1
00:00:00,000 --> 00:00:04,440
Completed technology to Bitcoin, and do several other amazing things as well. So,
Paul Sztorc, thanks.

2
00:00:12,840 --> 00:00:17,680
This talk actually is not about Drivechain, although I'm sure it'll come up in the
panel at noon.

3
00:00:23,480 --> 00:00:28,520
Okay, so hi, my name is Paul Sztorc. I have a relatively mainstream background.

4
00:00:28,520 --> 00:00:34,480
I went to public school in Connecticut for 12 years, and then I went to a private
engineering college in Ohio,

5
00:00:34,720 --> 00:00:37,000
where I studied economics and statistics.

6
00:00:37,000 --> 00:00:44,080
I then worked a kind of pre-doctoral research statistician job at Yale University
for two years for a man named

7
00:00:44,320 --> 00:00:46,680
William Nordhaus, who just won the Nobel

8
00:00:47,360 --> 00:00:54,560
Prize in Economics a few months ago, or the Swedish Bank Prize if you prefer, and so
my economic training is relatively mainstream.

9
00:00:55,000 --> 00:01:01,440
But despite all of that, I fell in love with Bitcoin in 2012, and I published
Bitcoin research on my blog

10
00:01:01,800 --> 00:01:07,200
Truthcoin.info since 2014, and I presented at many Bitcoin conferences,

11
00:01:07,400 --> 00:01:13,040
especially the scaling Bitcoin conferences, as well as building on Bitcoin last
summer and TabConf

12
00:01:13,680 --> 00:01:15,680
earlier this year.

13
00:01:15,760 --> 00:01:21,200
The topic of this presentation is an idea for getting the public sector, and I put
it there,

14
00:01:21,280 --> 00:01:29,200
I put it there in a kind of scary red blob, to substantially inherit most of the
reasonableness of the private sector.

15
00:01:29,200 --> 00:01:31,640
And so this presentation is not about

16
00:01:32,520 --> 00:01:39,600
replacement. It is not about replacing the public sector with the private sector via
some mysterious process that no one will explain.

17
00:01:39,720 --> 00:01:45,640
It is just about improving the public sector. So you have to decide how anarchist
you think it is.

18
00:01:45,640 --> 00:01:49,480
It's up to you, but it does involve markets. It's very Hayekian, so we'll see.

19
00:01:51,200 --> 00:01:57,880
Here is the entire talk in one slide. The problem, politicians are installing bad
policies and getting away with it.

20
00:01:58,440 --> 00:02:03,400
Solution, make it easy to find the bad politicians and get rid of them, and

21
00:02:04,240 --> 00:02:10,320
specifically, we're going to create some assets that whose value reflects the
politicians' competence,

22
00:02:10,320 --> 00:02:14,200
and then we'll make the pricing data available to the public, and they'll just vote
for

23
00:02:14,720 --> 00:02:16,840
whoever has the better numbers.

24
00:02:17,920 --> 00:02:19,920
So

25
00:02:20,120 --> 00:02:25,760
people might have this information available to them just before they vote, and so
for each person running,

26
00:02:25,760 --> 00:02:31,080
there's a column here, and it just gives forecasts about how life will be if the
person's elected.

27
00:02:31,640 --> 00:02:38,480
The first row guesses how much the government will cost. The second row guesses how
economically prosperous the citizens will be, and

28
00:02:38,720 --> 00:02:41,680
the third row just maybe would cover things like

29
00:02:42,280 --> 00:02:44,440
invasion, war, health care, mental health,

30
00:02:44,760 --> 00:02:50,560
gun safety, whatever. It just kind of catches all these things, and people will just
look at the two numbers and decide which one they like

31
00:02:50,560 --> 00:02:57,720
more. So where do these numbers come from, and why would anyone take them seriously,
and that is what this talk is about.

32
00:02:59,120 --> 00:03:04,040
So first, I'm going to give some background knowledge, and then second, I'm going to
talk a little bit about

33
00:03:04,840 --> 00:03:07,320
democracy and what I call electoral feedback, and

34
00:03:08,480 --> 00:03:13,080
then I'm going to talk about these event derivatives, which are usually called
prediction markets, and

35
00:03:13,560 --> 00:03:20,200
fourth, I'm going to combine these ideas, and fifth, I'll explain why I think this
idea actually will work, unlike other ideas that don't work.

