Bitcoin and crytpos – is understanding useful?
What people immediately ‘understand’ is that this post is about understanding Bitcoin and cryptocurrencies. Well, it isn’t! This is the math behind or under Bitcoin: https://www.coindesk.com/math-behind-bitcoin You could spend your life understanding it – and it wouldn’t help anything.
In this post where I say ‘Bitcoin’ I include all cryptocurrencies as a concept. This exploration is not simply about Bitcoin. It is an exploration of ‘understanding‘. Why is this necessary? Well – I find that loads of people do not engage with various things because the say they “don’t understand“.
At the outset I have to be pre-emptively defensive in this crazy world of social media, to say this post is not an encouragement to buy or trade Bitcoin or any other security or derivative – just in case some moron decides to conclude any old thing and make it into a fact. If one is obsessed with learning about Bitcoin, kindly clear off because I only use Bitcoin later on to explain a few things.
Where I use the word ‘he’, it includes ‘she’ lest I be accused of being sexist! Chrysst! It’s so bledy difficult to write a blog without offending somebody or the other.
People seem to need understanding for the following reasons:
- It gives them a sense of control and order.
- It reduces anxiety or other psychological discomfort.
- They may feel better able to manage or ‘predict’ outcomes.
- They want to avoid risk – of whatever – and associated psychological discomforts.
Now did I say I blame anybody for needing understanding? I did NOT! The above is not an exhaustive list as this is not a lecture – even if you think it is one!
The need for understanding does not however mean that people will seek understanding. They may well avoid understanding something for ‘n’ number of reasons in their minds. Where people do seek understanding of X, Y or Z it is primarily because they see some advantage for them (or persons in their affection) in the present or at some point in the future.
I often meet lots of people who need to understand – before they do X, Y, or Z. These people should never drives cars, use washing machines or mobile phones. But they do! How strange. They have what I refer to below was ‘shallow understanding’ which gets them by.
For Bitcoin – only a few people in the world truly ‘understand’ it. But it’s not just about Bitcoin – the whole range of cryptos are a new mathematical discovery. Do people need to know the intricacies of Bitcoin? Do people need to understand how money is created to use it? They don’t! In fact a whole lot of people think money is about coins and specially printed paper (banknotes). How? Those are the images that pop into their minds. All they know is that ‘the government creates it’ – and they are wrong to think so. I’ll come back to Bitcoin a bit more later.
It’s a difficult thing to define. Wikipedia has some definitions, some of which I may borrow from. People often say things like, “I grasp it” or “I follow” to indicate understanding. But those words do not really give and idea of what is ‘understanding’. According to Wikipedia, understanding is broken down into ‘shallow’ and ‘deep’ types. These types will unfold later on.
I take as:
- Basic knowledge
- Basic pattern recognition
- Memory of and application of procedure
- Recognition of expected outcomes
for me means:
- Very in-depth and broad knowledge of a thing(s) or systems.
- Identification of complex patterns and abilities to manipulate them.
- Creativity and innovation arising from the above i.e. abilities to find novel ways of approaching complexity and finding novel solutions where things go wrong.
- Recognition of potentially unexpected outcomes arising from a higher order of knowledge, skill and experience.
Clearly the above differentiate novice from expert – and yes, I know there are shades of grey between those. If you want to know ‘which shades of grey’, kindly stop everything and consider jumping off a cliff – which is not to say that I think you should do so.
Few people actually understand how planes fly. Sure they have a basic idea of the physics of flight but they do not understand nearly all the complexities that goes into keeping around 500 tons of steel in the sky. What’s more important? Understanding it or flying safely in it? The pilot certainly doesn’t know the electromechanical complexity of the engines on his plane. He couldn’t go on the tarmac and fix the engine if it broke down. He doesn’t need to know how do that stuff – and I’m not going to explain why! He needs to have a deep understanding of how the complex systems work together to make the plane fly. He doesn’t need to know the intricacies of how the systems are constructed. You may have a shallow understanding of how planes fly – the pilot has a deep understanding.
