 and I need to do something else like ration the food more or have fewer children or livestock, food-eating things, 101 00:08:27,000 --> 00:08:30,000 and maybe I can go hunting instead or whatever. 102 00:08:30,000 --> 00:08:36,000 I can plant more seeds to overcompensate for the eventual loss, which is like you could just work harder. 103 00:08:37,000 --> 00:08:40,000 But in contrast to that, you will eventually feel like an idiot 104 00:08:40,000 --> 00:08:46,000 because one day you will discover that you could have done something else that would have just solved your problem. 105 00:08:46,000 --> 00:08:52,000 So this is the idea here that eventually we figure out how to make pipes and water and other things like that. 106 00:08:52,000 --> 00:08:57,000 So that's kind of like where this is going where, I mean, I love Ron Paul a lot, 107 00:08:57,000 --> 00:09:04,000 but it's not practical to vote for someone who can't win in a first-past-the-post democracy. 108 00:09:04,000 --> 00:09:09,000 So the question is, why do we do it? Just to express outrage or other things? 109 00:09:11,000 --> 00:09:15,000 With respect to the problem of governance, which is what this talk is about, 110 00:09:15,000 --> 00:09:23,000 you have these three kind of modes here, and I see just kind of vague complaining as the Frerer case up at the top, 111 00:09:23,000 --> 00:09:30,000 and I see the sort of cypherpunks and encrypted email and Bitcoin as this middle case where you say, 112 00:09:30,000 --> 00:09:35,000 well, governance doesn't really work, so I'm just going to shield myself from all the craziness that's going on. 113 00:09:35,000 --> 00:09:43,000 But then I think that you can try to solve the problem with this technology, which is the traditional prediction market, 114 00:09:43,000 --> 00:09:45,000 and I'm not going to go into a lot of detail about what it is. 115 00:09:45,000 --> 00:09:50,000 That's not to say that this is like a better, more likely to succeed project than Bitcoin or better. 116 00:09:50,000 --> 00:09:59,000 Bitcoin is obviously a really awesome project, but I'm just trying to say that the style of approaching the problem 117 00:09:59,000 --> 00:10:10,000 is sort of defensive in Bitcoin. It just says that you want to ignore or be immune to all the crazy stuff that is happening in Congress, 118 00:10:10,000 --> 00:10:16,000 whereas you would want to maybe take a more active role in the lower part to just make sure that only good things happen. 119 00:10:18,000 --> 00:10:23,000 So okay, so now that ends part two. So now why is governance such a hard problem to solve? 120 00:10:24,000 --> 00:10:31,000 Well, if you ask me and some other people, we say that it's something called multi-factor competition, which I'm now going to explain. 121 00:10:31,000 --> 00:10:33,000 But first I'm going to talk about single-factor competition. 122 00:10:33,000 --> 00:10:36,000 So let's say you've got $20 and you want to buy some dinner. 123 00:10:36,000 --> 00:10:43,000 Life is going to be good for you because you have three restaurants and you're choosing and dining alone, 124 00:10:43,000 --> 00:10:48,000 and you just have the one thing, which is what can you buy with $20 and how much will you enjoy it? 125 00:10:48,000 --> 00:10:54,000 So this is your expected satisfaction vertically here by spending $20 or less at whatever restaurant, 126 00:10:54,000 --> 00:10:58,000 and those are your three choices, and you have one choice that is the best choice. 127 00:10:58,000 --> 00:11:01,000 And so you always get the highest satisfaction possible. 128 00:11:01,000 --> 00:11:05,000 You may not get infinite satisfaction, but you have the highest satisfaction possible. 129 00:11:05,000 --> 00:11:11,000 And the restaurants are induced to compete on this metric of satisfaction per dollar. 130 00:11:12,000 --> 00:11:15,000 So everything works pretty well during this world. 131 00:11:15,000 --> 00:11:19,000 And even if it doesn't work well, it improves over time. 132 00:11:19,000 --> 00:11:22,000 So that's pretty awesome. 133 00:11:22,000 --> 00:11:26,000 The problem is when you have multi-factor. 134 00:11:26,000 --> 00:11:29,000 So this is fine. 135 00:11:29,000 --> 00:11:33,000 This thing glitched over when he copied it from this map. 136 00:11:34,000 --> 00:11:43,000 So in a multi-factor world, your decision depends on lots of different things at once. 137 00:11:43,000 --> 00:11:50,000 So imagine a slightly different situation where many people are choosing to eat somewhere, at some restaurant. 138 00:11:50,000 --> 00:11:57,000 And in addition to having preferences about the food, they strongly prefer to all meet at the same place. 139 00:11:57,000 --> 00:12:01,000 So it's like you're going on a date or something, and you don't want to end up at a different restaurant. 140 00:12:02,000 --> 00:12:06,000 That would not really be helping you achieve your goal. 141 00:12:06,000 --> 00:12:09,000 It depends on how much you like the food at one certain place. 142 00:12:09,000 --> 00:12:12,000 But that's my point, is that sometimes you can't get everything. 143 00:12:12,000 --> 00:12:15,000 So this question is much harder. 144 00:12:15,000 --> 00:12:20,000 The decision that you ultimately make is going to depend on what you prefer, which is what I had before. 145 00:12:20,000 --> 00:12:22,000 That's the first factor. 146 00:12:22,000 --> 00:12:25,000 But it's also going to depend on where other people might go. 147 00:12:25,000 --> 00:12:28,000 And now you have a giant infinite recursion problem. 148 00:12:28,000 --> 00:12:34,000 But basically, where other people go, that is going to be a function of what they prefer. 149 00:12:34,000 --> 00:12:38,000 And maybe they prefer the same thing as you, but that's not going to get you out of this mess, 150 00:12:38,000 --> 00:12:43,000 because where other people might go is not just a function of what they might prefer, 151 00:12:43,000 --> 00:12:45,000 but where they think other people are going. 152 00:12:45,000 --> 00:12:49,000 Because they also think that they want to be near where other people are, 153 00:12:49,000 --> 00:12:55,000 and so maybe they want to sacrifice where they are eating in order for the sake of having better company or something. 154 00:12:55,000 --> 00:12:59,000 So where they think other people might go, technically it goes on forever. 155 00:12:59,000 --> 00:13:07,000 But in general, it's a function of everyone's collective best guess on where most people currently plan on going, 156 00:13:07,000 --> 00:13:09,000 which I'm going to call status quo. 157 00:13:09,000 --> 00:13:13,000 So they have some guess that is just their default guess. 158 00:13:13,000 --> 00:13:16,000 And it doesn't literally need to be the status quo that happened in the past, 159 00:13:16,000 --> 00:13:22,000 but the point is just whatever their state of mind is right now, that is what it is. 160 00:13:22,000 --> 00:13:27,000 And then their state of mind might be changed, so it's a function of the status quo, 161 00:13:27,000 --> 00:13:32,000 and since it's the case that time, attention, and communication are not free, 162 00:13:32,000 --> 00:13:35,000 in some cases they're very costly. 