Project Treble, Coming into its Own

Project Treble is the biggest re-architecture of Android since it was born, and Google announcing that the Android P beta will be supported by nearly a dozen smartphones is the clearest indication yet that it is working.

The following shows the one year adoption rate of each version of Android:
50.6%, Gingerbread                 
23.7%, Ice Cream Sandwich 
25.0%, Jelly Bean                     
30.2%, Kitkat
25.6%, Lollipop
24.0%, Marshmallow
7.1%, Nougat
5.7%, Oreo (August 2018 will mark one year since its release.) 

Gingerbread was a fluke for many reasons, so it’s safe to say that 25% penetration after one year has historically been the norm. The drop off in Nougat and Oreo can be explained largely by the maturity of the smartphone market. The year over year improvement in devices isn’t as much as it used to be, inclining users to hold off on replacing their smartphone for a longer period of time. This downward trend is about to change dramatically.

The following are my predictions for the one year adoption rate of future Android versions (+/- 2.5%):
Android Oreo, 9%
Android P, 15%,
Android Q, 19%
Android R, 22%
Android S, 24%
Android T, 25%
Android U, 25%

There are two levers driving my predictions. The first is the fact that new Android devices will support Treble and thus contribute to an increased one year adoption rate. The second is the fact that the smartphone market is maturing and users are replacing their devices at an increasingly lower rate. And since even devices with Treble won’t receive updates for more than ~3 years, the one year adoption rate will taper off to ~25%.

Let’s see what happens.

 

Of Delusionists and Blochaters

For every popular phenomenon there is an equal and opposite group of detractors. This creates a positive feedback loop where the promoters become more fervent in their support as the detractors become more fervent in the opposite, and vice versa. This leaves us with two irrational groups.

Blockchain is no different. The delusionists on one side frothing at the mouth that blockchain will change everything, can be used for everything, and oh, many of them are financially invested so they are less concerned with the truth and more concerned with pumping their portfolio. On the other side are the blochaters, who have been pushed so far into the detractor camp by the delusionists that they dismiss the technology all together. Kai Stinchcombe is one of these blochaters, and he has written two excellent posts that many are rallying around because they are sick and tired of hearing the buzzword bullshit. I mostly agree with Kai but his second post makes two points that I’d like to respectfully attack. Kai writes:

“Blockchain systems are supposed to be more trustworthy, but in fact they are the least trustworthy systems in the world. Today, in less than a decade, three successive top bitcoin exchanges have been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained.”

This isn’t fair. It’s not the blockchain systems that have been compromised, it’s the infrastructure built around them that have been compromised, i.e. the non blockchain parts. Bitcoin has existed for almost a decade and it has not been directly compromised once. That is a fantastic feat for a system that exists on the internet and is owned collectively by people all over the world. Yes, keys have been stolen, wallets have been drained, but the protection of private keys is outside the scope of the Bitcoin network. As for the DAO smart contract bug, that wasn’t an issue with Ethereum itself, that was an issue with the contract written on top of Ethereum. Companies worth billions of dollars are getting hacked on a regular basis, but that isn’t a problem with the internet, that’s a problem with the company’s security practices.

As for the second point I take issue with, Kai writes:

“A lawless and mistrustful world where self-interest is the only principle and paranoia is the only source of safety is not a paradise but a crypto-medieval hellhole.”

Brother, this is the world we already live in. Don’t let the shower twice a day and nifty technology fool you, humans are running on caveman software and we are all one week of no food away from destroying each other. 75 years of peace without a major war is not the result of a global morality boost, it is the result of mutually assured destruction. What has kept the peace is not that we trust each other more as a species, it’s that nations have guns pointed at each others collective heads. What an irony that the greatest weapon ever created has made war obsolete. Nations have a self interest to avoid war at all costs and miners have a self interest to follow the rules of the network or face financial loss. It is this very threat of loss that keeps both nations and blockchain networks well behaved.

The great innovation of blockchain technology is that consensus can be reached among parties that don’t trust each other individually, but are able to trust each other collectively- without an overseer. This is not only a huge technological feat, but a social one. The only previous technology that has come close to this is the BitTorrent protocol. Blockchain is in its infancy. It is a solution looking for a problem. I can’t tell you exactly what problems it will find, only that I’m optimistic it will find them. And no, IBM hasn’t found the problem either. Besides the fact that blockchain only complicates supply chain management, a company pushing its own blockchain system is backwards and removes its main selling point- decentralization. I’ll leave you with this from Benedict Evans (whose newsletter I recommend):

“You can believe both that crypto is full of delusional utopian lunatics saying stuff that’ll never happen and that it’s a profound technology that will change the world. That’s what talking about the internet was like in 1994.”

Reminiscing on the Release of Windows 7

Coming off the disaster that was the release of Windows Vista with its performance and compatibility issues, there was a palpable sense in the community that Windows 7 had to be our saving grace. Despite Windows having the vast majority of the market share, we fanboys felt under attack. Everyone thought Macs were cooler, easier to use, safer, and faster. And the worst part of all, you had to field the onslaught of “Macs are better” from your sister’s friends. “Security through obscurity,” we cried in defense. Harder to use wasn’t a bad thing, we took pride in it. We did our duty, we relished in defending our platform. The strongest among us believed Vista was only unsuccessful because the OEMs didn’t properly update their drivers. But in our heart of hearts, we knew the truth.

