Wednesday, October 24, 2018

Only the Big Ideas #6 — Entropy + biology/software, blockchain + moats, self-improvement + permaculture



Surfacing mental models, weekly
Read 3 articles to learn 10 mental models this week, including:
  • Entropy
  • Caching
  • Ecological niche
  • Opportunity cost
  • Stacking functions
  • Diminishing returns
  • Economic moats
  • Incentives
  • Network effects
  • Governance


Melting Asphalt — Entropy and Rebootable Processes

Entropy is just a fancy word for ‘number of possible arrangements’. Entropy is a count of how many ways you can rearrange the ‘insides’ of a thing (its microscopic internals), while keeping its ‘outwardly’ (macroscopic) state unchanged.
The odds of seeing entropy decrease are effectively zero, not because any physical law compels it to be so, but because of sheer statistics — there are overwhelmingly more ways for the energy to be spread out than there are ways for the energy to be contained (Entropy Explained, With Sheep)
A cache is a high-speed data storage layer which stores a subset of data, typically transient in nature, so that future requests for that data are served up faster than is possible by accessing the data’s primary storage location.
Trading off capacity for speed, a cache typically stores a subset of data transiently, in contrast to databases whose data is usually complete and durable. (AWS)
A species’ niche is its ecological role or “way of life,” which is defined by the full set of conditions, resources, and interactions it needs or can make use of. Each species fits into an ecological community in its own special way and has its own tolerable ranges for many environmental factors (Khan Academy)
According to the competitive exclusion principle, two species cannot occupy the same ecological niche in a habitat if they are competing for the same resources (Biology Dictionary)



Stacking Functions

Opportunity cost
An economics term that refers to the value of what you have to give up in order to choose something else. In a nutshell, it’s a value of the road not taken (Shopify)
Opportunity cost = return of most lucrative option not chosen — return of chosen option (Investopedia)
“a single input or element that serves multiple functions”
Stacking functions is a primary principle of permaculture and basically refers to elements in your life having multiple functions, instead of a single function (The Art of Stacking Functions)
In permaculture we speak about getting many yields (outputs) from one element (thing) in your system (Heathcote.org)

Diminishing returns
The law of diminishing returns states that in all productive processes, adding more of one factor of production, while holding all others constant, will at some point yield lower incremental per-unit returns (Wikipedia)
When increasing amounts of one factor of production are employed in production along with a fixed amount of some other production factor, after some point, the resulting increases in output of product become smaller and smaller (Auburn.edu)



Turing Capital — Blockchain Moats

Sustainable competitive advantages. Economic moats are almost never stable, either getting a little bit wider or a little bit narrower every day (Measuring the Moat — Michael Mauboussin)
A durable competitive advantage that protects returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns (adapted from: Hurricane Capital’s collection of quotes from the-above Maubossin piece)
  1. Supply-Side economies of Scale
  2. Demand-side Economies of Scale (network effects)
  3. Brand
  4. Regulation
  5. Patents and Intellectual Property
Something (financial, moral, coercive, natural/intrinsic) that motivates an individual to perform an action (Wikipedia)
“Never, ever, think about something else when you should be thinking about the power of incentives.”
— Charlie Munger
A network effect (a.k.a. demand-side economies of scale) occurs when a product or a service becomes more valuable to its users as more people use it (a16z)
Potential network effects in blockchain: data, protocol, token, monetary, security
The mechanism for change in a system (Fred Ehrsam)
another take: Governance refers to all actions such as decision-making processes that are involved in creating, updating, and abandoning formal and informal rules of a system. These rules can be code (e.g. smart contracts), laws (e.g. fees for malign actors), processes (what must be done when X happens), or responsibilities (who must do what) (Leopold Bosankic)
another take: Governance of a blockchain amounts to having authority to update its code, which might be done either for technical reasons or to change critical constraints or assumptions (such as the rate at which new coins or shares are issued).
Blockchains must rely on a governance process in which the users agree upon a set of requirements for the underlying software code to be changed, including provisions for dispute resolution, sanctions for violating the agreed upon rules, and procedures for enforcement of penalties (Oxford — Corporate Governance and Blockchains)