163 00:13:35,000 --> 00:13:41,000 So because of that, it's not only the status quo, but it's also how open to communication or negotiation is. 164 00:13:41,000 --> 00:13:48,000 So we have these preferences thing, and then we have this vague measure of whether or not people are willing to talk about this 165 00:13:49,000 --> 00:13:52,000 for hours and hours, discuss the whole time. 166 00:13:52,000 --> 00:14:00,000 It's important to keep in mind that the negotiation doesn't really improve the set of options. 167 00:14:00,000 --> 00:14:06,000 So although it might bring you to a better option, every minute you spend negotiating is wasted, 168 00:14:06,000 --> 00:14:09,000 because the best thing is to get the best option first, 169 00:14:09,000 --> 00:14:13,000 but if you're not going to be able to ultimately change the option, 170 00:14:13,000 --> 00:14:18,000 then you're just digging yourself further and further into a hole and wasting more time. 171 00:14:18,000 --> 00:14:24,000 Now the weird thing is you have four or something like two or like one plus f of x, 172 00:14:24,000 --> 00:14:33,000 you have more than one criterion, but you can't broadcast how you feel about each of them. 173 00:14:33,000 --> 00:14:37,000 At the end of the day, you just have to pick one place about where you're going to go, 174 00:14:37,000 --> 00:14:41,000 and so you must aggregate these four different things. 175 00:14:41,000 --> 00:14:44,000 And in this little example, these preferences are the same. 176 00:14:44,000 --> 00:14:47,000 This is the same little figure that I put on the previous slide. 177 00:14:47,000 --> 00:14:51,000 So it's the same shape. You see that the little middle one is the tallest. 178 00:14:51,000 --> 00:14:54,000 And so even though everyone believes the same thing, 179 00:14:54,000 --> 00:15:02,000 I also have assumed in this example that everyone thinks that they're going to the one that no one likes, 180 00:15:02,000 --> 00:15:05,000 and so they just assume that they're all going there even though no one likes it there. 181 00:15:05,000 --> 00:15:08,000 So there's a little bit of pluralistic ignorance going on, 182 00:15:08,000 --> 00:15:18,000 and if all these three are the case, then if finally it's also the case that people aren't open to communication or negotiation, 183 00:15:18,000 --> 00:15:24,000 then they will not be able to talk about the fact that none of them like this place. 184 00:15:24,000 --> 00:15:26,000 They'll all just assume. 185 00:15:26,000 --> 00:15:30,000 It'd be kind of like a weird, awkward, extended family gathering 186 00:15:30,000 --> 00:15:34,000 where you've always met at the same place for Thanksgiving 187 00:15:34,000 --> 00:15:37,000 and no one is afraid to say that they don't really like it there anymore, 188 00:15:37,000 --> 00:15:44,000 and so awkward just kind of keeps going because people are afraid to be open about that or whatever it is. 189 00:15:44,000 --> 00:15:50,000 We have a big problem with this self-fulfilling prophecy with respect to this last one 190 00:15:50,000 --> 00:15:55,000 where if everyone believes that negotiating to pick a better restaurant is a lost cause, 191 00:15:55,000 --> 00:16:01,000 if they think that the negotiation is a waste of time, then they won't want to be the first to open the negotiation. 192 00:16:02,000 --> 00:16:09,000 So it's a circular logic, and either everyone will negotiate and then they will make it as best as possible, 193 00:16:09,000 --> 00:16:14,000 or really no one will, and it will always stay at the status quo. 194 00:16:14,000 --> 00:16:19,000 Negotiation is especially hard when there are lots of people and lots of alternatives, right? 195 00:16:19,000 --> 00:16:24,000 Because that just geometrically explodes the number of things that people can talk about 196 00:16:24,000 --> 00:16:26,000 and who you have to talk about them with. 197 00:16:26,000 --> 00:16:29,000 It goes on and on and on forever. 198 00:16:29,000 --> 00:16:34,000 And so when there's a lot of people, just like in the United States there's 250 million adults 199 00:16:34,000 --> 00:16:41,000 and there are infinite number of policies, the prophecy is likely to self-fulfill in the lost cause direction. 200 00:16:41,000 --> 00:16:43,000 So that is too bad. 201 00:16:43,000 --> 00:16:48,000 So, oh yeah, this is too bad. This glitched a little bit, but it's okay. 202 00:16:48,000 --> 00:16:55,000 That weird thing that I brought up in the last slide is not like some weird fringe thing that I just kind of invented. 203 00:16:55,000 --> 00:17:00,000 It's a very common desire to want to stay in sync with other people, 204 00:17:00,000 --> 00:17:06,000 because that reduces ambiguity, it reduces the need to negotiate for things, and it reduces conflict. 205 00:17:06,000 --> 00:17:09,000 And it also gives you network effects and economies of scale. 206 00:17:09,000 --> 00:17:11,000 So I was going to drive on the left in Australia. 207 00:17:11,000 --> 00:17:15,000 It doesn't really matter whether you prefer driving on the left or driving on the right. 208 00:17:15,000 --> 00:17:16,000 It doesn't matter that much. 209 00:17:16,000 --> 00:17:20,000 The point is just that you really want to be doing the same thing as everyone else. 210 00:17:20,000 --> 00:17:24,000 It's the dominant thing that you would care about in that scenario. 211 00:17:24,000 --> 00:17:27,000 And then I had a cool thing here, but the formatting is messed up. 212 00:17:27,000 --> 00:17:33,000 You've got to compare the idea of competing, starting a new competitor to Facebook or Craigslist, 213 00:17:33,000 --> 00:17:38,000 and you compare that with competing, you start up a new barbershop or something like that. 214 00:17:38,000 --> 00:17:42,000 It's a totally different mode of competition. 215 00:17:42,000 --> 00:17:44,000 I thought this was so funny I had to put it in. 216 00:17:44,000 --> 00:17:48,000 It says, why you should stop asking, is Google Plus dead? 217 00:17:48,000 --> 00:17:53,000 And I just think that's kind of a funny joke, because if you have to ask, right, then it is dead, right? 218 00:17:53,000 --> 00:17:57,000 So let's see. Yes. 219 00:17:57,000 --> 00:18:01,000 So again, you get moral arguments sometimes, so I have to talk about them. 220 00:18:01,000 --> 00:18:05,000 But basically, we know that people will put up with Facebook. 221 00:18:05,000 --> 00:18:08,000 You know, Facebook changes the format, and especially if they were doing this like five years ago, 222 00:18:08,000 --> 00:18:11,000 they would change the format all the time, and everyone would be like, I hate this format. 223 00:18:11,000 --> 00:18:14,000 But everyone puts up with it because the alternative is no Facebook, 224 00:18:15,000 --> 00:18:21,000 or number two, an endless and ultimately futile negotiation with unmotivated friends and family 225 00:18:21,000 --> 00:18:24,000 to switch to one particular alternative among many, right? 226 00:18:24,000 --> 00:18:26,000 So if you're going to leave Facebook, where are you going to go? 227 00:18:26,000 --> 00:18:29,000 There's too many potential options. 228 00:18:29,000 --> 00:18:34,000 Then the people that you're talking to, they need to then go and convince all of their own friends. 229 00:18:34,000 --> 00:18:36,000 Who would need to convince their own friends? I don't know. 230 00:18:36,000 --> 00:18:39,000 It's literally impossible. 