36
00:03:21,600 --> 00:03:25,240
Those last two are super short, take about 60 seconds, I hope.

37
00:03:26,080 --> 00:03:27,680
So

38
00:03:27,680 --> 00:03:33,440
the background knowledge that you need to have in a nutshell is that this idea is
very old, and a lot of super smart people

39
00:03:33,440 --> 00:03:35,440
like it, including many cypherpunks.

40
00:03:36,360 --> 00:03:42,600
The second is that I've already basically implemented the idea, so it's not
vaporware, and the third, there is no like scam

41
00:03:42,600 --> 00:03:47,360
ICO, or any kind of like weird scamming thing in this project anywhere, which I'm
going to explain.

42
00:03:47,880 --> 00:03:54,640
So the first name I'm going to drop is Hal Finney. A lot of people think that Hal
Finney is Satoshi Nakamoto.

43
00:03:54,640 --> 00:03:57,880
He received the first Bitcoin transaction. He liked this idea a lot.

44
00:03:59,160 --> 00:04:02,880
He's calling them conditional prediction markets. I'm going to call them
multi-dimensional

45
00:04:03,640 --> 00:04:05,640
event derivatives later.

46
00:04:06,480 --> 00:04:13,400
The second name is Robin Hanson, who Ralph Merkle is name-dropping him as an
important guy.

47
00:04:13,800 --> 00:04:17,920
This is basically Robin Hanson's ideas just put on a blockchain, and

48
00:04:18,840 --> 00:04:22,400
Ralph Merkle built most of the technology that Bitcoin uses, so

49
00:04:23,120 --> 00:04:26,760
this is more name-dropping, which is that this was a paper that was put out

50
00:04:27,080 --> 00:04:33,080
in order to try to convince the government to stop interfering with prediction
market development and research.

51
00:04:33,640 --> 00:04:40,120
It's signed by a giant list of people. All these people either like will win the
Nobel Prize, or have, or should.

52
00:04:40,320 --> 00:04:44,440
They're super, super well respected, and they all signed this paper,

53
00:04:44,440 --> 00:04:49,800
but it's kind of going nowhere, hence the blockchain emphasis that I'm taking it
sort of more

54
00:04:50,520 --> 00:04:54,640
getting further away from the high road, because it's been shown to be impractical.

55
00:04:56,440 --> 00:05:01,560
So the second thing is that this talk assumes that someone will solve the so-called

56
00:05:02,280 --> 00:05:08,160
blockchain oracle problem, which is a technical problem. In order to make these
assets, you need it to be solved. Fortunately,

57
00:05:08,160 --> 00:05:09,520
I personally have solved it,

58
00:05:09,520 --> 00:05:14,880
so there's nothing for you to worry about, and I wrote this paper about it a long
time ago, and this paper has some pretty

59
00:05:14,880 --> 00:05:17,960
cool endorsements. We've got Roger Ver up here.

60
00:05:18,160 --> 00:05:22,760
We also have Andrew Poelstra, who I think is the brightest technical mind in the
space, and

61
00:05:23,440 --> 00:05:28,920
we have also Adam Back, CEO of Blockstream, and we even have a smiley face from
Peter Todd.

62
00:05:29,000 --> 00:05:31,400
So it's like basically as good as it gets, I think.

63
00:05:33,240 --> 00:05:37,760
This paper that I wrote spawned virtually all the projects in this area,

64
00:05:38,680 --> 00:05:44,040
some of which I'm more proud of than others, but the only one I really like is this
one at the top. I saw it's

65
00:05:45,200 --> 00:05:49,480
oversaw its development. Personally, it's a fork of Bitcoin Core, and it was
assembled by two different

66
00:05:50,120 --> 00:05:53,320
Bitcoin Core developers over a period of about 24 months,

67
00:05:54,160 --> 00:05:59,440
and I run the project website where I put content like papers and this presentation,
and

68
00:06:00,560 --> 00:06:02,560
here's some screenshots.

69
00:06:02,760 --> 00:06:04,080
There we go.

70
00:06:04,080 --> 00:06:07,840
Some screenshots, which hopefully by the end of the talk will kind of make some
sense to you.

71
00:06:08,160 --> 00:06:13,640
So we have some events here. They're like in a big list, and then we have some
markets. They have prices,

72
00:06:14,200 --> 00:06:21,360
and then we have like a trading view, where you're like buying and selling things.
So that's just kind of to show it's not paperware.

