It is a little bit unfair to say that buying 10 bicoins was everything you needed to do. I owned 10 bitcoins, and then sold them at a meager price. Nothing changed as a result of me merely understanding that buying bitcoins was a good idea.
What you really needed was to sit down and think up a strict selling schedule, and also commit to following it. E.g. spend $100 on bitcoin now, and later sell exactly 10% of your bitcoins every time that 10% becomes worth at least $10,000 (I didn't run the numbers to check if these exact values make sense, but you get the idea).
Upstream of not taking effective action was unwillingness to spend a few hours thinking hard about what would actually be smart to do if the hypothetical proved true.
A good general rule here is to think in terms of what percentage of your portfolio (or net worth) you want in a specific asset class, rather than making buying/selling a binary decision. Then rebalance every 3 months.
For example, you might decide you want 2.5%-5% in crypto. If the price quadrupled, you would well about 75% of your stake at the end of the quarter. If it halved, you would buy more.
The major benefit is that this moves you from making many small decisions to one big decision, which is usually easier to get right.
I agree that this is the appropriate strategy to use when adding an investment to your portfolio, but note that if applied to Bitcoin it did not yield the sort enormous gains that motivated this post. So if you think the Bitcoin example should lead us to update away from outside-view-motivated beliefs about our ability to spot market inefficiencies/investment opportunities, you should probably also endorse updating away from outside-view-motivated portfolio strategies like picking an allocation and rebalancing.
I just ran some numbers on this. Suppose you had $100k in savings, read the 2011 LessWrong post and were convinced to adopt a 95% cash 5% bitcoin allocation at the end of Q1 2011, and thereafter rebalanced on the last Monday of every quarter. (Assume for simplicity that your non-Bitcoin holdings earn zero interest, that you don't add or remove any money from your total savings during the period, and that you successfully avoided having your BTC stolen in MtGox etc.) If you ignore taxes, then at the end of 2017 you'd be left with $414k, which is decent but not life-changing. Further, since you're rebalancing every quarter you're paying a lot of taxes if...
In my case, it was about not-so-trivial inconveniences. Like Richard, I couldn't install the software and didn't know a reliable place to buy. A few months ago, when a friend sent me a link to BitStamp and explained what to do, I bought some BTC, which are currently at triple the price I bought them. Nice, but not as nice as if the same thing would have happened a few years sooner.
(I am in a similar situation with index funds right now. I agree that it is a good idea to buy them. I just don't know where exactly to go, what exactly to do, and what exactly will be the consequences for taxes. I am not an American, so I would need specific information for my country.)
But it is also my fault for not paying enough attention to this specific topic. Not realizing that this article is not the same as 99.99% of the rest; that this is the right moment to stop reading web and actually do something.
Some of us were smarter than others. Good for them! But if we want to help each other, and avoid having the same thing happen the next time, next time when you see an exceptionally important article, don't just think "others have read the same article, and they are smart peop...
This post is interesting to me, because I feel strong resistance to acting as you suggest. (Background: I made a lot of money from buying Ether at $0.80, but was into crypto before I was into rationalism.)
I think my intuition is some sort of fear of social risk? I'm mostly willing to tell people what I think the right move is, but if they're not motivated to figure out the details themselves, then I worry that they will be upset if the most likely outcome (losing 100% of their money) happens, and that I'll bear the social cost.
I'm one of the 3% who made over $100K (I made ~$500K).
I have to agree with other commenters that it was genuinely difficult to buy the cryptocurrency in the first place. It took me about 5 solid hours to learn how it worked, and then several days to funnel the currency through the various necessary conversions, any of which might've unexpectedly eaten my hard-earned cash for some incomprehensible reason.
In hindsight it's easy to see this as "5 hours' work for $100,000/hour, plus some waiting", but at the time there was no such guarantee of success. The only reason I persisted was because I was interested in the cryptography aspect and wanted to be a part of an up-and-coming technology.
To take a different set of data points in the community, MIRI and CFAR easily filled up their respective funding gaps recently (largely as a result of crypto), and if this continues to be the new normal then I'll consider us to have passed fairly well (maybe a B+). If it's a one off hit then I'll agree to the C grade.
Edit: Fixed the links.
I can't click your link, but I disagree. MIRI got most of its money from Vitalik, who I think was into crypto first and then found rationality/LW. We don't get any credit for that.