Thursday, October 11, 2018

Only the Big Ideas #5 — Quantum computing, Bias, Plasticity, Genomics




Surfacing mental models, weekly
Read 4 articles to learn 10+ mental models this week, including:
  • Quantum Suprememcy
  • Qubit
  • Quantum Superposition
  • Regression to the Mean
  • Loss Aversion
  • Emergent Behavior
  • Self-Organization
  • Theory of Minimal Surfaces
  • Moore’s Law
  • Network Effects
  • Winner-Takes-All Market Dynamics

Wired — The Wired Guide to Quantum Computing

The potential ability of quantum computing devices to solve problems that classical computers practically cannot (Google AI BlogWikipedia)
The basic unit of quantum information. Whereas the state of a bit can only be either 0 or 1, the general state of a qubit according to quantum mechanics can be a coherent superposition of both states (Wikipedia)
Another Take: Quantum computers aren’t limited to two states; they encode information as quantum bits, or qubits, which can exist in superposition…Because a quantum computer can contain these multiple states simultaneously, it has the potential to be millions of times more powerful than today’s most powerful supercomputers. (How Stuff Works)
“The math of superposition describes the probability of discovering either a 0 or 1 when a qubit is read out…A superposition is in an intuition-defying mathematical combination of both 0 and 1. Quantum algorithms can use a group of qubits in a superposition to shortcut through calculations.”



Populism

Extreme outcomes tend to be followed by more moderate ones (Farnam Street)
Regression to the mean occurs when unusually large or small measurements tend to be followed by measurements that are closer to the mean. It happens because values are observed with random error. (Regression to the mean: what it is and how to deal with it)
The idea that losses generally have a much larger psychological impact than gains of the same size (Scientific American)
Another take: The key idea behind the bias is that people react differently to positive and negative changes of their status-quo. More specifically, losses are said to be twice as powerful compared to equivalent gains. (The Decisions Lab)



Quanta Magazine— The Physics of Glass Opens a Window Into Biology

Jordana Cepelewicz with physicist Lisa Manning
A process by which a system of interacting subunits acquires qualitatively new properties that cannot be understood as the simple addition of their individual contributions (Sante Fe Institute — Complexity Explorer)
“The whole is other than the sum of its parts” (Nicky Case)
Self-organization can be defined as the spontaneous emergence of global structure out of local interactions.
“Spontaneous” means that no internal or external agent is in control of the process: for a large enough system, any individual agent can be eliminated or replaced without damaging the resulting structure.
The process is truly collective, i.e. parallel and distributed over all the agents. This makes the resulting organization intrinsically robust and resistant to damage and perturbations (Complexity and Self-organization,6)
A surface that locally minimizes its area subject to some constraint. Of all possible surfaces, it is the one with minimal energy (WikipediaMath.Berkely)
(this was a tough one to nail down…I’m not satisfied with this explanation, but do believe the mental model has enough utility to include)



Neo.Life — Who Will Be the Google of Genomics?

Moore’s law is the observation that the number of transistors in a dense integrated circuit doubles about every two years. Moore’s law is an observation and projection of a historical trend and not a physical or natural law (Wikipedia)
Moore’s law suggests exponential growth. Thus, it is unlikely to continue indefinitely (Investopedia)
A network effect (a.k.a. demand-side economies of scale) occurs when a product or a service becomes more valuable to its users as more people use it (a16z)
A winner-takes-all market is a market in which the best performers are able to capture a very large share of the rewards, and the remaining competitors are left with very little (Investopedia)

Wednesday, October 3, 2018

Only the Big Ideas #4 — Dynamical systems, Blockchain, Anthropology & Startups




Surfacing mental models, weekly
Read 3 articles, and watch 1 video, to learn 10+ mental models this week, including:
  • Complex Adaptive Systems
  • Positive feedback loop
  • Fitness landscapes
  • Conway’s Law
  • Emergence
  • Consensus Mechanisms: Proof-of-Work & Proof-of-Stake
  • Positive Externalities
  • Tragedy of the commons
  • Memes
  • and more…




MIT JoDS — Pace Layering: How Complex Systems Learn and Keep Learning

Pace layers are components of a dynamical system
  • That have different change-rates and different scales of size
  • Operate somewhat independently
  • Influences and responds to the layers closest to it
The total effect of the pace layers is that they provide a many-leveled corrective, stabilizing feedback throughout the system, making the whole system resilient (adapted from source)




