Crypto analogies
I was listening to Tim Urban on Kevin Rose’s podcast, and he brought up the distinction that Elon Musk has made between reasoning by analogy and reasoning from first principles. It got me thinking about how analogies are used in the blockchain/crypto space.
Urban, who has spoken with and written extensively about Elon Musk on Wait But Why (I’ve you’ve never visited his site, either bookmark it or get ready to lose an afternoon), identifies Musks’ reasoning from first principles as opposed to by analogy as one of the core elements of his success. One example he gave on the podcast was that everyone expects airplanes to look like, well, airplanes, with wings and runways, while Musk has envisioned them to look and travel more like rockets (of course, I guess that's using a space travel analogy). Listen to the podcast or read this article for more examples.
In the blockchain space, the most powerful and persuasive analogy seems to be to compare today to the early days of the internet. (Or, okay, maybe tulips.)
Sometimes this is used to emphasize how early we are: It’s like the internet in 1994! 1973!
Sometimes it’s used to caution that we’re probably in a bubble: It’s like the internet of 1999! Remember pets.com!
Sometimes it’s used to emphasize that even if it is a bubble it still has huge potential, or to emphasize that current top coins might be overtaken: Amazon and Google came out of the bubble! Bitcoin might be Ask Jeeves!
It’s important to recognize both the power of reasoning from first principles and the value of analogies. Failing to think from first principles can limit creativity and innovation, with the adjacent possible blinding us to alternative paradigms and solutions. Failing to make us of analogies can make it harder for innovation to take root within existing frameworks and paradigms, and blind us to the patterns of the past that might repeat themselves.
Bringing this line of thought back to the blockchain space, it is helpful to use analogies to think about the state and development of the blockchain space, but it’s also important to point out that the analogies are not necessarily apt, and certainly are not robust predictors of the future. To paraphrase a friend: illustration by analogy is very helpful, but reasoning by analogy is foolish.
And while it is important to, for instance, think about how to redesign a financial system from the ground up (perhaps using blockchain technology), it’s also crucial to develop and test stories of how both drastic and incremental change may be realized given the current state of systems.
I’m a partner at INBlockchain, an investment group out of China (our principles). I try to share short, semi-formed thoughts here fairly often, because I find that writing stuff down helps me understand things better. Please point out the holes in my thinking, and please feel free to follow and share.