Also, MIRI got a 500,000 dollar (why can't I make the dollar sign on this site?) worth of Ripple donation in 2014. If they had kept it as Ripple, it would be worth 50 million now. Instead they sold it for 500,000 dollars (I'm not blaming them, this made sense at the time).
So although MIRI and CFAR lucked out into getting some money from crypto, I don't think it was primarily because of their (or our) great decisions. And if people had made great decisions they could have gotten much more.
Taking my place in history - one of my first tasks as an intern at MIRI was to write some ruby scripts that dealt with some aspects of that donation.
Not only did that experience land me my first programming job, but just realizing now that it was also the impetus that led me to grab more bitcoin (I had sold mine at the first peak in 2013) AND look into Stellar. Probably the most lucrative internship ever.
(Shoutout to Malo/Alex if you guys are still lurking LW)
MIRI got most of its money from Vitalik
While not technically part of the winter fundraiser, don't forget that MIRI also got a million dollar ETH donation in the spring. For the year, it's more than half crypto, even after accounting for the 1.25M from Open Phil.
Maybe this is nitpicking, but per their post MIRI got a plurality of cryptocurrency from Vitalik but not a majority. If the website is accurate, then out of 66% of the funds raised ($1.656m) Vitalik contributed $763k, the other $893k of cryptocurrency being from other donors.
You can't write a dollar sign because it's interpreted as "start writing mathematics". But if you type a backslash first it gets escaped and you get the dollar sign you hoped for: $.
I think it says something good about our community that whoever implemented this feature assumed people would be more likely to want to write mathematics than to discuss amounts of money.
Nope, not custom-written. We are using this plugin: https://github.com/efloti/draft-js-mathjax-plugin
However, I did consider whether to change the behavior of pressing '$' and decided that people would probably use LaTeX more often than trying to use the dollar sign, and so was reasonably happy with that default behavior.
This is pretty low on the list of opportunities I'd kick myself for missing. A longer reply is here: https://www.facebook.com/yudkowsky/posts/10156147605134228
A hindsight solution for rationalists to have reduced the setup costs of buying bitcoin would have been either to have had a Rationalist mining pool or arrange to have a few people buy in bulk and serve as points of distribution within the community.
This suggests that if a future opportunity appears to be worth the risk of investment, but has some barrier to entry that is individually costly but collectively trivial, we ought to work first to eliminate that barrier to entry, and then allow the community to evaluate more dispassionately on risk and return alone.
I suspect it was the trivial inconveninece of setting it up that stopped most of those who were considering it.
I remember reciting "beware trivial inconveniences" to myself in my head when I went through the process of figuring out how to buy BTC in December 2010. It was good advice.
Yeah. I was wondering if I get any points for spending two or three evenings back in 2014 trying to get some bitcoin and failing due to the complete crappiness of the user experience.
I mean, you get points for trying, but those points don't go to your final grade. Your final grade is only ever determined by reality, and if you didn't make millions because of a trivial inconvenience, then you didn't make millions.
I found the inconvenience more than trivial. I made several attempts over the life of Bitcoin to either mine some (back when that was practical for anyone) or buy some, but my efforts always ran into the sand. The software didn't work, or the web sites didn't look like credible places to send substantial sums of money to, or whatever. Scandals like Mt Gox didn't help. Of course, plenty of people did get past those hurdles, so I can't blame anyone but myelf.
I did finally manage to buy a token quantity of Bitcoin a few months ago, but I expect the boom is now over. I haven't bothered tracking the price since then. I've even had ads for digital coins in my Facebook feed, targetted at the general public (eww!). In fairness to Bitcoin, they mostly looked like scams with little likelihood of doing anything with their customers' money but keeping it.
It's multiple risks, each singly counted. Bitcoin in general is risky for definite reasons: volatility, the possibility that governments will come down hard on it, security of the cryptography it depends on, etc. But any particular method of operating in Bitcoin has its additional risks of the probity and security of those involved. My unconfidence in some of the cryptocurrency dealers I looked at was not simply because they were cryptocurrency dealers.
I bought 200 BTC and lost them in a hack. Later bought 50 ether and kept them in a wallet, so I still have those. In light of that, I'd say security was pretty important!