MIT JoDS — Resisting Reductionism: A Manifesto

CAS are dynamic systems are able to adapt in and evolve with a changing environment. It is important to realize that there is no separation between a system and its environment in the idea that a system always adapts to a changing environment.
7 attributes: Distributed control, connectivity, co-evolution, sensitive dependence on initial conditions, emergent order, far from equilibrium, state of paradox (order & chaos)
Stocks: Accumulations of materials or information built up over time (Wikipedia)
Flows: Flows, on the other hand, are entities that make stocks increase or decrease. The presence of a flow indicates the movement of material or information (Systems Thinker)
A positive feedback loop is self-reinforcing. An action produces a result which influences more of the same action.
Positive feedback loops are sources of growth, explosion, erosion, and collapse in systems. A system with an unchecked positive loop ultimately will destroy itself. That’s why there are so few of them (Donellameadows.org)
Models used to represent how organisms and groups interact with their environments to improve their abilities to survive (Human Systems Dynamics Institute)
“You realize that for each species, its landscape consists almost entirely of other species, all of them busy evolving right back. That’s co-evolution. We are all each other’s fitness landscapes.” — Stewart Brand (edge.org)




Melting Asphalt — Anthropology of Mid-Sized Startups

A suggested cognitive limit to the number of people with whom one can maintain stable social relationships …he proposed that humans can comfortably maintain only 150 stable relationships (Wikipedia, more here The New Yorker — The Limits of Friendship)
Any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the organization’s communication structure (Melconway.com)
Socially approved and traditional norms or standards of everyday behavior.
Folkways are social standards, not moral standards or mores and the repercussions for breaking a folkway are minimal or nonexistent. (sociologydictionary.org)




a16z — Cryptonetworks and Cities: Analogies(video)

by Denis Nazarov, Jesse Walden, Ali Yahya, and Devon Zuegel
The smallest amount of reactive material needed to maintain a self-sustaining chain reaction (adapted from Wikipedia)
A process by which a system of interacting subunits acquires qualitatively new properties that cannot be understood as the simple addition of their individual contributions (Sante Fe Institute — Complexity Explorer)
“The whole is other than the sum of its parts” (Nicky Case)
A concept that the future life expectancy of some non-perishable things (books, technologies, ideas, political systems) is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy.
Where the Lindy effect applies, mortality rate decreases with time.
(adapted from Wikipedia, more from Nassim Taleb)
Consensus mechanism (blockchain): The purpose of a consensus mechanism is to verify that information being added to the ledger is valid i.e. the network is in consensus (Consensus Mechanisms Explained: PoW vs. PoS)
Proof-of-work: an economic measure to deter service abuses on a network by requiring some work from the service requester, usually meaning processing time by a computer. A key feature of these schemes is their asymmetry: the work must be moderately hard (but feasible) on the requester side but easy to check for the service provider. (Wikipedia, more on Github)
Proof-of-stake: With Proof of Stake, there is no mathematical puzzle, instead, the creator of a new block is chosen in a deterministic way based on their stake. The stake is how many coins/tokens one possesses. (Consensus Mechanisms Explained: PoW vs. PoS, more on Investopedia)
another take via GithubPoS a category of consensus algorithms for public blockchains that depend on a validator’s economic stake in the network.
In PoS-based public blockchains, a set of validators take turns proposing and voting on the next block, and the weight of each validator’s vote depends on the size of its deposit (i.e. stake). Significant advantages of PoS include security, reduced risk of centralization, and energy efficiency.
A positive externality is the positive effect an activity imposes on an unrelated third party. (Wikipedia)
The trap called the tragedy of the commons comes about when there is escalation, or just simple growth, in a commonly shared, erodable environment.
When there is a commonly shared resource, every user benefits directly from its use, but shares the costs of its abuse with everyone else. Therefore, there is very weak feedback from the condition of the resource to the decisions of the resource users. The consequence is overuse of the resource, eroding it until it becomes unavailable to anyone.
An idea that is a replicator (anything that contributes causally to its own copying).
A rational meme replicates because people find it valuable.
An anti-rational meme replicates by disabling its holder’s rational thinking so that one has no choice but to spread it. (David Deutsche)

🌴Last Week in Crypto🍹10/12/20 - 10/18/20

Find the original & subscribe 👉  LWIC Newsletter LWIC is a weekly rundown posted on Mondays that covers the biggest news from the previ...