🌀🗞 The FLUX Review, Ep. 33
January 6th, 2022
Episode 33 — January 6th, 2022 — Available at read.fluxcollective.org/p/33
Contributors to this issue: Ade Oshineye, Justin Quimby, Stefano Mazzocchi, Erika Rice Scherpelz, Neel Mehta, Alex Komoroske, Dimitri Glazkov
Additional insights from: Gordon Brander, a.r. Routh, Ben Mathes, Boris Smus, Robinson Eaton, Spencer Pitman
We’re a ragtag band of systems thinkers who have been dedicating our early mornings to finding new lenses to help you make sense of the complex world we live in. This newsletter is a collection of patterns we’ve noticed in recent weeks.
“There's no love in a carbon atom, no hurricane in a water molecule, no financial collapse in a dollar bill.”
— Peter Sheridan Dodds
⛏️🌉 The explorers, the miners, and the bridge builders
Innovation is like hunting for gold: there are those who explore the land in search of gold veins, and others who do the work of mining those veins for profit. Explorers read the landscape to understand where the lucrative spots might be. They pattern-match and fail fast. It’s not only a numbers game — there is skill involved — but success depends on going broad and hoping for a pinch of luck. Meanwhile, miners extract the gold, refine it, and bring it to market. They balance greater rewards (digging faster) against more risk (letting the mine collapse). They use canaries to react early to undesired externalities. Theirs is not a numbers game; it’s a sustainability game.
Successful innovation requires a similar balance: someone invents, and someone else works to realize the value of that invention. Then, because all sources of value are finite, someone must keep exploring to find the next vein.
However, unlike gold mining, innovation needs to solve the challenge of transitioning between exploration and exploitation. With gold, the value is clear to both explorers and miners: gold is there! But when it comes to innovation, what the explorers find might not even look valuable to the exploiters. It can be perceived as a distraction from their profitable exploitation or a threat to established operations.
They say that most ideas die between the lab and the real world. Sometimes this is because the explorers in the lab failed to understand the reality of deployment. There is another angle, though: even under the best of conditions, there needs to be a bridge between the twin engines of exploration and exploitation. That bridge is ultimately made of trust: trust that exploiters will see the value in exploration, trust that the explorers can reliably hand off their knowledge, and trust that both have the same interests in mind.
This isn’t easy, though. So it might seem easier to avoid the handoff and bridge entirely: just have the explorers become the exploiters. However, explorers are often not interested in exploitation (and may even actively avoid it!).
Instead, successfully transitioning between exploration and exploitation depends on bridge builders who invest in the necessary trust. Investing in bridges is itself an act of trust: bridge builders are generally rewarded and recognized not for the bridge itself but rather for the ideas successfully transported over it. The fact they had to build trust bridges to make that possible is often illegible. Because of this illegibility, there is often little incentive to invest in bridge builders. Recognizing and fostering bridge-building is not seen as a necessary part of innovation. We recognize that some ideas will always die in transport, even though those ideas may be great. We do not recognize that we can reduce the risk of their demise.
Next time we see something new and valuable fail to deliver on its promise, we can ask ourselves: how strong was the bridge meant to deliver it safely across the explore/exploit gap? And how can we incentivize the building of better bridges in the future?
Clues that point to where our changing world might lead us.
🚏🩺 Rapid COVID tests have become massive profit-makers on delivery apps
COVID-19 rapid tests are in short supply in the US, and as a result many stores — including restaurants, liquor stores, and even pet stores — have started offering them at steep markups on delivery apps like Uber Eats and Seamless. These rapid-testing kits retail for $10 to $30, but they’ve become so hard to find on shelves that delivery-app sellers are now charging up to $80 per kit.
🚏🔌 Kosovo banned crypto mining after local miners guzzled cheap or free electricity
For many years, electricity was extremely cheap in Kosovo; in fact, residents of northern Kosovo paid absolutely nothing for electricity because locals didn’t recognize the legitimacy of the area’s government. This attracted a flood of crypto miners. The practice didn’t draw much attention from the government until Kosovo got hit by an energy crisis in December (part of the broader European surge in energy prices). Now, seeking ways to save electricity, the Kosovo government has announced a ban on crypto mining.
🚏🦌 COVID-19 is spreading in American deer, too
Multiple teams of American researchers tested deer for COVID-19 and found that about a third of them were currently or recently infected with the disease, with evidence for at least six separate instances of human-to-deer coronavirus transfer (though the transfer mechanism is unknown). Deer tend to travel in herds, making deer-to-deer transmission easy. This potential for a deer epidemic worries scientists, who fear that the animals could act as a breeding ground for dangerous new strains of the virus that could “spill back” into humans.
🚏👭 Digital twins are making VR popular in manufacturing, medicine, and more fields
While much talk about VR focuses on the metaverse, one VR trend that’s seen rapid uptake among engineers, architects, doctors, researchers, and more is that of “digital twins,” or virtual 3D simulations of physical objects or scenes. These are commonly used when real-world experimentation would be too expensive, dangerous, or difficult: manufacturers are using digital twins of their assembly lines to experiment with new processes while avoiding downtime; carmakers are using digital twins to run crash-test simulations without having to destroy cars; medical educators are making VR simulations of fetus ultrasounds to cheaply train doctors; and so on.