73
00:06:23,480 --> 00:06:29,840
This project could theoretically be live on the Bitcoin BTC mainnet as early as this
autumn,

74
00:06:29,840 --> 00:06:33,400
but I don't, you know, you never know about that type of thing. It depends on a lot
of

75
00:06:34,120 --> 00:06:36,120
variables, so we'll have to see about that.

76
00:06:36,400 --> 00:06:41,480
So finally, I just have to mention there's no ICO and no like weird utility token
going on here.

77
00:06:41,480 --> 00:06:46,520
There is a second token, which leads to misunderstanding, so I'm going to explain it
in about three sentences.

78
00:06:47,040 --> 00:06:49,040
The second token is more

79
00:06:49,360 --> 00:06:54,280
analogous to mining. So in Bitcoin, the people who transact, they don't need to
mine, and

80
00:06:54,840 --> 00:07:01,440
in this project, the users, people who trade in these markets and create them, they
don't need to know anything about the second token,

81
00:07:02,200 --> 00:07:04,440
nor do they need to own any of the second token.

82
00:07:04,440 --> 00:07:07,440
So if you only own that token, if you want to go into that line of work,

83
00:07:07,840 --> 00:07:11,480
same way you'd only buy an ASIC if you wanted to go into that line of work.

84
00:07:12,840 --> 00:07:15,840
Okay, so now the talk can really get started actually, for real.

85
00:07:16,840 --> 00:07:22,640
So the question is, why is the public sector so disappointing? Because it's really
everyone that hates it.

86
00:07:22,640 --> 00:07:24,640
It's not just people who come to an anarchist

87
00:07:25,000 --> 00:07:26,120
conference

88
00:07:26,120 --> 00:07:29,400
in Mexico. It's just kind of universally, culturally,

89
00:07:29,400 --> 00:07:34,400
it's just disappointing for people. And the question is why, and the argument I'm
going to put forward has nothing to do with

90
00:07:35,160 --> 00:07:42,560
morality or with lofty abstractions such as freedom or whatever. It won't even have
that much to do with economics.

91
00:07:43,200 --> 00:07:49,600
Instead, it has more of like a physics or biochemistry flavor, because it rests on
this idea of feedback.

92
00:07:50,240 --> 00:07:54,320
And this is an idea of feedback in the free market, where you have

93
00:07:54,880 --> 00:07:56,880
bad products being sold and

94
00:07:57,400 --> 00:07:59,760
consumers don't like the products, and they buy fewer of them,

95
00:08:00,320 --> 00:08:06,440
which punishes the merchant who's selling them. So a free market doesn't mean
instant utopia, right?

96
00:08:06,440 --> 00:08:10,560
But it does mean that things improve, and they improve basically as fast as
possible.

97
00:08:10,800 --> 00:08:11,840
And

98
00:08:11,840 --> 00:08:18,960
so the modern democracies that most of us live in, for better or for worse, also
have feedback called voting. And

99
00:08:19,880 --> 00:08:25,000
it kind of goes a little like this, where if the government is too unsatisfying in
some way,

100
00:08:25,080 --> 00:08:31,000
it can be dismissed with a majority vote. And it's a little more complicated than
that. There's like some other weird stuff

101
00:08:31,000 --> 00:08:33,760
that's not really important. But basically, this is this gear that

102
00:08:34,560 --> 00:08:36,200
controls the machine

103
00:08:36,200 --> 00:08:40,640
very slowly. Now, the free market feedback differs from electoral feedback.

104
00:08:40,840 --> 00:08:45,280
We know they're different, because one works pretty well, and the other one is
always disappointing.

105
00:08:46,360 --> 00:08:49,360
So what are the differences? Frequency is one difference.

106
00:08:49,880 --> 00:08:53,560
The market feedback fires every time a merchant loses a sale.

107
00:08:54,160 --> 00:08:56,320
So that's many millions of times per day.

108
00:08:56,840 --> 00:09:02,080
The electoral feedback fires once every four or two or six years or something like
that or whatever,

109
00:09:02,400 --> 00:09:05,800
whatever the election is. So that's one big difference.

110
00:09:05,800 --> 00:09:11,000
But I think that difference is actually relatively trivial in comparison to
something that I call research.

111
00:09:11,880 --> 00:09:17,640
And so you see there's actually even more feedback loops than you originally
anticipated, because

112
00:09:18,240 --> 00:09:26,080
when a disappointing sale is completed, the consumer suffers. And the desire to
avoid suffering

113
00:09:26,720 --> 00:09:32,040
stimulates the consumer's search for alternatives. And I call that search effort
research, for lack of a better word.