I think a large part of what prevented many people from investing in Bitcoin may have been the epistemic norms commonly referred to nowadays as "the absurdity heuristic", "the outside view", "modest epistemology", etc. In other words, many of us may have held the (subconscious) belief that it's impossible to perform substantially better than the market, even in situations where the Efficient Markets Hypothesis may not fully apply. To put it another way:
Well, suppose God had decided, out of some sympathy for our project, to make winning as easy as possible for rationalists. He might have created the biggest investment opportunity of the century, and made it visible only to libertarian programmers willing to dabble in crazy ideas. And then He might have made sure that all of the earliest adapters were Less Wrong regulars, just to make things extra obvious.
I think many of us considered this, and unconsciously dismissed it due to the obvious absurdity: surely things can't be that easy, right? Sure, we may be rationalists, and sure, rationalists "ought to win", but surely winning can't be so easy that the opportunity to win literall...
There's something I should note that doesn't come through in this post: one of the reasons I was interested in Bitcoin in 2011 is because it was obvious to me that the 'experts' (economists, cryptographers, what have you) scoffing at it Just Did Not Get It.
The critics generally made blitheringly stupid criticisms which showed that they had not even read the (very short) whitepaper, saying things like 'what if the Bitcoin operator just rolls back transactions or gets hacked' or 'what stops miners from just rewriting the history' or 'the deflationary death spiral will kick in any day now' or 'what happens when someone uses a lot of computers to take over the network'. (There were much dumber ones than that, which I have mercifully forgotten.) Even the most basic reading comprehension was enough to reveal most of the criticisms were sheer nonsense, you didn't need to be a crypto expert (certainly I was not, and still am not, either a mathematician or C++ coder, and wouldn't know what to do with an exponent if you gave it to me). Many of them showed their ideological cards, like Paul Krugman or Charles Stross, and revealed that their objections were excuses because they disliked the po
...I bought 10 bitcoins back around 2012. I forget the exact date, but they were around ten dollars each. Today, that investment is worth zero dollars, because those bitcoins were in Mt Gox.
My point: there may be a nontrivial chunk of LWers who correctly predicted where bitcoin would go, but still ended up without any significant profit. (That actually would not include me; I just got into it to test a trading algorithm, then left a few bitcoins sitting around after the test was done.)
Collectively the community has made hundreds of millions from cypto. But it did so by getting a few wealthy people to buy many bitcoin, rather than many people to buy a few bitcoin. This is a more efficient model because it avoids big fixed costs for each individual.
It also avoid everyone in the community having to dedicate some of their attention to thinking about what outstanding investment opportunities might be available today.
Due to declining marginal returns, hundreds of millions is a substantial fraction as good as billions. So I think we did alright.
If you're considering the welfare of the individuals concerned: "a few wealthy people make multiple millions" is not as good an outcome as "dozens of not-so-wealthy people make hundreds of thousands" because of diminishing marginal returns.
If you're considering cryptocurrency gains only as fuel for effective altruism or something, then "a few wealthy people make multiple millions" might be as good an outcome, but then it's no longer so plausible that "hundreds of millions is a substantial fraction as good as billions".
If you're considering cryptocurrency gains only as fuel for some narrow kind of effective altruism (say, donations to help AI safety work) then both halves might be right, but then it seems reasonable to ask whether those hundreds of millions have in fact gone to AI safety donations. My impression is that most of the money has just gone into the personal fortunes of the people who bought cryptocurrency. That's fine, but if so then I think we're back with my first paragraph.
I have some Bitcoin, and have made some money on Bitcoin[1], and am currently a software engineer at a Bitcoin startup, where I've been working since the beginning of 2015.
I have complicated feelings about this. Obviously I invested in Bitcoin because I thought it was +EV, and I did make a nice profit by doing so. That doesn't necessarily mean I was correct to imagine that it was +EV, and I struggle to understand whether my choices were reasonable or just lucky. I think Eliezer's recent sequence about adequacy probably has something useful to say about this. But I also think that a lot of Bitcoin and cryptocurrency behavior is fundamentally a function of the psychology of the market, rather than actual value, and the psychology of the market is a dangerous thing to bet on.
Of course, it's not wrong to take dangerous bets with good upside. Ultimately I think cryptocurrency investing may or may not have been the correct decision for people depending on their circumstances. There's no conventional wisdom or obvious right answer to fall back on.