231 00:18:39,000 --> 00:18:44,000 In the same way we put up with governments and the question of governance, 232 00:18:44,000 --> 00:18:49,000 even though they are incompetent, because the alternative is no property rights, 233 00:18:49,000 --> 00:18:54,000 which is like the naive anarchism death spiral. 234 00:18:54,000 --> 00:18:59,000 But then the other alternative is some really weird, potentially endless negotiation 235 00:18:59,000 --> 00:19:05,000 with a potentially violent, maybe not, but possibly violent transition period. 236 00:19:05,000 --> 00:19:09,000 And who knows whether or not what you end up with is even better or not. 237 00:19:09,000 --> 00:19:12,000 Animal Farm by George Orwell is probably my favorite book. 238 00:19:12,000 --> 00:19:15,000 And for them, they did not end up any better. 239 00:19:15,000 --> 00:19:19,000 They just did a lot of effort, and then just to suffer more at the end. 240 00:19:22,000 --> 00:19:29,000 Obviously there's a big similarity between this scenario of just sadness and unalterability and voting. 241 00:19:29,000 --> 00:19:35,000 So a big problem with voting is that it costs too much to figure out who to vote for. 242 00:19:35,000 --> 00:19:42,000 You need to know the existing option and the challenger and both plans. 243 00:19:42,000 --> 00:19:47,000 So the policies that they plan to enact, that's what I mean by that. 244 00:19:47,000 --> 00:19:49,000 And the likelihood of follow through. 245 00:19:49,000 --> 00:19:57,000 So sure, I remember very clearly that Barack Obama said that he would close Guantanamo Bay. 246 00:19:58,000 --> 00:20:00,000 But it's still open. 247 00:20:00,000 --> 00:20:08,000 So maybe Barack Obama has a plan to close Guantanamo Bay, but he never got around to following through on it. 248 00:20:08,000 --> 00:20:11,000 And then you need to know the effect of these plans on you. 249 00:20:11,000 --> 00:20:15,000 So if someone has something weird like a new tax plan or like a health care bill or something like that, 250 00:20:15,000 --> 00:20:17,000 how are you supposed to know? 251 00:20:17,000 --> 00:20:24,000 Some of these policies are super complicated, and there's no way you can ever know really for sure. 252 00:20:24,000 --> 00:20:30,000 Definitely not as much as some specialist would know what effect the policy will have on you. 253 00:20:30,000 --> 00:20:35,000 So most people don't even care about any of this at all. 254 00:20:35,000 --> 00:20:39,000 So 71% of Americans can't even name their congressional representative. 255 00:20:39,000 --> 00:20:46,000 I can't name my own congressional representative, and I will randomly quiz people out of sort of curiosity. 256 00:20:47,000 --> 00:20:55,000 I've been surprised. My estimation is that more than 29% can. 257 00:20:55,000 --> 00:20:58,000 So I don't know. I have some smart friends or something, I guess. 258 00:20:58,000 --> 00:21:03,000 Because the point I'm trying to make is it's totally useless to know this because it can't improve your life at all. 259 00:21:03,000 --> 00:21:07,000 So I don't know why people would know, and I don't know myself. 260 00:21:07,000 --> 00:21:09,000 But the point is that we're very far away. 261 00:21:09,000 --> 00:21:14,000 I mean you want to know your name, the name of the person, and you want to know their challenger, 262 00:21:14,000 --> 00:21:17,000 and you want to know all the proposed policies and their voting records, 263 00:21:17,000 --> 00:21:26,000 and the likelihood of something new happening, and you need to know this not just for one U.S. Congress, 264 00:21:26,000 --> 00:21:31,000 but what about the state senators, let alone the governor or the mayor or something. 265 00:21:31,000 --> 00:21:37,000 I have a funny story about this, which I think I have a little bit of time to tell, which is that 266 00:21:37,000 --> 00:21:43,000 I was talking to someone who was literally herself, she was a U.S. Congress person. 267 00:21:43,000 --> 00:21:49,000 And I was like, I've got to tell them about this funny thing that most people can't name their Congress person. 268 00:21:49,000 --> 00:21:51,000 And she told me a really great story. 269 00:21:51,000 --> 00:21:56,000 So she's from State A, let's say. I didn't really clear this with her, so I don't want to say anything. 270 00:21:56,000 --> 00:22:03,000 But she's from State A, and she was flying from State B to the capital in Washington, D.C. 271 00:22:03,000 --> 00:22:07,000 And she happened to be sitting next to a bunch of lobbyists on the plane. 272 00:22:07,000 --> 00:22:12,000 So she's like, oh, how funny is this? I'm a Congress person. I'm sitting next to lobbyists on the plane. 273 00:22:12,000 --> 00:22:17,000 And so obviously they were talking, and the lobbyists, they all live in State B, 274 00:22:17,000 --> 00:22:20,000 but they were going to the capital. They were flying from State B. 275 00:22:20,000 --> 00:22:26,000 And so the lobbyists, they obviously had these targets for these people that they were going to hit 276 00:22:26,000 --> 00:22:29,000 to try to persuade them to pass various laws and other things. 277 00:22:29,000 --> 00:22:35,000 And they knew those guys. I think in one case they knew them literally down to their shoe size 278 00:22:35,000 --> 00:22:39,000 because they were literally buying them shoes or something absurd like that. 279 00:22:39,000 --> 00:22:46,000 So they knew all this stuff about the Congress people that they were trying to persuade, 280 00:22:46,000 --> 00:22:48,000 that they had been paid to persuade. 281 00:22:48,000 --> 00:22:54,000 But then she asked them about their own Congress people, the Congress people in State B, 282 00:22:54,000 --> 00:22:56,000 and they had no idea who they were. 283 00:22:56,000 --> 00:23:03,000 So even lobbyists who are paid to know things about representatives and senators, 284 00:23:04,000 --> 00:23:06,000 even they don't know their own. 285 00:23:06,000 --> 00:23:10,000 So this idea of the civic duty is kind of a joke on my part. 286 00:23:10,000 --> 00:23:14,000 And so the reason is this multi-factorness. 287 00:23:14,000 --> 00:23:17,000 There's a lot of things, but in particular it's electability. 288 00:23:17,000 --> 00:23:23,000 So I don't know if anyone here or how many people here are interested in this super cool thing 289 00:23:23,000 --> 00:23:26,000 called Arrow's Impossibility Result. 290 00:23:26,000 --> 00:23:29,000 He won the Nobel Prize in Economics for this. 291 00:23:29,000 --> 00:23:37,000 And it demonstrates that you have these things that are four assumptions that are very, very reasonable. 292 00:23:37,000 --> 00:23:40,000 They're like more than one voter or something. 293 00:23:40,000 --> 00:23:43,000 And if you don't have more than one voter, you're not really voting. 294 00:23:43,000 --> 00:23:47,000 And the deterministic – these first two are technicalities. 295 00:23:47,000 --> 00:23:50,000 You can't even bring them up. They're so simple. 296 00:23:50,000 --> 00:23:55,000 But what he says, of these four things, you can never have all four of them be true at once. 297 00:23:55,000 --> 00:23:58,000 He demonstrated this using some math, which is pretty neat. 298 00:23:58,000 --> 00:24:02,000 But the first two are so important that you can't dismiss them at all. 299 00:24:02,000 --> 00:24:05,000 It's only the second two where you have to choose one to sacrifice. 