114
00:09:32,040 --> 00:09:34,040
I don't know what else to call it.

115
00:09:34,360 --> 00:09:36,360
But so, okay.

116
00:09:36,640 --> 00:09:40,920
Now, in both sectors, public and private, you have to do your own research,

117
00:09:41,120 --> 00:09:47,800
so to speak, and you have to pay for your research. Research consumes your scarce
resources, especially your time.

118
00:09:49,400 --> 00:09:54,040
Important things in your life, you research a lot. Buying a house, you research it a
lot.

119
00:09:54,280 --> 00:09:59,240
But picking out a hotel room, on the other hand, you do not do as much research. You
only do a little bit.

120
00:10:00,520 --> 00:10:06,080
Cosmetic surgery, you would do lots of research. Buying a new pair of flip-flops,
very little research.

121
00:10:06,280 --> 00:10:12,760
So the problem with elections is that your single vote will almost never affect the
outcome, because there's so many voters.

122
00:10:13,360 --> 00:10:19,760
And people pretend that their vote matters in order to feel important, but really,
they know it doesn't matter.

123
00:10:20,280 --> 00:10:25,280
So if you master the issues and the candidates and do a lot of research,

124
00:10:25,280 --> 00:10:29,560
it won't change your life in the slightest, because other people are not doing any
research.

125
00:10:29,800 --> 00:10:31,800
So there's never any reason for you to do any.

126
00:10:32,600 --> 00:10:34,600
Now, of course, this is a big oversimplification,

127
00:10:34,920 --> 00:10:38,160
but I think it's basically the explanation for what's going on here.

128
00:10:38,280 --> 00:10:45,280
Voters usually admit that they don't know what they're doing, and I have here 71% of
Americans cannot even name their congressional representative,

129
00:10:45,520 --> 00:10:47,920
let alone know what they've been up to or whatever.

130
00:10:48,520 --> 00:10:52,440
And why bother learning who the representative is? Because it basically makes no
difference.

131
00:10:53,360 --> 00:10:56,080
So at breakfast on Election Day,

132
00:10:56,680 --> 00:11:01,000
voters will carefully weigh the costs and benefits of different breakfast foods that
they could eat.

133
00:11:01,320 --> 00:11:06,200
But when they go in to vote, they won't really know anything about the costs and
benefits of their choices,

134
00:11:06,320 --> 00:11:09,120
so hence this idea to kind of give them that information.

135
00:11:10,200 --> 00:11:17,320
Now, an implication of this theory is that the idea of educating people in order to
make them libertarians,

136
00:11:17,320 --> 00:11:19,320
or make them experts in economics,

137
00:11:19,760 --> 00:11:23,120
will never be able to actually solve this problem and improve society.

138
00:11:23,320 --> 00:11:28,800
It's very noble and worth doing, in the same way that chemistry and music are worth
doing,

139
00:11:28,800 --> 00:11:33,120
and like bird-watching is like a real skill, and mastering the skill of
bird-watching could be fun,

140
00:11:33,160 --> 00:11:39,080
but ultimately, if persuasion were effective, then the elections themselves wouldn't
be so problematic.

141
00:11:39,720 --> 00:11:42,920
Friedrich Hayek would have been wrong about information diffusion,

142
00:11:43,240 --> 00:11:46,960
and a centrally planned economy would be more efficient than laissez-faire.

143
00:11:47,240 --> 00:11:49,640
So the research incentives are the whole problem in the first place.

144
00:11:50,000 --> 00:11:51,840
So now, what should we do instead?

145
00:11:52,720 --> 00:11:57,560
As I said, the plan is to have people show up on Election Day, open their cell
phones, and check some prices,

146
00:11:58,080 --> 00:12:02,600
and it should be as easy as checking an NFL score, or the S&P 500, or something like
that.

147
00:12:02,880 --> 00:12:07,800
Then they just vote for the candidate with better prices, and this is just supposed
to be a huge improvement of what we do right now.

148
00:12:08,080 --> 00:12:10,280
So prices of what, though? What's going on here?

149
00:12:11,280 --> 00:12:15,360
This is an example of an event derivative, which is usually called a prediction
market.

150
00:12:16,320 --> 00:12:19,880
It's defined as an asset that pays you money if something happens.