🚏❄️ China’s freeze on new mobile games has led to 14,000 game studios shuttering
The Chinese government requires game developers to get a license before they can publish games on app markets like Apple’s App Store, but regulators haven’t issued new licenses since July 2021. The freeze on new licenses has already led to the shutdown of about 14,000 gaming studios (including many smaller ones) and driven some larger Chinese gaming firms to lay off employees or shift their efforts toward overseas markets.
🚏🙈 Two NFT projects sold clones of the famous Bored Apes, then ran into copyright challenges
The Phunky Ape Yacht Club (PAYC) and PHAYC projects both downloaded all 10,000 JPEGs of the popular (and expensive) Bored Ape Yacht Club NFTs, flipped the ape images to face left instead of right, and re-uploaded them for sale as new NFT collections. PAYC said it was “joining the battle” against “the tyranny of DMCA”, while one PHAYC fan said the project was “a satirical take on the current state of NFTs.” The creators of the original Bored Ape Yacht Club proceeded to use their copyright on the original images to have PAYC and PHAYC kicked off NFT trading platforms.
📖⏳ Worth your time
Some especially insightful pieces we’ve read, watched, and listened to recently.
Do Large Language Models Understand Us? (Blaise Aguera y Arcas) — Questions the popular conception that AIs’ grasp of human languages is “just statistics” and not a “real” understanding of language; he dives into the philosophy of language and the mind and counters that, because interactions are the only way we can probe another’s mind, there’s no way to distinguish between a convincing AI and a real human.
Climate Researchers on the Most Hopeful Things They’ve Seen Yet (Vice) — Five climate researchers share good news about the environment, from reductions in deforestation, to new science on the resilience of coral reef ecosystems, to how local and indigenous communities are helping with conservation.
Seeing Carbon Through Silicon (Logic Magazine) — Scrutinizes a trendy concept known as the “Carbon Law,” which says that we’ll achieve decarbonization through exponential technological advancements, similar to Moore’s Law for semiconductors. The author argues that this framing is misleading, since Moore’s Law relied as much on social organization and collective action as technical innovation, and adds that the quest for decarbonization will require a similar public-spirited effort instead of waiting for tech to save us.
Noble Lies Are a Public Health Hazard (The Week) — Argues that American public health officials damaged their credibility by saying misleading things about COVID-19 in service of political goals. While these short-term goals were good, the author writes, the act of telling “noble lies” harmed public health efforts in the long run by making future scientific recommendations seem capricious, emboldening anti-vaxxers, and misleading many Americans into making bad choices about their health.
Imagine Virginia’s Icy Traffic Catastrophe — But With Only Electric Vehicles (Washington Post) — Argues that the recent ice storm that stranded hundreds of cars on the highway points to some lesser-known drawbacks of electric vehicles: they lose capacity in cold weather, they’re reliant on a fragile electrical grid, and they’re harder to rehabilitate (you can’t just carry a jug of gasoline to them). Concludes that, before EVs can hit mass adoption, they’ll need to become better-equipped to handle extreme circumstances.
The Bulldozer vs. Vetocracy Political Axis (Vitalik Buterin) — Ethereum’s inventor seeks to move beyond the usual left–right and authoritarian–libertarian political axes, exploring the tension between vetocracy (where many people have input into a decision, but progress is slow and controversial things can’t happen) and bulldozers (where single actors can make meaningful change, but without permission from anyone else). He then examines how we could balance the two when building new human organizations.
🍯🧠 From the hive mind
Showcasing useful tools and resources from the FLUX community.
Karthik Srinivasan was inspired by a recent FLUX piece on mētis to create Mētis in Product Management, an expanded vignette on the topic of tacit knowledge, breaking the rules, and how these might be useful in product management.
🌀🖋 More from FLUXers
Highlighting independent publications from FLUX contributors.
Fascinated by the depth of insight that could be gleaned from the lens of the OODA loop, FLUX’s own Dimitri Glazkov wrote a short series titled “Jank in Teams.” The series takes the OODA loop as the starting point and explores various forces that might be at play within teams in pursuit of their objectives. Borrowing concepts from graphics rendering and using silly math, Dimitri builds a narrative about systemic challenges that all organizations face, culminating in a handy checklist of questions that might help you get a better sense of how these forces might be affecting your team.
📚🌲 Book for your shelf
An evergreen book that will help you dip your toes into systems thinking.
This week, we recommend Widen the Window: Training Your Brain and Body to Thrive During Stress and Recover from Trauma by Elizabeth A. Stanley, PhD (2019, 498 pages).
Though you’ll find plenty of insights into how our minds work in this book, it wasn’t written by a psychologist or a neuroscience expert. Rather, it was written by someone whose passion to understand our “systems of self” was spurred by personal trauma and the journey of recovery that followed. As is evident from the book’s writing style, the idea of the “widening window” as a metaphor for increasing our resilience was a profound experience for the author. Unlike some volumes that speak about a subject but seem to never get into it, this book dives into the nature of stress and trauma with a full heart.