300 00:24:05,000 --> 00:24:11,000 And it's shocking that in no normal voting scheme where you pick your favorite one, 301 00:24:11,000 --> 00:24:15,000 and other people pick their favorite one, and then you try to choose one winner. 302 00:24:15,000 --> 00:24:19,000 No voting scheme can satisfy all four, so you have to sacrifice one of these two. 303 00:24:19,000 --> 00:24:24,000 The first one is you can't hurt an option when everyone ranks it higher. 304 00:24:24,000 --> 00:24:27,000 So it's like, well, it seems like we might need that one. 305 00:24:27,000 --> 00:24:32,000 But the second one is even more ridiculous, which is the irrelevant alternatives really are irrelevant, 306 00:24:32,000 --> 00:24:36,000 which is that you can't hurt an option by re-ranking the options below or above it. 307 00:24:36,000 --> 00:24:42,000 So if you're trying to vote on Jeb Bush versus Bernie Sanders, 308 00:24:42,000 --> 00:24:47,000 and then people rank – they decide they like Hitler more than Stalin or Stalin more than Hitler, 309 00:24:47,000 --> 00:24:51,000 that cannot hurt either Sanders or Jeb Bush. 310 00:24:51,000 --> 00:24:55,000 And you think like, oh, my God, both of these two seem pretty reasonable. 311 00:24:55,000 --> 00:25:01,000 But unfortunately, you can't have them at all, and the point is this phenomenon of strategic voting. 312 00:25:01,639 --> 00:25:04,639 Most practically, it is the idea of splitting the vote. 313 00:25:04,639 --> 00:25:09,639 So if Jeb Bush had run, he would probably have split the Republican vote. 314 00:25:09,639 --> 00:25:14,639 And so even though he may have dragged people's preferences towards the political right, 315 00:25:14,639 --> 00:25:17,639 the outcome would have been worse for the right. 316 00:25:17,639 --> 00:25:24,639 And so hence why we have all these things like political parties and primaries and superdelegates 317 00:25:24,639 --> 00:25:28,639 and all these weird techniques to try to stop this from happening. 318 00:25:28,639 --> 00:25:32,639 So when a vote is split, all the votes that were cast with a lost cause don't contribute at all 319 00:25:32,639 --> 00:25:36,639 to the one battle that really matters. 320 00:25:36,639 --> 00:25:41,639 So it all leads to this circular concept of electability, 321 00:25:41,639 --> 00:25:44,639 which is kind of like the status quo of the restaurant before, 322 00:25:44,639 --> 00:25:48,639 which is that some people believe that a choice is a lost cause, 323 00:25:48,639 --> 00:25:51,639 and so you can't throw your vote away for that. 324 00:25:51,639 --> 00:25:56,639 It ends up being a lost cause, and even just random people like CNN 325 00:25:56,639 --> 00:26:01,639 end up having a lot of influence just because they can flag people as lost causes. 326 00:26:01,639 --> 00:26:06,639 So in order to solve this problem, we're going to need a reliable source of information on who to vote for, 327 00:26:06,639 --> 00:26:10,639 and we're going to need a way of crunching the multifactoriness back down, 328 00:26:10,639 --> 00:26:15,639 and we'll also need a way of preventing people from capturing this process. 329 00:26:15,639 --> 00:26:18,639 That is the blockchain, obviously. 330 00:26:19,639 --> 00:26:23,639 So first we're going to talk about this prediction market thing, 331 00:26:23,639 --> 00:26:26,639 and hopefully it won't take too much time. 332 00:26:26,639 --> 00:26:29,639 A prediction market is a market for a special kind of derivative. 333 00:26:29,639 --> 00:26:34,639 So this is an example from Intrade, which was my favorite website on the Internet 334 00:26:34,639 --> 00:26:37,639 before it closed in 2012. 335 00:26:37,639 --> 00:26:39,639 But this is a screenshot. I don't remember this. 336 00:26:39,639 --> 00:26:42,639 I guess this is from January 2013. 337 00:26:42,639 --> 00:26:46,639 This thing is some asset that is worth $100 338 00:26:46,639 --> 00:26:49,639 if the year 2012 is the warmest year on record 339 00:26:49,639 --> 00:26:54,639 as measured by some NASA satellite that calculates surface temperature abnormalities. 340 00:26:54,639 --> 00:26:57,639 So you have some exact source, and it says, 341 00:26:57,639 --> 00:27:01,639 if 2012 is the warmest year on record, this thing will be worth $100. 342 00:27:01,639 --> 00:27:04,639 Otherwise it's worth $0. 343 00:27:04,639 --> 00:27:19,639 So as you can see, although 2014 I think was the warmest year on record at this time, 344 00:27:19,639 --> 00:27:21,639 2012 was not. 345 00:27:21,639 --> 00:27:27,639 And this runs from January 2011 to the end of 2012, which is right there. 346 00:27:27,639 --> 00:27:30,639 And you can see that the price is going down. 347 00:27:30,639 --> 00:27:36,639 As it's going down, it becomes more and more obvious that it's not going to work for 2012. 348 00:27:36,639 --> 00:27:41,639 As the likelihood of this event happening goes up, the price goes up. 349 00:27:41,639 --> 00:27:44,639 And as the likelihood goes down, the price goes down. 350 00:27:44,639 --> 00:27:49,639 And so that's just a random example. 351 00:27:49,639 --> 00:27:52,639 And let's see, this glitched a little bit too, but it's okay. 352 00:27:52,639 --> 00:27:55,639 So these are just normal derivatives. 353 00:27:55,639 --> 00:28:00,639 This is like a binary call option that says I owe $20 to someone who has this 354 00:28:00,639 --> 00:28:05,639 only if stock price of some corporation is above $20 a share. 355 00:28:05,639 --> 00:28:09,639 The idea of an event derivative or a prediction market, they're the same thing. 356 00:28:09,639 --> 00:28:14,639 That's saying I owe $20 to whoever owns this derivative on some date 357 00:28:14,639 --> 00:28:17,639 only if Hillary Clinton is elected president. 358 00:28:17,639 --> 00:28:21,639 So I owe $20 if she is, and otherwise I owe nothing. 359 00:28:21,639 --> 00:28:24,639 And the idea is that – I think I'm going to skip this. 360 00:28:24,639 --> 00:28:28,639 Actually, I'm going to explain this part. 361 00:28:28,639 --> 00:28:36,639 So the price was $40 out of $100 at the beginning of January 2011. 362 00:28:36,639 --> 00:28:42,639 So since the price is $40 and the maximum price is worth $100 if it actually happens, 363 00:28:42,639 --> 00:28:47,639 that implies that the objective likelihood of the event is 40%. 364 00:28:47,639 --> 00:28:50,639 And it just conjectures that. It doesn't prove that or anything. 365 00:28:50,639 --> 00:28:53,639 But it says that it's open to refutation. 366 00:28:53,639 --> 00:28:59,639 So if someone doesn't agree that it's 40%, they can make a trade in this market 367 00:28:59,639 --> 00:29:01,639 and pick up expected value. 368 00:29:01,639 --> 00:29:05,639 And since anyone can do that, it's just assumed that if you're not doing it, 369 00:29:05,639 --> 00:29:07,639 it's because you actually agree. 370 00:29:07,639 --> 00:29:09,639 And so it's a way of getting everyone to agree. 371 00:29:09,639 --> 00:29:11,639 And let's see how bad this glitched out. 372 00:29:11,639 --> 00:29:12,639 Okay, it's not that bad. 373 00:29:12,639 --> 00:29:17,639 This looked a lot better on Microsoft. 374 00:29:17,639 --> 00:29:21,639 So what happens is markets aggregate all of society's information 375 00:29:21,639 --> 00:29:24,639 because anyone who disagrees with the current market price can make money 376 00:29:24,639 --> 00:29:26,639 by trading against it. 377 00:29:26,639 --> 00:29:29,639 A lot of people will say that they disagree, but they won't trade. 