People think they understand how mobile phones work. They don’t. The average fool who uses a phone knows how to operate it. They may have a smattering of basic knowledge of components and the technology that makes it work. But they don’t understand it’s inner workings – the electronics, the computing, carrier signals etc. This is shallow understanding. Just to be clear – I’m not saying that ‘everybody’ needs to have a deep understanding of everything under the sun! But what I am saying is that those who obviously have a shallow understanding of things should not be so arrogant and authoritative in their chunterings!
What about light bulbs? Yeah – the ones you switch on from the wall or how ever. How do they work? Do you understand them? Some say things like, “Well I turn the switch on, electricity travels to the bulb, some electrons are turned into light.” That’s just basic knowledge of a process or procedure and some idea of electricity etc. But most people do not know or understand how florescent bulb and the how common LEDs work. Yes – they need electricity but that’s very elementary knowledge.
What is it that people use everyday and are totally clueless to it’s workings? Their brains! Maybe only 1000 people on earth actually have a rich understanding of how the human brain works. Understanding would mean knowledge of most of it’s structures, biochemistry, and physiology of the brain. But even those 1000 people cannot say exactly how thought is generated or where exactly in the brain it comes from! Do people need to understand their brains before they use it? I think not!
In general for most things in this information era, people can find a few headlines on the internet about how anything works. But that knowledge is actually pretty superficial. Most people do not understand how trees and other vegetation create oxygen for us humans to breathe. Immediately some fool in the back of my head is shouting “Photosynthesis!” I can tell you now that the fool does not know how photosynthesis works. Trust me it is a very complex electro-mechanical process. Mechanical? Yes! Huh? Yes – huh. Most people know little about how oxygen is produced by leaves using chlorophyll. They think it’s all ‘chemical’. It isn’t. So – does that mean we should stop breathing in oxygen until we understand how plants produce it? If you who reads this is that stupid, then please stop breathing right now!
Bitcoin is a store of value. Money is a store of value. A fundamental difference between money and Bitcoin, is that the value of money is determined by Central Banks, international trade and a host of other factors. The value of Bitcoin is determined purely by people, in the demand-supply competition. Below is a comparison of Bitcoin with Gold. Everybody knows and respects Gold. People are more inclined to think of Gold in terms of fiat currency value. But with Bitcoin – they ‘can’t wrap their heads around it‘. Why? Because basically they cannot fathom or understand how a thing that is never a physical reality can hold value. I explored value previously.
A lot of people have not spent time trying to find out about Bitcoin because they know (and are cocksure):
- That it is illegal
- Is used mainly by criminals.
- It is thin air so it is rubbish.
- They see no value in it for themselves.
All the above are false – except point 4. Point 3 is interesting because Bitcoin is as much thin air as regular currency used in credit or debit card transactions. How? You never see or feel the money in your hands with a ‘plastic’ transaction – and equally you wouldn’t feel Bitcoin if you were purchasing a cup of coffee using a Bitcoin Card.
When washing machines, sewing machines, microwaves, aeroplanes, and mobile phones were first invented, ‘everybody’ basically avoided them. Some people knew that they’d die if they tried flying in a plane. Others knew that microwaves caused cancer, though there was no evidence to support that. Then a few years ago there was a big palaver about mobile phones causing brain cancers. When people didn’t understand the above things, they stayed safe until they understood i.e. wait to see how many people were being mangled by washing machines, crashed in planes etc. The rest of the world moved on more swiftly. Did I say that ‘everybody’ has to adopt new things swiftly? I did NOT!
Why do entrepreneurs tend to make loadsah money? Cuz they evaluate things differently. So the choice is yours. You can spend our life understanding electric automobiles, pressure cookers, computers or anything else before you adopt. It’s a free country where everybody has freedom of individual choice to do with their money as they please. Those who wait for the fullest understanding are late in the game and usually left behind.
To understand more, spend your time fathoming all this below.