I might have more to say on this later.
[1] Bitcoin is very hard to store safely. Don't ask anybody how much Bitcoin they have (at least in public non-anonymously). They would be very foolish to disclose it, and the more it is the more foolish they would be.
Many people pointed out that the real cost of a Bitcoin in 2011 or whenever wasn't the couple of cents that it cost, but the several hours of work it would take to figure out how to purchase it. And that costs needed to be discounted by the significant risk that a Bitcoin purchased in 2011 would be lost or hacked - or by the many hours of work it would have taken to ensure that didn't happen. Also, that there was another hard problem of not selling your 2011-Bitcoins in 2014. I agree that all of these are problems with the original post, and that they significantly soften the parts that depend on "everyone should have bought lots of Bitcoins in 2011". Obviously in retrospect this still would have been the right choice, but it makes it much harder to claim it was obvious at the time.
I wrote about this post extensively as part of my essay on Rationalist self-improvement. The general idea of this post is excellent: gathering data for a clever natural experiment of whether Rationalists actually win. Unfortunately, the analysis itself is very lacking and is not very data-driven.
The core result is: 15% of SSC readers who were referred by LessWrong made over $1,000 in crypto, 3% made $100,000. These quantities require quantitative analysis: Is 15%/3% a lot or a little compared to matched groups like the Silicon Valley or Libertarian blogosphere? How good a proxy is Scott's selection for people who were on LessWrong when Bitcoin was launching and had the means to take advantage of the opportunity? How much of a consensus on LessWrong was the advice to buy cryptocurrencies? These are all questions that one could find data on (I did a bit of it in my own post), but the essay does no such thing. Scott declares by fiat that 15% earns the community a C grade, with very little justification provided. This conclusion aligns perfectly with what Scott previously opined on the utility of Rationality to things like making money, which doesn't engender confidence in th...
When this article came out, I put a bit of money into alternate cryptocurrencies that I thought might have upside. They are now worth less than I invested.
I think it's good to review how you did in the past, but it's important not to overlearn specific lessons. In retrospect, I think that this article should have put more emphasis on that point.
I think the percentages of 'successful' LW readers need to be recalculated. What percentage of LW readers were in the SSC survey, but started reading LW after the most profitable window for buying bitcoin had already passed? What percentage were students with no spare funds in 2011, or otherwise had too little risk tolerance to invest?
I started reading LW in 2014, took the advice of the 2015 post to the extent I could, but was only able to make a little money because I didn't have any savings and 1 bitcoin was worth $200. Later, I heard about ethereum very early on from a friend who bought a bunch and was interested in investing myself, but was in the midst of a job transition where I again had no spare cash to invest. I only reported having acquired about $1000 from crypto on the survey, but I count myself as having done about as well as I could have, given circumstances and timing.
My biggest takeaway is that there's a chance I can beat markets which as far as I could tell ought to have been pretty efficient, so I'm personally going to attempt to do that more often in the future until I get evidence that it's not working.
15% seems like a lot.
Maybe I have that impression because I tend to reach for a null hypothesis as my default model, which in this case is that LWers would do no better with cryptocurrency than other people who had similar levels of interest in tech. And 15% of people making $1000+ is way more than I would predict on that model.
At the time I took the survey I would have answered that I made no money out of cryptocurrency. Since then, I found out that some free cryptocurrency I had forgotten about, which was worth less than $10 at the time, is now worth several thousand. Given that I went to the (small) effort of noticing and signing up for the giveaway, but only did the long-term-hold strategy by accident, I'll give myself a D+. I'm also too lazy to sell it for now so hopefully there isn't a hard crash.
It's one thing to know when to buy, it's another to know when to sell. In hindsight buying at 1.00 made sense with gwern's logic,(I don't think I had even heard about bitcoin let alone gwern's argument at the time) but what happens when it rises to 100.00? In that case, the same logic would tell you to sell, in which case if you had invested 100.00 you'd have made 10,000.00, hardly a life-changing sum. To have made it to 100,000.00 you'd have had to sit and watch as that not inconsiderable sum bounces around the hundreds ...