151
00:12:20,440 --> 00:12:23,720
If the thing happens, you get paid. If it doesn't happen, you do not get paid.

152
00:12:24,880 --> 00:12:26,880
This is an example from a website called Intrade.

153
00:12:27,440 --> 00:12:33,920
The asset was created in 2011, and it would have been worth $1 if the year 2012 had
been the warmest year on record,

154
00:12:33,920 --> 00:12:39,600
as reported by these NASA satellites that measure surface temperature and put it on
a website where anyone can find it.

155
00:12:40,280 --> 00:12:42,280
Otherwise, the asset is worth zero.

156
00:12:42,280 --> 00:12:49,680
So the asset traded at $0.40 in January 2011, but by mid-2012, it was worth just
$0.10,

157
00:12:49,680 --> 00:12:52,800
and in December of 2012, it was worth basically nothing.

158
00:12:53,960 --> 00:12:57,200
So event derivatives are similar to bets or wagers.

159
00:12:57,200 --> 00:13:01,640
The difference is that with event derivatives, the prices are constantly changing,

160
00:13:02,000 --> 00:13:05,600
and this variation in prices produces socially useful information.

161
00:13:05,600 --> 00:13:07,600
So in a bet, the odds are fixed.

162
00:13:08,080 --> 00:13:10,680
And the odds are usually just fixed at 50-50.

163
00:13:10,680 --> 00:13:12,680
I bet you $20 if this happens.

164
00:13:13,120 --> 00:13:14,400
And where's the fun in that?

165
00:13:14,400 --> 00:13:20,720
You know, with these assets, the market price is the objective likelihood of the
event that the market is about.

166
00:13:21,480 --> 00:13:28,600
So as 2012 went on, it was becoming clear that it wasn't going to be the warmest
year, at least according to these satellites,

167
00:13:28,600 --> 00:13:30,880
and so the price collapsed over time.

168
00:13:31,880 --> 00:13:38,880
The topic of prediction markets usually reminds people of election betting, which is
a good start.

169
00:13:38,880 --> 00:13:41,880
These are assets that pay out if the candidate wins.

170
00:13:41,880 --> 00:13:47,880
This right here is an example if a candidate won the 2016 Republican presidential
nomination.

171
00:13:47,880 --> 00:13:54,880
So after the Iowa straw poll, Trump's price in blue plummeted because he didn't do
as well as people thought,

172
00:13:54,880 --> 00:13:57,880
and then it surged after he won South Carolina.

173
00:13:57,880 --> 00:13:59,880
Now, is this what I suggest that we do?

174
00:13:59,880 --> 00:14:04,880
A lot of people think that this is what I want us to do, but it is absolutely not at
all what I want us to do.

175
00:14:04,880 --> 00:14:06,880
This is lame.

176
00:14:06,880 --> 00:14:12,880
It is certainly entertaining, and it makes election years much more fun, especially
for me, because I like this type of thing.

177
00:14:12,880 --> 00:14:17,880
But these type of markets only tell us who is probably going to win.

178
00:14:17,880 --> 00:14:24,880
Instead, we want to change who wins, and we want to sabotage the incompetent
candidates so that they cannot win.

179
00:14:24,880 --> 00:14:26,880
And how do we do that?

180
00:14:26,880 --> 00:14:29,880
This is what Hal Finney was excited about.

181
00:14:29,880 --> 00:14:37,880
Although, yeah, they could never really do it the right way, but they were excited
about it back in, whenever that was, 2006 or something.

182
00:14:37,880 --> 00:14:40,880
Okay, so, oh yeah, sorry.

183
00:14:40,880 --> 00:14:45,880
I'm going to try to explain this idea of multivariate betting in nine slides.

184
00:14:45,880 --> 00:14:49,880
And hopefully after this, the whole presentation will make sense.

185
00:14:49,880 --> 00:14:54,880
And the first two are super easy, and four of them are really just one slide broken
into four pieces.

186
00:14:54,880 --> 00:14:56,880
So, here we go.

187
00:14:56,880 --> 00:14:59,880
Okay, here on the left, I have a series of coin flip events.

188
00:14:59,880 --> 00:15:04,880
In this table, we're describing the behavior of the 303rd coin flip.

189
00:15:04,880 --> 00:15:08,880
We don't know what will happen on that flip, but we can nonetheless fill in the
probabilities in this table.