378 00:29:29,639 --> 00:29:31,639 The real reason is because they don't actually disagree. 379 00:29:31,639 --> 00:29:35,639 They're phonies, which is great because we get to just ignore them, 380 00:29:35,639 --> 00:29:37,639 which is exactly what you should do. 381 00:29:37,639 --> 00:29:43,639 But when members of the public observe this price for free, 382 00:29:44,639 --> 00:29:47,639 which is free, just like checking the stock price of Apple or something, 383 00:29:47,639 --> 00:29:51,639 you get reliable information, which is to say that it's right 384 00:29:51,639 --> 00:29:55,639 or it's at least as little wrong as possible because anyone can refute it 385 00:29:55,639 --> 00:29:59,639 at any time while making money for themselves in expectation. 386 00:29:59,639 --> 00:30:02,639 But not only is it reliable, but it's also common. 387 00:30:02,639 --> 00:30:05,639 So it's broadcast to everyone, and everyone knows that everyone got it. 388 00:30:05,639 --> 00:30:09,639 And that's going to make a really big deal in a couple slides. 389 00:30:09,639 --> 00:30:12,639 But basically it does all the research for us on any given issue, 390 00:30:12,639 --> 00:30:18,639 which in this case is the likelihood that 2012 would be the warmest year on record. 391 00:30:18,639 --> 00:30:21,639 It does all the research for us, and it also does all the persuading. 392 00:30:21,639 --> 00:30:23,639 Everyone knows. 393 00:30:23,639 --> 00:30:26,639 So this is like all these people, and you try to aggregate. 394 00:30:26,639 --> 00:30:30,639 One expert tells you that global warming is fake, and one tells you that it's not, 395 00:30:30,639 --> 00:30:32,639 and one tells you that, well, it's real, but it's a good thing, 396 00:30:32,639 --> 00:30:35,639 and other people say, well, it's real, but it's not caused by humans. 397 00:30:35,639 --> 00:30:38,639 And you're just confused, and everyone's confused separately, 398 00:30:38,639 --> 00:30:41,639 but all the information sources, some of them are very bad, 399 00:30:41,639 --> 00:30:44,639 but listen to them, some of them are very good. 400 00:30:44,639 --> 00:30:48,639 They go into the prediction market, and everyone is happy, 401 00:30:48,639 --> 00:30:52,639 and they all have reliability. 402 00:30:52,639 --> 00:30:54,639 I'll probably skip this part. 403 00:30:54,639 --> 00:30:57,639 But I will say that prediction market supports a clear definition. 404 00:30:57,639 --> 00:31:01,639 So people don't just talk about nonsense all day, like global warming is very abstract. 405 00:31:01,639 --> 00:31:06,639 But when it comes time to make the market, you have to define exactly what you mean. 406 00:31:06,639 --> 00:31:11,639 You have to pick like a real satellite or like a NASA log or something. 407 00:31:11,639 --> 00:31:13,639 So that's nice. 408 00:31:13,639 --> 00:31:15,639 That already helps people a lot. 409 00:31:15,639 --> 00:31:18,639 Now hopefully that was, I don't know, that may have been confusing, 410 00:31:18,639 --> 00:31:24,639 but it's about to get a lot more complicated because you can do very easily markets 411 00:31:24,639 --> 00:31:26,639 that have more than one dimension. 412 00:31:26,639 --> 00:31:28,639 So here's one where Hillary Clinton is elected in 2016. 413 00:31:28,639 --> 00:31:30,639 She either is or she is not. 414 00:31:30,639 --> 00:31:35,639 This is just like the global warming example where either it happens or it does not happen. 415 00:31:35,639 --> 00:31:38,639 But you can also do two things at once. 416 00:31:38,639 --> 00:31:52,639 So if some law or something is passed, you can sort of buy and sell based on that question 417 00:31:52,639 --> 00:31:56,639 or that exposure. 418 00:31:56,639 --> 00:32:00,639 And you can separately do that for this other question of whether or not 419 00:32:00,639 --> 00:32:04,639 unemployment will be low, whether or not we'll have a good economy. 420 00:32:04,639 --> 00:32:07,639 And you can do those separately as there'd be an example of this, 421 00:32:07,639 --> 00:32:11,639 but just stamped out twice. 422 00:32:11,639 --> 00:32:16,639 But if you do them together, you get all the benefits of what you had before 423 00:32:16,639 --> 00:32:19,639 plus some other cool stuff. 424 00:32:19,639 --> 00:32:22,639 In particular, you get the relationship between the two. 425 00:32:22,639 --> 00:32:31,639 So while you have one question over here on this dimension, what have you, 426 00:32:31,639 --> 00:32:34,639 when you add these probabilities up, these are called joint probabilities, 427 00:32:34,639 --> 00:32:38,639 and you add them up, you get exactly what you had before, 428 00:32:38,639 --> 00:32:42,639 which would indicate that in this case would indicate that the outcome of yes 429 00:32:42,639 --> 00:32:47,639 is 60% likely here because you add up the price of these two assets and you get 60, 430 00:32:47,639 --> 00:32:50,639 and you add up the price of these two no assets and you get 40. 431 00:32:50,639 --> 00:32:52,639 So you get everything you got before. 432 00:32:52,639 --> 00:32:55,639 And this question, will 2016 be the warmest year on record? 433 00:32:55,639 --> 00:32:57,639 This is a 50-50 thing. 434 00:32:57,639 --> 00:32:58,639 So you get everything you got before, 435 00:32:58,639 --> 00:33:01,639 but you also get the probability of both happening at once. 436 00:33:01,639 --> 00:33:06,639 And when you do that, you also get what's called the conditional probability, 437 00:33:06,639 --> 00:33:11,639 which says if you do something, would it influence something else? 438 00:33:11,639 --> 00:33:17,639 So the probability is that not only will X happen, but also would Y influence X? 439 00:33:17,639 --> 00:33:22,639 So positive relationship, negative relationship, no relationship. 440 00:33:22,639 --> 00:33:25,639 And that is where it really gets going, 441 00:33:25,639 --> 00:33:31,639 where you do these markets that say which CEO, or if we fired the CEO, 442 00:33:31,639 --> 00:33:35,639 would most increase the stock price, which president would most decrease unemployment, 443 00:33:35,639 --> 00:33:39,639 which Fed policy would most decrease GDP, if any, 444 00:33:39,639 --> 00:33:41,639 or which law would most decrease violent crime. 445 00:33:41,639 --> 00:33:44,639 That's where we could make the talk. 446 00:33:44,639 --> 00:33:48,639 So we have the cheap, reliable source of information to vote for. 447 00:33:48,639 --> 00:33:49,639 We have a way up. 448 00:33:49,639 --> 00:33:52,639 We're going to capture it as a blockchain. 449 00:33:52,639 --> 00:33:55,639 Now the last part is this crunching the multifactorness. 450 00:33:55,639 --> 00:34:01,639 So here's an example where you have this multidimensional market 451 00:34:01,639 --> 00:34:03,639 where someone is going to win the election in 2020, 452 00:34:03,639 --> 00:34:07,639 and as I said, you add these up to get the likelihood. 