Just for posterity and to try to make the success rate better next time, you should IMO seriously look at Ethereum now and decide what you make of it. Blockchain-based ledgers of stuff still seem to me like a good idea, the market has validated that opinion, and Ethereum is technically far in the front of the curve. (Some competitors, e.g. Tezos, Cardano have reasonable-sounding ideas but are way behind in terms of actual implementation and developer manpower being applied.) In the next two years we should see whether Ethereum's scaling plans work out...
It seems like a good idea to collect self-reports about why LessWrongers didn't invest in Bitcoin. For my own part, off the top of my head I would cite:
So something like We Agree: Get Froze, might...
I didn't invest in Bitcoin because I don't invest in things that I don't understand well enough to be confident that the Efficient Market Hypothesis doesn't apply. I continue to believe this is a rational choice-- okay, sure, this one time I might have made a lot of money, but most of the time I would waste a bunch of money/time/other resources. And no one writes blog posts about how they could have lost a lot of money but didn't, so the availability heuristic is going to overweight successes.
I do not think this is a strong analysis. Things were a lot more complicated than this, on many levels. Analyzing that in detail would be more interesting. This post seems more interested in the question of 'what grade should we get for our efforts' than in learning from the situation going forward, which is what I think is the far more interesting problem.
That's not to say that the actual evaluation is especially unfair. I give myself very low marks because I had the trading skills to know better, or I should have had them, and the spare c...
This post has been a clear example of how rationality has and has not worked in practice. It is also a subject of critical practical importance for future decisions, so it frequently occurs to me as a useful example of how and why rationality does and does not help with (in retrospect) critical decisions.
Very interesting, and I kind-of agree with the conclusion. However, as a few people pointed out, it wasn't as simple as just buying bitcoin, you had to sell at the right time, etc.. And buying bitcoin was complicated.
But the other problem is that there are thousands of opportunities, things you should do, etc, lying around, with a possibly good payoff in expected value terms. And how many of them do we do? How many of them do we even think about seriously?
Just a few off the top of my head (first two are obvious, then some others):
I thought Bitcoin, specifically, was a bubble/pyramid scheme. I still think so, as well as thinking it's a colossal waste of energy.
Obviously, that doesn't mean I couldn't have gotten rich by buying it, or that I wouldn't want to do so. And I've also adjusted my beliefs; I think I understand how it has failed to crash, and so I could imagine it continuing to have something like its current value for even 5 or 10 years more.
But it is very, very hard for me to imagine a world in which I am able to make a large pile dollars from some...
This post distinguishes between the success of the LW community on identifying crypto and the relative failure on acting on crypto in a way that reminds me of how important it is to actually act on information instead of just processing it mentally.
I think this failure mode of understanding a problem but failing to act on that understanding is a very common one for me and I would expect for other readers. I think both emphasizing that this is a part of the problem to be solved, and illustrating specific benefits from solving that problem in a historical co...
When such a situation arises again, that there's an investment opportunity which is generally thought to be worth while, but which has a lower than expected uptake due to 'trivial inconveniences', I wonder whether that is in itself an opportunity for a group of rationalists to cooperate by outsourcing as much as possible of the inconvenience to just a few members of the group? Sort of:
"Hey, Lesswrong. I want to invest $100 in new technology foo, but I'm being put off by the upfront time investment of 5-20 hours. If anyone wan...
>When I first saw the posts saying that cryptocurrency investments were a good idea, I agreed with them. I even Googled "how to get Bitcoin" and got a bunch of technical stuff that seemed like a lot of work. So I didn't do it.
Hum. I believed on various "weak efficient market" arguments, that this Bitcoin was unlikely to be profitable. So I didn't invest. Does this makes me worse or better? I had worse epistemics, but it wasn't a failure to act on things I thought I were true...
It's not like the opportunity is gone. Making money on blockchain hype is still easy enough. But it feels more like a bubble/scam now, so I'm out.
Who is our control group? I can think about two candidates:
1) "Rational"Wiki
David Gerard (RW admin) writes articles about how you can't actually sell Bitcoins, and those articles get highly upvoted on Hacker News. I would take that as a weak evidence he doesn't have any.
2) Logic Nation
Athene (some guy who tried some weird financial scheme on LW, and then started his own cult) is selling his own cryptocurrency (actually, two of them; you can use the former to buy the latter).
Seems to me that Less Wrong is somethere in the middle. I guess...
