What might happen in the coming year? What might happen in the next decade? Maybe what might happen in the next century? Is there anyone who can give you an answer? Of course not, otherwise they would be locked in some bunker 24 hours a day working for the CIA or some other three-letter agency.
One of the main attractions of reading a news article, blog post, or other type of reporting is the promise of something new at the end of the reading. Whether it's a recipe, or advice on dealing with a broken appliance, or even just a laugh, you're clicking to unknowingly extract value from the author.
You might describe the concept of online reading as a form of 21st century fortune-telling, a practice that began long ago when a large portion of the world had absolutely no idea how anything worked or the next day what happens. People were attracted to fortune telling because in those days, they didn't have therapists.
But instead of describing article writing as a form of handing out wealth advice, I want to go a little deeper and think about our history and obsession with understanding the future and why it's so important.
When you think of a fortune teller, you probably picture someone dressed like a wizard in some dark room, talking to the ceiling and rolling their eyes - but that's not the case. Modern fortune-telling is a farce; it is nothing but the shell of what it once was, as the onslaught of modern society strips the entire profession of hard-working and well-meaning fortune-telling. Let me explain.
When it comes to fortune telling, there is an important distinction as there are two different types that are quite different from each other. On the one hand there are spiritual, fortune tellers popular in the media, which probably make up your understanding of the industry as a whole. On the other hand, there are those people I mentioned earlier, who predict the future is a good thing, helping people to better see the inherent uncertainty of life. Sure, that's their job, but isn't that the therapist's job? They'll show you how to make sense of your chaotic life and give you words to make you feel better. The latter does not cure everyone, but it works for many. This is what a fortune teller does.
As you can probably guess, Type 1 fortune tellers quickly make a bad impression on Type 2 fortune tellers. As people get smarter and technology develops to give us a better understanding of the world, another class of fortune tellers cannot fill the need. Spoiler alert: they can't actually tell the future, and they can't do any better than that, except with good luck with their uneducated guesswork. With the passage of time, the fortune-telling profession gradually became obsolete, becoming a distant memory of the past. There are still plenty of fortune tellers out there, and maybe some of them can predict the future, but I find it hard to believe that anyone with superhuman abilities would sell themselves for $60 an hour in California.
David Foster Wallace wrote a really great short story that involves predicting the future. In "Another Pioneer," a man recounts a story he overheard told by another man who overheard him on a plane. The story is really interesting, I'll make a short summary.
A long time ago, a child was born in a primitive village in the world. This child possessed extraordinary intelligence and was different from anyone in the village. By the time the child was two or three years old, he was already able to answer any question—a stark contrast to his peers who had traveled around the Paleolithic and learned the ins and outs of village life.
This kid doesn't have average intelligence, because his intelligence goes beyond being able to answer basic arithmetic questions or any other ridiculous thing a smart kid can do. The child was able to give very convincing answers to questions that no one else knew the answers to, from what types of branches were used to hunt specific animals, to the cultural importance of various items collected in the village. Before long, people in the village start asking the child more important or profound questions, often involving moral conundrums or religious questions that have remained unanswered since ancient times. The child was treated like a god.
The village eventually builds a platform for the kid, and families and individuals will come to him with questions that desperately need answers—but only every "29.518 days" to keep him from burning out. The kid never leaves the platform.
Because of the child's ingenuity, the collective intelligence of the village has also grown with the progress of life in the village. Primitive tools, habits, and various other ways of life were eliminated, replaced by advanced technology and the answers given by this child, and the village developed rapidly. Consultation "hierarchies" have even emerged, providing common villagers with more efficient ways to ask questions to get the most out of their monthly inquiries. Of course there is a fee.
Ultimately, the story digs deep into the fact that because the man overheard the story on an airplane, so many parts are uncertain, the story splits into three parts in the middle, each ending with A child is asked an incomprehensible question by a shaman (a person believed to be able to communicate with gods of good and evil and to heal diseases) that changes his life forever. The child refused to answer any questions for months.
After waking up from a brief period of hibernation, the child shocked the village with a drastic change in the way he answered questions. In the past, to avoid conflict with the villagers, the child would answer the questions directly, but now, he will answer the questions with a second or third level answer, which is often the exact opposite of what the villagers want from him. As you can imagine, this irritated and caused quite a stir among the people in the village - they didn't have the uncanny ability to understand these new answers. This goes on for a while until the kid throws yet another curve ball at the villagers, answering questions with his own questions or devolving into rambling statements that the villagers get nothing out of.
Long story short, in the process of gaining new knowledge, the village ends up falling apart and the kid never leaves his platform and ends up dying.
I really like this short story because it's a real thinker exploring the idea of what humanity might become if it had the answers to all its questions. Is suddenly omniscient a bad thing? Is it better to cling to the constant thread of hope without fully knowing what to do or what will happen?