453 00:34:07,639 --> 00:34:10,639 So just guessing here, this is all invented by me, 454 00:34:10,639 --> 00:34:17,639 but the Democrat would have a 61% chance of being elected in 2020 as president, 455 00:34:17,639 --> 00:34:20,639 and the Republican candidate might have a 38% chance, 456 00:34:20,639 --> 00:34:26,639 and then Elon Musk might have a 0.9% chance of being elected, 457 00:34:26,639 --> 00:34:29,639 making him the lost cause that we mentioned before, 458 00:34:29,639 --> 00:34:33,639 and then someone else might win. 459 00:34:33,639 --> 00:34:39,639 But then this is the likelihood of a good economy in 2021 defined by some specific thing. 460 00:34:39,639 --> 00:34:42,639 This is no, and this is yes. 461 00:34:42,639 --> 00:34:48,639 So then you add this up, and you see we've got a 99.05% chance of having a bad economy 462 00:34:48,639 --> 00:34:53,639 and a 0.95% chance of having a good economy. 463 00:34:53,639 --> 00:35:02,639 But the crucial thing is that of those, 0, 0, 9, 5, almost all of them belong to. 464 00:35:02,639 --> 00:35:07,639 So this is the map behind the conditional likelihood of the good economy. 465 00:35:07,639 --> 00:35:12,639 So you go line by line, and you say, if someone else wins, then all this didn't happen. 466 00:35:12,639 --> 00:35:14,639 So it's equally split here. 467 00:35:14,639 --> 00:35:18,639 You have a 50% likelihood along this dimension of a good economy. 468 00:35:18,639 --> 00:35:21,639 If the Democrat wins, of course they'll screw it up. 469 00:35:21,639 --> 00:35:26,639 So it's certain that they'll have a bad economy with 0%. 470 00:35:26,639 --> 00:35:29,639 And the same thing for the Republican candidate. 471 00:35:29,639 --> 00:35:32,639 They will also start to screw it up with certainty. 472 00:35:32,639 --> 00:35:35,639 But with Elon Musk, it's certain that it will go the other way. 473 00:35:35,639 --> 00:35:38,639 Obviously, this is an exaggeration and just made up by me. 474 00:35:38,639 --> 00:35:45,639 But the point is that we can fix the multi-factor by doing this. 475 00:35:45,639 --> 00:35:47,639 And I'm going to demonstrate why. 476 00:35:47,639 --> 00:35:50,639 It's because the election hasn't happened yet. 477 00:35:50,639 --> 00:35:55,639 So even though there is a likelihood of winning that may be very small for Elon Musk, 478 00:35:55,639 --> 00:36:04,639 these numbers might all validly describe the situation at time equals 1 or time equals whatever. 479 00:36:04,639 --> 00:36:11,639 So you have here a case where someone is likely to be good for the economy but unlikely to win. 480 00:36:11,639 --> 00:36:14,639 So the election hasn't happened yet. We have these numbers. 481 00:36:14,639 --> 00:36:17,639 Everyone knows the election hasn't happened yet, and everyone knows these numbers 482 00:36:17,639 --> 00:36:20,639 because they're the same for everyone, just like the Apple stock price. 483 00:36:20,639 --> 00:36:25,639 And so what you have here is the voter who may decide, you know, 484 00:36:25,639 --> 00:36:30,639 these numbers here are decided by me, and you can renegotiate them at any time, 485 00:36:30,639 --> 00:36:31,639 especially last minute. 486 00:36:31,639 --> 00:36:37,639 It's like if you're in the voting box and you just do some last-minute research on your cell phone 487 00:36:37,639 --> 00:36:43,639 before you walk in to go voting, then you can do like an immediate, cheap, tacit, 488 00:36:43,639 --> 00:36:45,639 renegotiate tacit, which means without speaking. 489 00:36:45,639 --> 00:36:48,639 So without doing any negotiating at all. 490 00:36:48,639 --> 00:36:51,639 You can do a renegotiation to elect this guy. 491 00:36:51,639 --> 00:36:54,639 And it's better for unformed or angry voters. 492 00:36:54,639 --> 00:36:57,639 And the less that people actually know, the better because they just say, 493 00:36:57,639 --> 00:37:00,639 well, I don't know about any of this. 494 00:37:00,639 --> 00:37:06,639 I've invested nothing in this process, so I'm just willing to just kind of go with this on a bark. 495 00:37:06,639 --> 00:37:11,639 And the less that people interact with manipulative media or campaign ads, 496 00:37:11,639 --> 00:37:14,639 the better because they're not invested emotionally in any candidate. 497 00:37:14,639 --> 00:37:16,639 They just show up and they just pick this thing, 498 00:37:16,639 --> 00:37:20,639 and we have returned actually to the single factor competition from before. 499 00:37:20,639 --> 00:37:25,639 So people just pick whichever one they think is the best on this thing. 500 00:37:25,639 --> 00:37:29,639 And now finally, just two slides on being practical. 501 00:37:29,639 --> 00:37:32,639 How do we really get this going in practice? 502 00:37:32,639 --> 00:37:36,639 Well, the idea I think is to ramp it up over time by creating the platform 503 00:37:36,639 --> 00:37:44,639 and then using it on popular things like sports, like the Super Bowl or the Oscars or something. 504 00:37:44,639 --> 00:37:51,639 And just kind of keep it up over time and just show people how accurate the results are, 505 00:37:51,639 --> 00:37:53,639 which they should be maximally accurate. 506 00:37:53,639 --> 00:37:58,639 People should be interested in them or maybe get more interested over time. 507 00:37:58,639 --> 00:38:03,639 Even better though, the election process is so broken and people already hate it so much 508 00:38:03,639 --> 00:38:05,639 that I think people will actually come around. 509 00:38:05,639 --> 00:38:10,639 They have a high chance of coming around eventually or pretty quickly. 510 00:38:10,639 --> 00:38:16,639 And I think especially we have these congressional elections where it makes a big impact who controls Congress 511 00:38:16,639 --> 00:38:18,639 because Congress is in charge of everything. 512 00:38:18,639 --> 00:38:24,639 There are some problems that you can only solve, I think, really in that kind of process, 513 00:38:24,639 --> 00:38:26,639 as I tried to explain before. 514 00:38:26,639 --> 00:38:28,639 And the voters are really uninformed. 515 00:38:28,639 --> 00:38:31,639 The turnout is super low, like no one cares. 516 00:38:31,639 --> 00:38:35,639 So I think more people don't vote than do for these elections. 517 00:38:35,639 --> 00:38:38,639 So even if you've just got all those apathetic people who are just like, 518 00:38:38,639 --> 00:38:41,639 oh, I'm not going to vote because this process doesn't work, 519 00:38:41,639 --> 00:38:45,639 if they could be induced to do something that is really, really cheap, 520 00:38:45,639 --> 00:38:48,639 and it just takes five seconds of their time, 521 00:38:48,639 --> 00:38:53,639 I think that is a good avenue for maybe getting that to actually work. 522 00:38:53,639 --> 00:38:58,639 And then how do we measure those things, like the likelihood of a good economy? 523 00:38:58,639 --> 00:39:02,639 That, unfortunately, is talked about all the time, and that is the end of the talk. 524 00:39:02,639 --> 00:39:03,639 So I don't know. 525 00:39:03,639 --> 00:39:06,639 I started a little late, so I don't know if we have time for questions. 526 00:39:06,639 --> 00:39:09,639 But that is the talk, so I hope that you enjoyed it. 527 00:39:09,639 --> 00:39:10,639 Yes, questions? 528 00:39:10,639 --> 00:39:12,639 Well, I have one observation. 529 00:39:12,639 --> 00:39:16,639 If people are interested in net neutrality, 530 00:39:16,639 --> 00:39:20,639 there's a website called battleforthenet.com, 531 00:39:20,639 --> 00:39:22,639 and you can immediately see your representative. 