So this is where we are. Cryo: some are taking it seriously, but not enough. The bet is still open, but yet to pay off. Cryptocurrency: some took it seriously, but not enough. The bet paid off magnificently in the past. It may still be open to a significant extent, though maybe not with BTC.
Are there any candidates for a current thing in the category of things that someone informed about, smart, and having comparative advantage should be leaping into? Broadening from personal gain (although that's my interest here), maybe x-risk, AGI x-risk, defeating aging, and EA would count. Anything else?
I got a lot of extremely valuable rationality advice from Lesswrong, but even if I had read the arguments about Bitcoin, I would not have bought any. Like someone else said, it feels too much like a penny stock.
You migh call Bitcoin "Pascal's Investment Scheme"
This is a very important post to read concerning Bitcoin "billionaires", from one of the guys who helped code its software:
Not as rich as you think… - http://gavinandresen.ninja/not-as-many-as-you-think
It goes like this:
People assume that the people who worked on Bitcoin in the early years are fabulously wealthy.
That’s a bad assumption, for lots of reasons:
Thanks for rubbing salt in the wound. (Only a tiny bit serious.)
Back when mining was possible on a standard desktop computer I mined a block in my first week, and received 50 bitcoins. A couple years later, I found that bitcoins were trading at the mind-blowing sum of $1 each, and cashed in. (In my pitifully weak defense, I was really short on money at the time.)
If I had done something sensible, like sold a few each time the price went up 10x, I'd have a pile of cash and probably some bitcoins left.
Weep for me, oh ye internets.
I'm one of the 15%. Given declining marginal utility of money , high-risk-high-financial-reward bets have never appealed to me; the financial EV would have to be ridiculously high for the EV in utilons to be positive. I considered getting some BTC as a curiosity in 2011 but decided it was too much hassle. However discussions in the aftermath of the 2016 election led me to conclude that holding a small amount of cryptocurrency could decrease overall risk by mitigating certain legal risks (e.g. money you can memorise might be good to have if you'...
1: Our epistemic rationality has probably gotten way ahead of our instrumental rationality
I would defend the instrumental rationality of having a rule of thumb that unless you're quite wealthy, you don't bother looking into anything that appears to be a 'get rich quick' scheme, or seek to invest in high-risk high-return projects you can't evaluate.
Yes sometimes it will fail big, if you miss the boat on bitcoin, or Facebook or whatever. Every strategy fails in some scenarios. Sometimes betting it all on 23 red will have been the rig...
Is this taking the assumption that it was a sound investment based on its underlying value and therefore predictable? Or is this saying that the explosion in price was predictable even if unjustified?
My belief on bitcoin is that it isn't a viable fiat currency alternative and won't be (nor will any other crypto) because governments won't allow it. I believe this because it wouldn't make sense for a central bank to volunarily give up one of its few economic levers. A government could kill the bull proposition for bitcoin by making it ill...
I am not convinced that people in 2011 should have bought bitcoin. If you gave 2011 me the epistemic skills of 2018 me, I would not have bought bitcoin. I don't know how one could reliably distinguish bitcoin from, say, a penny stock that makes promises of 10,000x growth.
Or perhaps a slightly stronger argument would be venture capital. Many startup founders have plausible stories of why their company will one day be worth billions of dollars. Surely it's worth investing even if there's a 0.1% chance that they are correct? But if VCs invested...
I decided to buy only 0.5 BTC in 2013 as I thought that buying more will require too much my mental energy to think about how the exchange rate changes. The truth is that I still think about it a lot.
I also read a post about Davos-2018 where was said that older people think that all problems will be solved by AI, and younger ones think that blockchain will solve everything. Surely, LW people are more inclide to think that AI will solve everything and it explains the ignoring of bitcoin.
Wei Dai, one of the first people Satoshi Nakamoto contacted about Bitcoin, was a frequent Less Wrong contributor. So was Hal Finney, the first person besides Satoshi to make a Bitcoin transaction.
The first mention of Bitcoin on Less Wrong, a post called Making Money With Bitcoin, was in early 2011 - when it was worth 91 cents. Gwern predicted that it could someday be worth "upwards of $10,000 a bitcoin". He also quoted Moldbug, who advised that:
A few people brought up some other points, like that if it ever became popular people might create a bunch of other cryptocurrencies, or that if there was too much controversy the Bitcoin economy might have to fork. The thread got a hundred or so comments before dying down.
