I first wrote about Bitcoin on this website five years ago today. (Click here). I decided not to buy any at the time because the price had surged to well over one hundred dollars! Clearly it was a bubble. If only I had known that the price would peak at $18,000 a few years later. (Today, the price is about $6,800).
So what’s happened over the past five years? Let’s look at Bitcoin’s benefits and then investigate some of the ways that it has changed our world.
Bitcoin is based on a blockchain stored in multiple locations. This gives it two major advantages: it can’t be erased and can’t be tampered with. Simply put, it’s like writing checks in ink rather than in pencil, using paper that can’t be destroyed. A blockchain can record transactions and ensure that they will always be available as a matter of public record. Bitcoin uses this feature to buy and sell things. Each transaction is recorded forever, meaning that you can’t spend the same Bitcoin more than once.
Bitcoins can also reduce inflation because they can’t be printed at a government’s whim. Instead, they’re “mined” through complex mathematical calculations. The process gradually grows the supply of coins. The money supply grows in predictable ways. This appeals to anyone who worries that governments will artificially inflate their national currencies.
Bitcoin is also anonymous – just like cash. Unlike cash, however, it’s not physical. It can easily be moved around the world as electronic blips. That makes transactions convenient and inexpensive and could conceivably cut out banks as middlemen. This makes Bitcoin attractive to many groups, especially criminals.
So, what’s happened? First, the idea of the blockchain has spread. There’s no reason to limit the blockchain to currency transactions. We can store anything in blockchain and ensure that it never disappears. In other words, we believe that it is more trustworthy than government or financial entities.
As Tim Wu writes, we are undergoing, “… a monumental transfer of social trust: away from human institutions backed by governments and to systems reliant on well-tested computer code.” Wu notes that we already trust computers to fly airplanes, assist in surgery, and guide us to our destination. Why not financial systems as well? A well-organized cryptocurrency could become the de facto standard global currency and eliminate the need for many banking services.
But we don’t need to limit the blockchain to financial transactions. Any record that must be inviolate can potentially benefit from blockchain technology. Some examples:
Of course, we can also use blockchains for less noble pursuits. The blockchain can store any information, including pornography. That’s a problem but it’s the same problem that was faced by myriad new technologies, including VCRs and the Internet itself. Criminals can also use cryptocurrencies for ransomware attacks, and to traffic in contraband or avoid taxes. We can ameliorate these problems but we probably can’t eliminate them. Still, the advantages of the technology seem much greater than the disadvantages.
So … what happens over the next five years? The New York Times reports that venture capitalists poured more than half a billion dollars into blockchain projects in the first three months of this year. So, I expect we’ll see a shakeout at the platform level over the next five years. Today, there are many ways to implement blockchain. It reminds me of the personal computing market in, say, 1985 – too many vendors selling too many technologies through too many channels. I expect the market will consolidate around two or perhaps three major platforms. Who will win? Perhaps IBM. Perhaps R3. Perhaps Ethereum. Perhaps Multichain. Rather than buying Bitcoin, I’d suggest that you study the platforms and place your bets accordingly.
In the meantime, we need to ask ourselves a simple question: Are we really willing to forego our trust in traditional institutions and put it all into computer code?
Daniel Kahneman is rightly respected for discovering and documenting any number of irrational human behaviors. Prospect theory – developed by Kahneman and his colleague, Amos Tversky – has led to profound new insights in how we think, behave, and spend our money. Indeed, there’s a straight line from Kahneman and Tversky to the new discipline called Behavioral Economics.
In my humble opinion, however, one of Kahneman’s innovations has been overlooked. The innovation doesn’t have an agreed-upon name so I’m proposing that we call it the Kahneman Interview Technique or KIT.
The idea behind KIT is fairly simple. We all know about the confirmation bias – the tendency to attend to information that confirms what we already believe and to ignore information that doesn’t. Kahneman’s insight is that confirmation bias distorts job interviews.
Here’s how it works. When we meet a candidate for a job, we immediately form an impression. The distortion occurs because this first impression colors the rest of the interview. Our intuition might tell us, for instance, that the candidate is action-oriented. For the rest of the interview, we attend to clues that confirm this intuition and ignore those that don’t. Ultimately, we base our evaluation on our initial impressions and intuition, which may be sketchy at best. The result – as Google found – is that there is no relationship between an interviewer’s evaluation and a candidate’s actual performance.
