Engineer at CoinList.co. Donor to LW 2.0.
My current theory for what happened is that everyone bought into this delusion about the value of bitcoin, but that unlike other bubbles it didn't burst because Bitcoin has a limited supply and there is literally nothing to anchor its value. So there's no point where investors give up and sell because there is literally no point at which it's overpriced.
This actually sounds pretty close to what you might call the "bubble theory of money": that money is a bubble that doesn't pop, that certain (relatively) useless commodities can become money if enough people think of them that way, and when that happens their price is inflated, relative to their use value.
This isn't something that will happen to every commodity. Whether it happens depends both on the properties of the commodity, and also on things like memes and Schelling points.
Bitcoin has enough useful properties (it's like gold, but digital), and, because of its first-mover advantage, is the Schelling point for digital store-of-value (not that it couldn't be replaced, but it's a very up-hill battle), so it has become money, in this sense.
(On the memes-and-Schelling-points thing, see also: The Most Important Scarce Resource is Legitimacy, by Vitalik Buterin.)
the first 5-12 million dollar tab
You mean GPT-3? Are you asking whether it's made enough money to pay for itself yet?
I believe that you (and the Twitter thread) are saying something meaningful, but I'm having trouble parsing it.
I had thought of the difference between variance and volatility as just that one is the square of the other. So saying that the VIX is "variance in vol units, but not volatility" doesn't mean anything to me.
I think these are the critical tweets:
VIX is an index that measures the market implied level of 1-month variance on the S&P 500, or the square root thereof (to put it back in units we are used to).This is not the same as volatility. A variance swap’s payoff is proportional to volatility squared. If you are short a variance swap at 10%, and then realized volatility turns out to be 40%, you lose your notional vega exposure times 16 (= 40^2 / 10^2 ).To compensate for this, an equity index variance swap level is usually 2-3 points above the corresponding at the money implied volatility. So don’t look at VIX versus realized vol and make statements about risk premium without recognizing this extreme tail risk.
VIX is an index that measures the market implied level of 1-month variance on the S&P 500, or the square root thereof (to put it back in units we are used to).
This is not the same as volatility. A variance swap’s payoff is proportional to volatility squared. If you are short a variance swap at 10%, and then realized volatility turns out to be 40%, you lose your notional vega exposure times 16 (= 40^2 / 10^2 ).
To compensate for this, an equity index variance swap level is usually 2-3 points above the corresponding at the money implied volatility. So don’t look at VIX versus realized vol and make statements about risk premium without recognizing this extreme tail risk.
I was with him at "a variance swap's payoff is proportional to volatility squared". That matches my understanding of volatility as the square root of variance. But then I don't get the next point about realized volatility needing to be "compensated for".
Anybody care to explain?
Link for the curious: https://www.newyorker.com/culture/annals-of-inquiry/slate-star-codex-and-silicon-valleys-war-against-the-media
Which all make them even easier targets for criticism, and make confident enthusiasm for an idea increasingly correlated with being some kind of arrogant fool.
But it also means conviction is undervalued, and it might be a good time to buy low!
I hold positions in Bitcoin, Ethereum, and Tesla through Exchange Traded Funds.
For Bitcoin and Ether, do you mean the Grayscale trusts, GBTC and ETHE? My impression is that these are similar to ETFs, but not exactly the same thing, and I'm not aware of other ETFs that give you exposure to crypto (except for the small amount of exposure you'd get from owning shares in companies that have a little BTC on their balance sheet, like Tesla, Square, or MicroStrategy).
The difference between a TSAR bomb (or its modern equivalent) and the lowest settings of a mini-nuke is still an order of magnitude larger than the difference between the conventional “mother of all bombs” and a hand grenade. The Beirut explosion last year was the size of the hand grenade blast in this analogy
I didn't quite understand the last sentence here. Are you saying A) that the Beirut explosion was about the same size as a mini-nuke blast would be, or that B) MOAB : hand grenade :: TSAR bomb : Beirut explosion? (In which case the Beirut explosion would be larger than a mini-nuke explosion, if your claim about relative differences in the first sentence is correct.)In other words, I take the first part of what you wrote to be saying that (TSAR bomb / mini-nuke) > (MOAB / grenade), but then I'm not sure whether the second part is saying that A) (TSAR bomb / Beirut explosion) = (TSAR bomb / mini-nuke), or B) (TSAR bomb / Beirut explosion) = (MOAB / grenade).Is one of either A or B correct? (Or did you mean something else entirely?)
sometimes people think of things as being either X or Y, and then learn an argument for why this dichotomy doesn't make sense. As a result, they might reject the dichotomy entirely
This reminds me of the Fallacy of Gray.
I'm definitely left wondering what AI Alignment research is left at OpenAI
You may be interested to know that Jan Leike recently joined OpenAI and will lead their alignment team.