190
00:15:08,880 --> 00:15:12,880
Heads and tails are equally likely, so it's 50-50.

191
00:15:12,880 --> 00:15:14,880
This is just a basic statement of probability.

192
00:15:14,880 --> 00:15:16,880
And this next one is also easy.

193
00:15:16,880 --> 00:15:17,880
It's just a dice.

194
00:15:17,880 --> 00:15:19,880
It's the same as the previous slide, but with a dice.

195
00:15:19,880 --> 00:15:25,880
Since each face of the dice is equally likely to come up, they all have one sixth.

196
00:15:25,880 --> 00:15:28,880
Now, here's where you need to turn on your brain, unfortunately.

197
00:15:28,880 --> 00:15:29,880
Sorry about that.

198
00:15:29,880 --> 00:15:35,880
But this is where it starts to get complicated, which is that this slide is just the
previous two slides kind of added together.

199
00:15:35,880 --> 00:15:40,880
And we have the coin flip in green along the left vertical edge of the table.

200
00:15:40,880 --> 00:15:43,880
And we have the dice roll across the top horizontal edge.

201
00:15:43,880 --> 00:15:46,880
And I've circled some probabilities in red.

202
00:15:46,880 --> 00:15:50,880
The probability that a two will be rolled is still one sixth.

203
00:15:50,880 --> 00:15:51,880
It's at the bottom.

204
00:15:51,880 --> 00:15:54,880
The probability that a tail will be flipped is still one half.

205
00:15:54,880 --> 00:15:59,880
Those are called marginal probabilities because they're written in the margin, so to
speak.

206
00:15:59,880 --> 00:16:06,880
The probability that both a two will be rolled and that a tail will be flipped
simultaneously, that's shown here as one twelfth.

207
00:16:06,880 --> 00:16:13,880
And okay, so with that out of the way, we can talk about relationships between
events.

208
00:16:13,880 --> 00:16:16,880
And I'm going to draw a contrast between these two tables here.

209
00:16:16,880 --> 00:16:19,880
Both are about unknown future coin flips.

210
00:16:19,880 --> 00:16:27,880
The top table considers coin flip 304 in blue across the top.

211
00:16:27,880 --> 00:16:31,880
And it considers flip number 305 in red across the left side.

212
00:16:31,880 --> 00:16:35,880
Each cell occurs with probability .25, which is what I have indicated here.

213
00:16:35,880 --> 00:16:40,880
Now, the second table does something extremely unrealistic that is only for teaching
purposes.

214
00:16:40,880 --> 00:16:44,880
It plots coin flip 304 against itself.

215
00:16:44,880 --> 00:16:46,880
Now, in the real world, this would never happen.

216
00:16:46,880 --> 00:16:49,880
No one would do this because it's just the same thing twice.

217
00:16:49,880 --> 00:16:54,880
But the point here is that if it did happen, we could write certain numbers in this
table.

218
00:16:54,880 --> 00:16:58,880
And the numbers we would write would have zeros for things that are impossible.

219
00:16:58,880 --> 00:17:00,880
So we zero out everything that's impossible.

220
00:17:00,880 --> 00:17:03,880
And we see there's a kind of clumping here.

221
00:17:03,880 --> 00:17:08,880
And I'm going to explain that again with this dice, which is also the same idea
here,

222
00:17:08,880 --> 00:17:14,880
that if it's the same dice roll against itself, you have this kind of clumping up in
a line.

223
00:17:14,880 --> 00:17:16,880
If they're perfectly related, they clump up in a line.

224
00:17:16,880 --> 00:17:19,880
If they're just a little related, then they only clump up a little bit.

225
00:17:19,880 --> 00:17:23,880
And if they are not related at all, they don't clump.

226
00:17:23,880 --> 00:17:29,880
So that's really the synthesis here is that instead of doing things that we know are
related,

227
00:17:29,880 --> 00:17:32,880
we check and see if other things are related.

228
00:17:33,880 --> 00:17:38,880
Here I have the—we just make four—okay.

229
00:17:38,880 --> 00:17:42,880
Since clumping equals relatedness, all we do is measure these two things at once,

230
00:17:42,880 --> 00:17:44,880
and we look for the clumping.

231
00:17:44,880 --> 00:17:46,880
And if there's clumping, that means the events are related.

232
00:17:46,880 --> 00:17:51,880
So we make four different event-derivative markets, one for each of the grids here,

233
00:17:51,880 --> 00:17:54,880
and we get a market price for each, and then we just look for this clumping.

