Masters of AI

Artificial Intelligence Podcast with Lex Fridman – Nic Carter on Bitcoin Core Values, Reality, and writing skills

Nic Carter (@nic__carter) is a financial researcher, investor, writer, and podcaster on topics of decentralized finance

Understanding reality

Humans process reality through a subjective lens and thus can’t fully know the objective reality.
The conceit of modern economics is “thinking you can model human behavior in these unbelievably complex systems”
In our attempt to understand reality, we use tiny data sets trained over the last few decades and interpreted based on our accumulated assumptions.
However, as Nassim Taleb describes, things are much less predictable than we think, and we end up with black and grey swans
Bitcoin is a concrete object in an unpredictable world

While we may understand the short-term effects of the Fed’s action, the long-term consequences of the dollar structure are not understood.
For instance, the effects of debt accumulation and negative interest rates, mandated unemployment or high inflation levels
Although individuals may have good intentions, centralized power is susceptible to abuse with malicious intent.
Central bankers believe it’s their duty to perform their activities and that society can be tinkered into a desirable state by changing a few variables. In reality, consequences are often detrimental
The corporate sector loses competitiveness when bad companies aren’t allowed to fail
Unfortunately, politicians have short-term outlooks and thus avoid short-term pain. They rush to inject capital at the slightest sign of falling prices.

In essence, writing is communicating literal neural arrangements from the writer to the reader
It’s the power to, at scale, change the literal physical composition of peoples’ brains
Humility is key, letting pride and vanity seek into one’s writing results in a noisy signal
Strive for simplicity; if you can’t explain it simply then you don’t understand it
Write to communicate meaning, not to show off or to promote something

Bitcoin’s core operation is to settle transactions according to a specific ruleset. The technical features of the system give rise to political qualities
Non-discretionary monetary policy: Bitcoin’s algorithmic monetary policy is an alternative to the constant tweaking and intervention of modern central banking
New bitcoins are minted at a decaying rate, halving every four years until reaching the 21 million coin cap
The numbers themselves are not what matters. Rather, it’s the predetermined schedule made public before the network was operational
Strong respect for property rights: No party can issue more bitcoins and dilute the existing supply for network participants

Being an impressive writer is different from being an effective writer.

In essence, Bitcoin is just a replicated ledger, with peers maintaining up-to-date copies.
A full node downloads and verifies every transaction ever processed on the bitcoin network, any ordinary laptop can run a full node
Mining is a competitive process that involves large costs. This forces miners to assemble the blocks in a faithful way in order to earn the newly minted bitcoins.
Mining involves finding a solution to an SHA-256 problem by guessing and checking (brute force)
The network converges on the latest global state of the ledger continuously, which updates every 10 minutes on average
A change to the network consensus requires all users to agree. A change that is backward compatible with the current chain is called a soft-fork.

Money is freedom, and if you make stupid financial decisions, you can remove freedom from your life.