532 00:39:22,639 --> 00:39:25,639 With two clicks, you can send them a Twitter tweet, 533 00:39:25,639 --> 00:39:29,639 put in your zip code, and you can immediately send them an e-mail, 534 00:39:29,639 --> 00:39:32,639 and you can actually get involved very easily. 535 00:39:32,639 --> 00:39:35,639 Well, that stuff is good, but the problem is when you vote, 536 00:39:35,639 --> 00:39:38,639 it doesn't help you replace a leader who is bad. 537 00:39:38,639 --> 00:39:42,639 If you go into the bad restaurant, you're just stuck in there 538 00:39:42,639 --> 00:39:46,639 because you can't get enough people with you to replace someone that you don't like. 539 00:39:46,639 --> 00:39:50,639 So that's better than nothing, but it doesn't really help, I think. 540 00:39:50,639 --> 00:39:52,639 So the problem with governance. 541 00:39:52,639 --> 00:39:53,639 Yes, question? 542 00:39:53,639 --> 00:39:57,639 So I'm sorry, but I'm going to continue to break into the marketing thing. 543 00:39:57,639 --> 00:39:58,639 Okay, great. 544 00:39:58,639 --> 00:40:04,639 So the question I have for you is I hear what you're saying 545 00:40:04,639 --> 00:40:09,639 about having two dynamics and trying to predict out of those two dynamics. 546 00:40:09,639 --> 00:40:13,639 The thing is I follow you as you state the election 547 00:40:13,639 --> 00:40:16,639 and the yes or no with bad economy. 548 00:40:16,639 --> 00:40:20,639 Do you, I mean, is there something that you as an individual do? 549 00:40:20,639 --> 00:40:24,639 Like, for instance, the climate and the bonus on your credit? 550 00:40:24,639 --> 00:40:27,639 Because I'm probably going to find two types of data. 551 00:40:27,639 --> 00:40:29,639 I'm just going to give them to you. 552 00:40:29,639 --> 00:40:31,639 Yeah, that's a really good question. 553 00:40:31,639 --> 00:40:33,639 So these are decided after the fact. 554 00:40:33,639 --> 00:40:36,639 So before the election, there's no election on here, 555 00:40:36,639 --> 00:40:39,639 but before the election you don't know who's going to win. 556 00:40:39,639 --> 00:40:48,639 But you can place these conditional, I guess you could call them wagers almost, or bets. 557 00:40:48,639 --> 00:40:52,639 You place them in advance, and then they don't settle until afterwards. 558 00:40:52,639 --> 00:40:57,639 Now after the election is over, it would be very easy to observe who the winner was. 559 00:40:57,639 --> 00:41:01,639 So you'll know whether or not Hillary Clinton won. 560 00:41:01,639 --> 00:41:02,639 Everyone will know. 561 00:41:02,639 --> 00:41:03,639 But you don't know before. 562 00:41:03,639 --> 00:41:06,639 No one knows before, but afterwards everyone knows. 563 00:41:06,639 --> 00:41:09,639 So there's a delay. 564 00:41:09,639 --> 00:41:14,639 And what I don't think I explained very well is that there's four states here, 565 00:41:14,639 --> 00:41:17,639 and when you buy this thing, this is the joint. 566 00:41:17,639 --> 00:41:20,639 There's four things here instead of before. 567 00:41:20,639 --> 00:41:23,639 So this thing, there's only one thing. 568 00:41:23,639 --> 00:41:28,639 There's only one thing here, and there's no reason to plot the second thing 569 00:41:29,639 --> 00:41:32,639 because in the case of here, if there's only one thing, 570 00:41:32,639 --> 00:41:36,639 like if you only plot that was the yes outcome for the climate thing, 571 00:41:36,639 --> 00:41:39,639 there's no reason to plot no because it would just be a mirror image of it, 572 00:41:39,639 --> 00:41:40,639 so it's pointless to plot. 573 00:41:40,639 --> 00:41:42,639 But when there's four, then there is a reason to plot them 574 00:41:42,639 --> 00:41:44,639 because they'll all be different. 575 00:41:44,639 --> 00:41:52,639 So if you buy this thing, you only get paid the $100 if the Climate Act is not passed 576 00:41:52,639 --> 00:41:55,639 and if 2016 is not the warmest year on record. 577 00:41:55,639 --> 00:41:56,639 So these are all joints. 578 00:41:56,639 --> 00:42:01,639 So there's no combining until after the fact when you just throw a little switch 579 00:42:01,639 --> 00:42:03,639 that says did it actually happen, yes or no. 580 00:42:03,639 --> 00:42:07,639 So these things are all market assets that have their own market price, 581 00:42:07,639 --> 00:42:09,639 and they'll be trading whatever they want. 582 00:42:09,639 --> 00:42:12,639 So if you want to buy this thing, it will cost you whatever the market price is. 583 00:42:12,639 --> 00:42:15,639 It might be $0.15, and then you'll get $1, 584 00:42:15,639 --> 00:42:18,639 or it might cost you $15, and you'll get $100. 585 00:42:18,639 --> 00:42:23,639 But this thing will only be worth any money to you if this outcome is no 586 00:42:23,639 --> 00:42:25,639 and this outcome is no. 587 00:42:25,639 --> 00:42:28,639 This outcome will only be worth any money to you if this outcome is no 588 00:42:28,639 --> 00:42:29,639 and this outcome is yes. 589 00:42:29,639 --> 00:42:32,639 If anything else happens, you don't get anything for what you own here, 590 00:42:32,639 --> 00:42:38,639 which is why you would buy them in sections if you wanted to redo this thing. 591 00:42:38,639 --> 00:42:42,639 If you wanted to recreate this two-state world, all you would do is you'd say, 592 00:42:42,639 --> 00:42:48,639 instead of buying just one, where you would buy one over here, 593 00:42:48,639 --> 00:42:53,639 instead of buying one, you would buy one and two 594 00:42:53,639 --> 00:42:59,639 and the sum of their prices would be totally equivalent to the one in the previous case. 595 00:42:59,639 --> 00:43:00,639 Yes, okay, good. 596 00:43:00,639 --> 00:43:02,639 You said I have six minutes left? 597 00:43:02,639 --> 00:43:03,639 Okay, so that's cool. 598 00:43:03,639 --> 00:43:05,639 If there are more questions, that's great. 599 00:43:05,639 --> 00:43:06,639 Yes? 600 00:43:06,639 --> 00:43:08,639 I still don't quite understand something. 601 00:43:08,639 --> 00:43:11,639 I'm repeating the same question, but I was wondering, 602 00:43:11,639 --> 00:43:13,639 you have two independent things. 603 00:43:13,639 --> 00:43:19,639 How can you come up with a joint probability? 604 00:43:20,639 --> 00:43:31,639 These things, when they're created, they may not be connected at all. 605 00:43:31,639 --> 00:43:33,639 In this case, they're not. 606 00:43:33,639 --> 00:43:36,639 So they may not actually be connected at all. 607 00:43:36,639 --> 00:43:39,639 That doesn't prevent you from creating a market that says something like, 608 00:43:39,639 --> 00:43:43,639 I'm going to flip a coin and I'm going to roll a dice, 609 00:43:43,639 --> 00:43:46,639 and if it's less than three, then it goes this way, 610 00:43:46,639 --> 00:43:49,639 and if it's less than four, or three, or one, two, or three, it's over here, 611 00:43:49,639 --> 00:43:52,639 and if it's four, five, six, it's over here, and if it's tails, it's over here, 612 00:43:52,639 --> 00:43:54,639 and if it's heads, it's over there. 613 00:43:54,639 --> 00:43:56,639 You could still have a market with that. 614 00:43:56,639 --> 00:44:00,639 You'd have four assets or four tokens or something. 615 00:44:00,639 --> 00:44:03,639 This one would be worth $1, let's say, 616 00:44:03,639 --> 00:44:09,639 only if the dice roll is one, two, or three, 617 00:44:09,639 --> 00:44:13,639 and the coin flip is heads. 