234
00:17:54,880 --> 00:17:57,880
And that's basically the synthesis here, which is the short part,

235
00:17:57,880 --> 00:18:01,880
which is that with some arithmetic you can just add two numbers and divide them,

236
00:18:01,880 --> 00:18:06,880
and you can get out of this something that's very, very easy for the layperson to
understand.

237
00:18:06,880 --> 00:18:08,880
They'll never have to see anything complex.

238
00:18:08,880 --> 00:18:11,880
They just see a bunch of numbers that go up when the candidate is better

239
00:18:11,880 --> 00:18:14,880
and go down when the candidate is much worse.

240
00:18:14,880 --> 00:18:19,880
And that is how you get these numbers to show up that I mentioned at the beginning
of the talk.

241
00:18:19,880 --> 00:18:25,880
And so now I have two minutes left, I think, and I'm going to talk about this last
part,

242
00:18:25,880 --> 00:18:28,880
which is why anyone will care about this.

243
00:18:28,880 --> 00:18:31,880
So why would laypeople check their phones on election day?

244
00:18:31,880 --> 00:18:35,880
Well, if they're already in line, then actually this is the first Google result for
election line,

245
00:18:35,880 --> 00:18:37,880
and there's already people who are just on there.

246
00:18:37,880 --> 00:18:39,880
These people will be glued to their phones the whole time.

247
00:18:39,880 --> 00:18:41,880
So that's a small ask.

248
00:18:41,880 --> 00:18:43,880
People are basically on their phone all the time.

249
00:18:43,880 --> 00:18:47,880
But why would they navigate their phone to these particular prices and not just
ignore them,

250
00:18:47,880 --> 00:18:54,880
the same way they ignore every other piece of information that falls under this
category of research that I mentioned before?

251
00:18:54,880 --> 00:18:59,880
Well, basically, let's see here.

252
00:18:59,880 --> 00:19:02,880
In a nutshell, the voter turnout rate is super low,

253
00:19:02,880 --> 00:19:07,880
and it's so low that the people who don't vote could basically form their own
political party

254
00:19:07,880 --> 00:19:10,880
that would defeat both of the other parties combined.

255
00:19:10,880 --> 00:19:15,880
So you really aim for these people who are just totally overwhelmed and apathetic
and don't know what to do.

256
00:19:15,880 --> 00:19:17,880
And I think that really describes most people,

257
00:19:17,880 --> 00:19:25,880
especially when you consider that fact about 71% of Americans not even knowing who
their congressional representative is,

258
00:19:25,880 --> 00:19:27,880
even though everyone hates the government.

259
00:19:27,880 --> 00:19:30,880
So I think that's the only way to explain all those things.

260
00:19:30,880 --> 00:19:32,880
The victory margins are very narrow.

261
00:19:32,880 --> 00:19:38,880
So even if you don't get every single nonvoter to form a party, you could still do
very well.

262
00:19:38,880 --> 00:19:42,880
And finally, you can ramp this up by betting on other stuff that people like

263
00:19:42,880 --> 00:19:46,880
until they get more comfortable with this institution, and then there you go.

264
00:19:46,880 --> 00:19:53,880
And that's basically—oh, yes, one final thing, and I think I have like 30 seconds
left, so it's perfect, perfect timing,

265
00:19:53,880 --> 00:19:57,880
which is that this idea makes rhetoric irrelevant.

266
00:19:57,880 --> 00:20:01,880
So, for example, let me skip to bullet point number three.

267
00:20:01,880 --> 00:20:06,880
If a politician announces that they want everyone to die and that they plan to kill
everyone, that's fine,

268
00:20:06,880 --> 00:20:10,880
but if the traitors don't actually believe that they will follow through or they
will or can follow through with this,

269
00:20:10,880 --> 00:20:15,880
then the number won't actually budge an inch because you're speculating on stuff
that will happen.

270
00:20:15,880 --> 00:20:17,880
The derivatives only pay if it actually happens.

271
00:20:17,880 --> 00:20:21,880
So everything that politicians say can just be safely ignored.

272
00:20:21,880 --> 00:20:27,880
And laypeople already know that politicians are liars, so I think they will actually
warm up to this idea pretty quickly.

273
00:20:27,880 --> 00:20:29,880
Okay, that's the talk.

274
00:20:29,880 --> 00:20:31,880
Thank you.