But how does this play out in modern society? What does it mean to have answers to all the questions?
Think of those dime-and-a-dozen stock articles you see on sites like The Motley Fool. They will tell you what stocks to buy, when to buy, and when to sell, 15 times a day. do you know? There are thousands of people clicking on these ads, getting a little dizzy at the thought of getting a 50% return on a stock like Carvana or Roblox without doing any due diligence. But that's how traditional markets work. Financial advisors do the same, though their semi-educated guesses are more carefully planned.
And I don't mean institutions, I mean the private financial institutions that your parents will beg you to work for after hearing the news of FTX's bankruptcy. They have a plan, pitch their customers, and hope it goes well, while telling everyone "everything will be fine, the market always sorts itself out in the long run."
Just as fortune tellers can blatantly lie to thousands of unsuspecting people with impunity, money managers and family offices can often get horribly wrong, perhaps even more horribly wrong than weather forecasters, and get away with it.
However, there's nothing wrong with that. Ordinary people who entrust their funds to third parties do not know enough about the market to manage their own funds, and 99% of the time it is better to let professionals handle it. But even the pros can't do it well all the time, look at how many weird things have happened in the past two and a half years. We’ve seen VC firms go bankrupt, SPACs go to zero, hot tech IPOs are close to zero, growth stocks are flying to zero, and monetary policy is questionable. Is there any indication that society can function at all without interest rates near zero? I have no idea.
Humans tend to trust people in authority, which explains why so many assets are entrusted to institutions, and why the U.S. government works the way it does. People in authority make both right and wrong decisions, and they try to make more right decisions than wrong ones. Life goes on. You don't ask someone to manage your retirement accounts in order to earn 25% annual returns for 40 years, you do it because you trust them to keep your money safe and earn you more money, often. Just like people in the past went to a fortune teller to make our lives more meaningful, we put our attention and money on other people because we believe that they can guide us and make our future brighter.
The truth is that no one can predict the future—we're just dead set on believing that some people can and want to imagine a world in which we've found the right predictor of the future. Perhaps this explains why so many people are duped into the effective altruist trap.
After FTX crashed, I don't know what to think.
You can tell me that the downfall of Terra, centralized DeFi platforms (Celsius, BlockFi) and even Three Arrows Capital is a micromarket bottom event in the crypto industry, and I will believe you. In fact, I said less than a week ago that all three combined are a bottom signal. Unfortunately, FTX’s insolvency is by far the hardest blow to the crypto industry.
As time goes by, I become more and more uncertain about the future of the crypto industry. For a while, SBF has been a net positive for the industry when it comes to raising awareness about cryptocurrencies or getting newcomers involved. Sentiment has shifted in recent months, whether it's his DeFi regulatory rhetoric or his growing obsession with U.S. crypto policy, he's no longer the role model he's made himself.
SBF is everywhere. SBF advertised with Tom Brady and actively lobbied for any regulation he wanted that would ultimately determine the fate of our industry - but now he's gone.
All of the events that have led to horrific price swings in cryptocurrencies this year are the result of opaque systems we have created; systems that run counter to our eternal quest to find truth in those around us.
Why should we deposit our precious funds with a platform like Celsius? Why do we blindly believe that LUNA and UST will succeed in the end? Why do we believe the supercycle theory posited by Su Zhu and Kyle Davies? Why did we put our funds on FTX and expect a different outcome?
Are we complacent? Are we being too greedy? Are we blinded by these people and their mysterious personalities? Perhaps a combination of all of the above.
With the exit of FTX, the crypto industry is facing a make-or-break moment. It is not the fault of cryptocurrencies that ruin our systems, it is the result of bad businesses and individuals taking advantage of them. There is nothing inherently evil or insidious about Bitcoin or crypto, so why has everything turned out so badly? In a bull market we allow some bad actors to feed us a conspiracy and we do nothing about it because we make so much easy money. Now the music has stopped, no one is dancing, and we are all a bit confused. From here, there's really only one way to go, and that's to actively criticize centralized entities to keep them on track, and to praise both centralized and decentralized entities that have done good for the crypto space.
Self-custody is probably the biggest net positive that cryptocurrencies can bring to the world. You hear people in the crypto space all the time talking about banking the unbanked, but we're actively educating the world about the treacherous (but promising) waters of self-custody, OPSEC, and DeFi. Instead of trading perpetual contracts on FTX, why don't we give a little more trust to systems that are actually doing a good job of showing transparency in difficult times?
Ethereum didn't crash, but a company in the Bahamas did. Cryptocurrencies are not dead, just some bad actors are.
Hope you are all doing well after this week's events and not struggling too much with potentially trapped funds.
Aaron
Jasper
Clement
Davin
YouQuan