618 00:44:13,639 --> 00:44:16,639 If that happens, then this is worth $1, and all these are worth zero. 619 00:44:16,639 --> 00:44:20,639 But if the dice roll ends up at five, and the coin flip is heads, 620 00:44:20,639 --> 00:44:24,639 then this one will be worth $1, and the rest will be worth zero. 621 00:44:24,639 --> 00:44:28,639 So it's not really until the end that they are entangled. 622 00:44:28,639 --> 00:44:32,639 They're entangled by the structure that you impose here. 623 00:44:32,639 --> 00:44:36,639 But there doesn't have to be anything in the real world that actually connects them, 624 00:44:36,639 --> 00:44:40,639 other than, of course, the fact that we're all living in the same universe. 625 00:44:41,639 --> 00:44:43,639 Just informed by people's belief, that's what you're saying. 626 00:44:43,639 --> 00:44:44,639 Absolutely, right. 627 00:44:44,639 --> 00:44:47,639 But see, the point is, someone might actually know. 628 00:44:47,639 --> 00:44:49,639 Very few people would. 629 00:44:49,639 --> 00:44:51,639 Very few people would, but some people might actually know 630 00:44:51,639 --> 00:44:58,639 whether or not this act has any effect on 2016 being the warmest year. 631 00:44:58,639 --> 00:45:00,639 Maybe it only has an effect on 2017. 632 00:45:00,639 --> 00:45:02,639 Maybe it won't actually have an effect. 633 00:45:02,639 --> 00:45:06,639 So someone might know, and that person will trade and try to make some money, 634 00:45:06,639 --> 00:45:07,639 and other people will not. 635 00:45:07,639 --> 00:45:09,639 They will be like, well, that doesn't look right to me, 636 00:45:09,639 --> 00:45:12,639 but I don't want to trade because I don't know anything about it. 637 00:45:12,639 --> 00:45:16,639 And then all of us get to ignore those people, which is exactly what we want. 638 00:45:16,639 --> 00:45:17,639 Does that make sense? 639 00:45:17,639 --> 00:45:18,639 Does that make more sense? 640 00:45:18,639 --> 00:45:19,639 I think so. 641 00:45:19,639 --> 00:45:21,639 I've got to think about it a little bit more. 642 00:45:21,639 --> 00:45:22,639 Okay. 643 00:45:22,639 --> 00:45:27,639 Each of these are what is – this thing right here with the 15, 644 00:45:27,639 --> 00:45:30,639 that is now this thing. 645 00:45:30,639 --> 00:45:37,639 So this thing is going around to 15, and it can go anywhere from 100 to 0, 646 00:45:37,639 --> 00:45:42,639 and it's at 15 right now in this example. 647 00:45:42,639 --> 00:45:43,639 And this thing is trading at 15. 648 00:45:43,639 --> 00:45:45,639 This thing is trading at 5 cents. 649 00:45:45,639 --> 00:45:55,639 So here's the thing is that almost no one thinks that if the act is passed – 650 00:45:55,639 --> 00:45:59,639 no one thinks that both of these things are going to happen at once. 651 00:45:59,639 --> 00:46:02,639 You can get those for pennies on the dollar. 652 00:46:02,639 --> 00:46:05,639 So since you can get those for pennies on the dollar, 653 00:46:05,639 --> 00:46:07,639 but this one is really expensive. 654 00:46:07,639 --> 00:46:10,639 Imagine if this one cost almost $1. 655 00:46:10,639 --> 00:46:14,639 So no, that would mean almost everyone thinks the act is not going to be passed, 656 00:46:14,639 --> 00:46:18,639 and almost everyone thinks that 2016 is going to be a one-time thing. 657 00:46:18,639 --> 00:46:19,639 Yes? 658 00:46:19,639 --> 00:46:23,639 Is this what Gnosis is trying to do? 659 00:46:23,639 --> 00:46:28,639 Yeah, so I know the guys behind Augur and Gnosis, 660 00:46:28,639 --> 00:46:33,639 and I don't have a lot of – I don't think – yeah, it is what they are trying to do. 661 00:46:33,639 --> 00:46:37,639 But I actually – they actually met me in April 2014, 662 00:46:37,639 --> 00:46:40,639 and I know a lot about them and their projects, 663 00:46:40,639 --> 00:46:43,639 and I've been waiting to be impressed for a long time. 664 00:46:43,639 --> 00:46:47,639 And it's actually kind of shocking because we – I finished this – 665 00:46:47,639 --> 00:46:51,639 a lot of the code for this was another person around 2015, 666 00:46:51,639 --> 00:46:55,639 and I just can't believe that some of these other people haven't launched already 667 00:46:55,639 --> 00:46:57,639 because what they did was kind of a fork of our thing. 668 00:46:57,639 --> 00:47:00,639 I think if they just rebased off of ours, they could launch. 669 00:47:00,639 --> 00:47:06,639 But part of the problem is that Ethereum has lots and lots of other problems that interact with this. 670 00:47:06,639 --> 00:47:09,639 So this is why I really wanted this to be a Bitcoin sidechain. 671 00:47:09,639 --> 00:47:11,639 It's much better at home. 672 00:47:11,639 --> 00:47:13,639 Ethereum has all these problems with the gas costs 673 00:47:13,639 --> 00:47:16,639 and with other smart contracts attacking each other, 674 00:47:16,639 --> 00:47:21,639 and just with generally being more unstable and kind of ridiculous, you ask. 675 00:47:21,639 --> 00:47:25,639 But yeah, they are – I had slides about that. 676 00:47:25,639 --> 00:47:26,639 Yes? 677 00:47:26,639 --> 00:47:33,639 For most of the privation markets I've seen, they rely on NASA, let's say, to have the outcome. 678 00:47:33,639 --> 00:47:38,639 Is that something that this project you have sort of trusted? 679 00:47:38,639 --> 00:47:44,639 Yes, there is a peer-to-peer Oracle system that I don't know. 680 00:47:44,639 --> 00:47:48,639 I have a bunch of slides about it, but it's a little complicated to explain. 681 00:47:48,639 --> 00:47:51,639 But that doesn't get around the fact that you need – 682 00:47:51,639 --> 00:47:57,639 what the peer-to-peer Oracle system does is it maps information that you could easily find into the blockchain. 683 00:47:57,639 --> 00:47:59,639 And so that's already a huge amount of work. 684 00:47:59,639 --> 00:48:03,639 So the Oracle that I described, the peer-to-peer Oracle that I described, 685 00:48:03,639 --> 00:48:05,639 it only works for things that are very easy to find. 686 00:48:05,639 --> 00:48:13,639 So you need it to be as easy as who won the election, Donald Trump or Hillary Clinton. 687 00:48:13,639 --> 00:48:18,639 It needs to be that easy because the human attention is very scarce and very unreliable. 688 00:48:18,639 --> 00:48:27,639 So even those things that are very easy take some human people to map that into the blockchain 689 00:48:27,639 --> 00:48:31,639 in a way that does not require trust and holds up strongly to attack 690 00:48:31,639 --> 00:48:34,639 or people's computers catching on fire and stuff. 691 00:48:34,639 --> 00:48:36,639 So that is what the white paper is really about. 692 00:48:36,639 --> 00:48:37,639 It's not about any of this at all. 693 00:48:37,639 --> 00:48:40,639 It's about the peer-to-peer Oracle. 694 00:48:40,639 --> 00:48:43,639 And you can go to bitcoinhivemind.com and you can read about it. 695 00:48:43,639 --> 00:48:47,639 And the white paper is still called Truthcoin, and Truthcoin is my Twitter handle 696 00:48:47,639 --> 00:48:49,639 because no one can spell my last name. 697 00:48:49,639 --> 00:48:51,639 It's impossible, Polish last name. 698 00:48:51,639 --> 00:48:53,639 I think we're out of time then, right? 699 00:48:53,639 --> 00:48:54,639 Yes? 700 00:48:54,639 --> 00:48:56,639 Okay, great. 701 00:48:56,639 --> 00:48:57,639 Thank you. 702 00:48:57,639 --> 00:48:59,639 Thank you.