To remove the distortion of our confirmation bias, KIT asks us to delay our intuition. How can we delay intuition? By focusing first on facts and figures. For any job, there are prerequisites for success that we can measure by asking factual questions. For instance, a salesperson might need to be: 1) well spoken; 2) observant; 3) technically proficient, and so on. An executive might need to be: 1) a critical thinker; 2) a good strategist; 3) a good talent finder, etc.
Before the interview, we prepare factual questions that probe these prerequisites. We begin the interview with facts and develop a score for each prerequisite – typically on a simple scale like 1 – 5. The idea is not to record what the interviewer thinks but rather to record what the candidate has actually done. This portion of the interview is based on facts, not perceptions.
Once we have a score for each dimension, we can take the interview in more qualitative directions. We can ask broader questions about the candidate’s worldview and philosophy. We can invite our intuition to enter the process. At the end of the process, Kahneman suggests that the interviewer close her eyes, reflect for a moment, and answer the question, How well would this candidate do in this particular job?
Kahneman and other researchers have found that the factual scores are much better predictors of success than traditional interviews. Interestingly, the concluding global evaluation is also a strong predictor, especially when compared with “first impression” predictions. In other words, delayed intuition is better at predicting job success than immediate intuition. It’s a good idea to keep in mind the next time you hire someone.
I first learned about the Kahneman Interview Technique several years ago when I read Kahneman’s book, Thinking Fast And Slow. But the book is filled with so many good ideas that I forgot about the interviews. I was reminded of them recently when I listened to the 100th episode of the podcast, Hidden Brain, which features an interview with Kahneman. This article draws on both sources.
People often ask me why they should take a class in critical thinking. Their typical refrain is, “I already know how to think.” I find that the best answer is a story about the mistakes we often make.
So I offer up the following example, drawn from recent news, about very smart people who missed a critical clue because they were not thinking critically.
The story is about the conventional wisdom surrounding Alzheimer’s. We’ve known for years that people who have Alzheimer’s also have higher than normal deposits of beta amyloid plaques in their brains. These plaques build up over time and interfere with memory and cognitive processes.
The conventional wisdom holds that beta amyloid plaques are an aberration. The brain has essentially gone haywire and starts to attack itself. It’s a mistake. A key research question has been: how do we prevent this mistake from happening? It’s a difficult question to answer because we have no idea what triggered the mistake.
But recent research, led by Rudolph Tanzi and Robert Moir, considers the opposite question. What if the buildup of beta amyloid plaques is not a mistake? What if it serves some useful purpose? (Click here and here for background articles).
Pursuing this line of reasoning, Tanzi and Moir discovered the beta amyloid is actually an antimicrobial substance. It has a beneficial purpose: to attack bacteria and viruses and smother them. It’s not a mistake; it’s a defense mechanism.
Other Alzheimer’s researchers have described themselves as “gobsmacked” and “surprised” by the discovery. One said, “I never thought about it as a possibility.”
A student of critical thinking might ask, Why didn’t they think about this sooner? A key tenet of critical thinking is that one should always ask the opposite question. If conventional wisdom holds that X is true, a critical thinker would automatically ask, Is it possible that the opposite of X is true in some way?
Asking the opposite question is a simple way to identify, clarify, and check our assumptions. When the conventional wisdom is correct, it leads to a dead end. But, occasionally, asking the opposite question can lead to a Nobel Prize. Consider the case of Barry Marshall.
A doctor in Perth, Australia, Marshall was concerned about his patients’ stomach ulcers. Conventional wisdom held that bacteria couldn’t possibly live in the gastric juices of the human gut. So bacteria couldn’t possibly cause ulcers. More likely, stress and anxiety were the culprits. But Marshall asked the opposite question and discovered the bacteria now known a H. Pylori. Stress doesn’t cause ulcer, bacteria do. For asking the opposite question — and answering it — Marshall won the Nobel Prize in Medicine in 2005.