But Bitcoin kept getting mentioned on Less Wrong over the next few years. It's hard to select highlights, but one of them is surely Ander's Why You Should Consider Buying Bitcoin Right Now If You Have High Risk Tolerance from January 2015. Again, people made basically the correct points and the correct predictions, and the thread got about a hundred comments before dying down.
I mention all this because of an idea, with a long history in this movement, that "rationalists should win". They should be able to use their training in critical thinking to recognize more opportunities, make better choices, and end up with more of whatever they want. So far it's been controversial to what degree we've lived up to that hope, or to what degree it's even realistic.
Well, suppose God had decided, out of some sympathy for our project, to make winning as easy as possible for rationalists. He might have created the biggest investment opportunity of the century, and made it visible only to libertarian programmers willing to dabble in crazy ideas. And then He might have made sure that all of the earliest adapters were Less Wrong regulars, just to make things extra obvious.
This was the easiest test case of our "make good choices" ability that we could possibly have gotten, the one where a multiply-your-money-by-a-thousand-times opportunity basically fell out of the sky and hit our community on its collective head. So how did we do?
I would say we did mediocre.
According to the recent SSC survey, 9% of SSC readers made $1000+ from crypto as of 12/2017. Among people who were referred to SSC from Less Wrong - my stand-in for long-time LW regulars - 15% made over $1000 on crypto, nearly twice as many. A full 3% of LWers made over $100K. That's pretty good.
On the other hand, 97% of us - including me - didn't make over $100K. All we would have needed to do was invest $10 (or a few CPU cycles) back when people on LW started recommending it. But we didn't. How bad should we feel, and what should we learn?
Here are the lessons I'm taking from this.
1: Our epistemic rationality has probably gotten way ahead of our instrumental rationality
When I first saw the posts saying that cryptocurrency investments were a good idea, I agreed with them. I even Googled "how to get Bitcoin" and got a bunch of technical stuff that seemed like a lot of work. So I didn't do it.
Back in 2016, my father asked me what this whole "cryptocurrency" thing was, and I told him he should invest in Ethereum. He did, and centupled his money. I never got around to it, and didn't.
On the broader scale, I saw what looked like widespread consensus on a lot of the relevant Less Wrong posts that investing in cryptocurrency was a good idea. The problem wasn't that we failed at the epistemic task of identifying it as an opportunity. The problem was that not too many people converted that into action.
2: You can only predict the future in broad strokes, but sometimes broad strokes are enough
Gwern's argument for why Bitcoin might be worth $10,000 doesn't match what actually happened. He thought it would only reach that level if it became the world currency; instead it's there for...unclear reasons.
I don't count this as a complete failed prediction because it seems like he was making sort of the right mental motion - calculate the size of the best-case scenario, calculate the chance of that scenario, and realize there's no way Bitcoin wasn't undervalued under a broad range of assumptions.
3: Arguments-from-extreme-upside sometimes do work
I think Moldbug's comment aged the best of all the ones on the original thread. He said he had no idea what was going to happen, but recommended buying ten bitcoins. If Bitcoin flopped, you were out $10. If it succeeded, you might end up with some crazy stratospheric amount (right now, ten bitcoins = $116,000). Sure, this depends on an assumption that Bitcoin had more than a 1/10,000 chance of succeeding at this level, but most people seemed to agree that was true.
This reminds me of eg the argument for cryonics. Most LWers believe there's a less than 10% chance of cryonics working. But if it does work, you're immortal. Based on the extraordinary nature of the benefits, the gamble can be worth it even if the chances of success are very low.
We seem to be unusually fond of these arguments - a lot of people cite the astronomical scale of the far future as their reason for caring about superintelligent AI despite the difficulty of anything we do affecting it. These arguments are weird-sounding, easy to dislike, and guaranteed to leave you worse off almost all the time.
But you only need one of them to be right before the people who take them end up better off than the people who don't. This decade, that one was Bitcoin.
Overall, if this was a test for us, I give the community a C and me personally an F. God arranged for the perfect opportunity to fall into our lap. We vaguely converged onto the right answer in an epistemic sense. And 3 - 15% of us, not including me, actually took advantage of it and got somewhat rich. Good work to everyone who succeeded. And for those of us who failed - well, the world is getting way too weird to expect there won't be similarly interesting challenges ahead in the future.