In doing so, Dr. Stanley lays out a compelling picture of how we become stressed and the depth of the effects of trauma and stress – and then suggests the path out of the vicious cycle that’s holding us back.
🕵️♀️📆 Lens of the week
Introducing new ways to see the world and new tools to add to your mental arsenal.
This week’s lens comes from the land of video games: Bartle’s Four Player Types.
In 1996, Richard Bartle wrote a paper classifying the primary types of players in multiplayer online games (including MUDs and MMORPGs). The four player types Bartle proposed were Achievers, Explorers, Socializers, and Killers. Each type is distinguished by a different preference for what they want to interact with (other players vs. the world) and how they want to take action (interaction vs. unilateral action).
This provided a shorthand for game developers and players. The “Bartle Four” helped advance online game development and became pervasive in game development discourse. But like all frameworks, it is a radical simplification of the complexity of game players. For example, where do players who enjoy “simulation” games like “The Sims” fit in? How might players shift their playstyle depending on the genre of game or their individual mood?
When you are thinking about the users of your product, how do you categorize them? What axes are implicit in those categories? What lenses have you explicitly rejected when framing your users? And where might there be blind spots in your current models?
🔮📬 Postcard from the future
A ‘what if’ piece of speculative fiction about a possible future that could result from the systemic forces changing our world.
// If cryptocurrencies continue to rise, how might the US government react?
// January 2045. An article in an economics magazine.
Crypto and decentralized finance (DeFi) exploded in scale and popularity in the first half of the 2020s. As stablecoins like Tether grew in popularity, venture capitalists poured money into “web3” startups, and as ecosystems of new crypto financial tools were built, the US Federal Reserve became nervous. The US dollar had acted as the world’s principal global reserve currency since the end of World War II, in part enabling America’s global hegemony. This status was now under threat.
Key government leaders knew that it would be disastrous for the government to try to build its own cryptocurrency. But if the US ignored DeFi entirely, the country could find itself no longer in the economic driver’s seat, with potentially catastrophic consequences for America.
The US faced a Thucydides Trap (a tendency towards war when an emerging power threatens to displace an existing great power), which is what led to the drafting of the now-infamous 2027 “GovCoin” Executive Order, signed by the President.
The “GovCoin” Executive Order had a few key points:
In 45 days, the company Circle (the maker of the USD Coin, or USDC) and all its assets would be nationalized.
In 90 days, all cryptocurrencies and crypto assets would be considered financial securities, eliminating the crypto “wash sale” loophole. The US Treasury and IRS would ramp up investigation and enforcement against crypto tax avoidance.
In 180 days, all USDC coins would be converted into new USD Tokens.
In 1 year, the USD Token would become the official digital currency of the United States, backed by the US government. At that time, the US government would begin allowing payment of taxes in USD Tokens.
The US Federal Reserve would run the centralized ledger of USD Token transactions, taking the USD Token off the public blockchain.
USD Token transactions would have a fixed transaction fee, set by the Fed (rather than a fluctuating Ethereum gas fee), starting at 0.5%. Of this transaction fee, 50% of the first 5 years of transaction fees would be dedicated to US infrastructure improvements.
USD Token transactions could be reversed in the cases of fraud, blackmail, extortion, and other malfeasance according to US law.
The short-term effects were predictable. A bomb went off in the social crypto world: Tweet after Discord post after TikTok video railed against US government’s move. Public hearings were held, and old US Senators asked meme-worthy questions. A bank run across the crypto world occurred as crypto holders attempted to convert their assets before the transition. Hundreds of sh*tcoins and memecoins dove straight to zero. Grifters and scammers tried to squeeze the last money out of the NFT-mania.
It took a few years for the longer-term implications of this systemic change to become apparent. Companies who wanted to do business with the US government began to offer USD Token payment services. New York financial institutions began incorporating USD Token into investment vehicles including index funds, 401(k) allocations, and more. Block, Apple Pay, and other digital wallets incorporated USD Tokens, making them easier and easier for people worldwide to use.
China, having already banned crypto mining in 2021, doubled down on eliminating crypto usage by the population, going so far as to seize the assets of several prominent Party members due to their holdings of USD Tokens. The EU decided to create a ‘EuroCoin’, but the process was still in the requirements-gathering phase after 3 years, at which point the Swiss fully launched their own ‘SwissCoin’, with full integration into the Swiss financial system.
As for other cryptocurrencies and stablecoins, while a handful of them survived the destructive entrance of the US government, they all found themselves under heavy scrutiny by major world powers. People and groups attempting to use non-govcoin crypto for darkweb transactions saw immutable blockchain transaction histories scrutinized by regulators and amateur sleuths alike.
The vast reduction in usage of public blockchain crypto combined with the USD Token not requiring “Proof of Work” for transactions resulted in a significant reduction of the environmental impact of crypto’s usage as well as a drastic reduction in traditional banking fees. The drop in fees also had a significant impact in reducing “payday loans” in the United States. In addition, the USD Token transaction fees provided ‘free’ money to upgrade and green the US’s electrical grid, which came in handy when climate change hit the US hard in the 2030s.