The discipline of critical thinking gives us a structure and method – almost a checklist – for how to think through complex problems. We should always ask the opposite question. We should be aware of common fallacies and cognitive biases. We should understand the basics of logic and argumentation. We should ask simple, blunt questions. We should check our egos at the door. If we do all this – and more – we tilt the odds in our favor. We prepare our minds systematically and open them to new possibilities – perhaps even the possibility of curing Alzheimer’s. That’s a good reason to study critical thinking.
A few days ago, the RAND Corporation — one of America’s oldest think tanks — published a report titled, Truth Decay: A Threat To Policymaking and Democracy. Though I’ve read it only once and probably don’t yet grasp all its nuances, I think it’s very relevant to our world today and want to bring it to your attention.
You can find the full report here. Here are some of the highlights. The items in italics are direct quotes. The items not in italics are my comments and opinions.
What Is Truth Decay?
Heightened disagreement about facts and analytical interpretations of data — we used to disagree about opinions. Now we increasingly disagree about facts.
The blurred line between opinion and fact — we used to separate “news” from “editorial”. It was easy to tell which was which. Today, the two are commonly mixed together.
Increased volume and influence of opinion and personal experience across the communication landscape — our channels of mass communication used to be dominated by factual reporting with some clearly labeled opinion pieces mixed in. Today the reverse seems to be true.
Diminished trust in formerly respected institutions as sources of factual information — we used to have Walter Cronkite. Now we don’t.
Why Has The Truth Decayed?
Characteristics of human information processing, such as cognitive biases — these are the same biases that we’ve been studying this quarter.
Changes in the information system, such as the rise of 24-hour news coverage, social media, and dissemination of disinformation and misleading or biased information — we used to sip information slowly. Now we’re swamped by it.
Competing demands on the educational system that challenge its ability to keep pace with information system changes — is our educational system teaching people what to think or how to think?
Polarization in politics, society, and the economy — we’ve sorted ourselves out so that we only have to meet and interact with people — and ideas — that we agree with.
It’s a bracing read and I recommend it to you.
When did you last get goose bumps as you contemplated something magnificent? When did you last feel like a small thread in an eternal fabric? When were you last awestruck?
I ask my students these questions and most everyone can remember feeling awestruck. My students get a bit dreamy when they describe the event: the vastness of a starry night or the power of a great thunderstorm. It makes them feel small. It fills them with wonder. They’re awestruck.
But not recently. The events they describe took place long ago. My students (who are mainly in their mid-30s) can reach back years to recall an event. But I can’t think of a singe example of a student who was awestruck just last week. It was always the distant past.
I’m starting to believe that we’re in an awe drought. Though we say “awesome” frequently, we don’t experience true skin-tingling awe very often. Perhaps we’ve explained the world too thoroughly. There aren’t many mysteries left. Or perhaps we’re just too busy. We don’t spend much time contemplating the infinite. We’d rather do e-mail.
My subjective experience has some academic backing as well. Paul Piff and Dachner Keltner make the case that “that our culture today is awe-deprived.” (Click here). They also point out that people who experience awe are more generous to strangers and more willing to sacrifice for others. An awe drought has consequences.
An awe drought might also explain the growing egotism in today’s world. Awe is the natural enemy of egotism. When you’re awestruck, you don’t feel like the center of the universe. Quite the opposite – you feel like a tiny speck of dust in a vast enterprise.
Awe holds egotism in check. If awe is declining, then egotism should be booming. And indeed, it is. A number of academic studies that trace everything from song lyrics to State-of-the-Union addresses suggest that egotism is growing – at least in America and probably elsewhere as well. (Click here, here, here, and here for examples).
What causes what? Does a lack of awe spur greater egotism? Or does growing egotism stifle awe? Or is there some third variable in play? It’s hard to sort out and the answer may not be clear-cut one way or the other. As a practical matter, however, awe is easier to experiment with than is egotism. It’s hard to imagine that we could just tell people to stop being egotistic and get any meaningful results. On the other hand, a campaign to stimulate awe-inspiring experiences might just work. If we can put a dent in the awe drought, we might be able to sort out the impact on egotism.
So, let’s seek out awe-inspiring experiences and let’s encourage our friends to do the same. Let’s see what happens. I know that I, for one, would love to say “awesome” and actually mean it.