Much to our delight in 2007, a mere six months following the release of Vista, Microsoft announced the next version would be codenamed “Windows 7.” The salivating started, we saw a flicker of light that would be our salvation. Then, in 2008, Microsoft officially announced the name would be “Windows 7.” We cheered. The name was simple, obvious, to the point. It felt fast, easy to type, easy to translate, it oozed efficiency and we couldn’t wait to touch it. In late 2008 a beta version of Windows 7 was leaked and distributed on torrent sites. The bravest among us slapped it on our machines and sung its praises near and far, anything to wipe the memory of Vista from our minds as quickly as possible. “Using the beta on machines responsible for life support, at a hospital where I work, runs perfectly, absolutely zero problems,” sang the evangelists. In early 2009, Microsoft released the official Windows 7 beta. Microsoft wanted to hear from us and there was a real sense that they were listening. Our duty was to install the beta and give feedback, if only in the form of anonymous usage statistics. We were in this together.

I remember being stationed at my parents’ dining room table, installing it on my 10-pound machined plastic HP dv6000 with that AMD Turion engine.The feeling of risk and fear we all get when we do a fresh install, a part of us thinking, “this might not work.” Worked it did, and on boot I was awarded with that beautiful betta fish. I leaned back in my chair, looked up at the heavens to Steve Ballmer and Bill Gates, arms outstretched, palms up, head back, “We made it.”

The betta fish wallpaper, a nod from a large behemoth of a corporation that said, “Hey, thanks for testing our software, here’s an inside joke we know only the real hax0rs will get ;).” We ate it up. Windows Aero was fully realized, and for some reason we liked it a lot more in 7 than in Vista. The taskbar, unapologetically geometric, it all felt so right. And of course those insane wallpapers that were introduced in Windows 7 RC 1. I remember a digg.com post, God rest its soul, that topped the charts saying, “Microsoft is on some serious drugs,” linking to the wallpapers, we loved it. They showed us that Microsoft had changed. They showed us that Microsoft knew how to have fun, and have fun with us, the community, because no one else cares about these minor details. But we did, and we cared that Microsoft cared too. The wallpapers were a victory lap for a product that hadn’t even been released. At this point, we all knew the success of Windows 7 was a foregone conclusion.

The official release in October 2009 was glorious. Pre-order records were broken, adoption soared. The troves of Windows XP users who avoided Vista were beckoned, we took their hands and told them it was safe now, they could come out of their troll holes and upgrade. That default wallpapergreeting you on first boot, like the name, it was efficient, simple, it was a digital manifestation of the promises of Windows 7. Promises kept, thanks in part to us. We had arrived.

Only this time it’s Blockchain

In A Random Walk Down Wall Street, Burton G. Malkiel writes:

“It was called the tronics boom, because the stock offerings often included some garbled version of the word “electronics” in their title, even if the companies had nothing to do with the electronics industry. Buyers of these issues didn’t really care what the companies made- so long as it sounded electronic, with a suggestion of the esoteric. For example, American Music Guild, whose business consisted entirely of the door-to-door sale of phonograph records and players, changed its name to Space-Tone before “going public.” The shares were sold to the public at 2 and, within a few weeks, rose to 14.”

60 years later we are seeing companies add blockchain to their name with similar resultsCastle in the air theory is in full effect and I expect that most speculators are purchasing these shares simply because they think they will be able to sell it to someone else playing the same game for a higher price. Eventually the music stops, it always does. For better or worse I expect the havoc to the public stock exchanges will be mitigated by the fact that speculators can fill their insatiable appetite buy taking part in ICOs and purchasing cryptocurrencies directly. Do I think we are in a bubble? Absolutely. Do I think that blockchain and the potential of distributed consensus will ultimately prove to be useful? Yes. We are in the early days of blockchain and though not much has come of ityet, I think it’s only a matter of time. The bubble will burst, the hype will die, and the people in it for the right reasons will keep their noses to the grindstone and take this to the future where they’ll be waiting for us.

Hodlers, Consider This

Given the absolute stunning rise in the value of the cryptocurrency market, this is leaving many with the difficult decision of whether they should sell some of their position or not (remember, it doesn’t have to be all or nothing). So what should you do? There is no single answer as everyone has different financial goals and risk tolerance. But I ask you to consider two principles when determining when and how much you should sell, loss aversion and rebalancing.

Loss aversion “refers to people’s tendency to prefer avoiding losses to acquiring equivalent gains: it’s better to not lose $5 than to find $5”. Given this, hedge your bets against your future self feeling devastated if the value of your position plummets. This will cause less pain than the pain of missing out on even greater potential gains.

Rebalancing “is the process of realigning the weightings of a portfolio of assets.” You never want your asset allocation to be heavily skewed toward one specific asset (e.g. Apple stock, Bitcoin, etc.) as this decreases the diversification of your portfolio and increases your level of risk. If you have $20k in traditional non cryptocurrency investments that include a range of different stocks, bonds, etc. and $20k in Bitcoin, half your portfolio is in one specific asset. This is an extremely risky position given all it takes is for Bitcoin to diminish in value, and that brings your entire portfolio down with it. You may even feel that given the performance of cryptocurrencies recently you should invest even more than you already have. This is dangerous. As the prices continue to climb, simply by not selling you are in effect increasing your investment already, because you have that much more to lose. Consider this, let’s say you purchased 1 Bitcoin in 2017 for $1k. At the time of this writing, your initial $1k investment is now worth ~$20k. You may be tempted to continue to hold, because you think to yourself, “this was only a $1k investment anyway, so what if I lose it.” This is an incorrect way of thinking and just because cryptocurrencies are new, doesn’t mean sound financial principles do not apply. The reality is, you now have $20k to lose, not $1k. And framing your position this way will allow you to make more sound decisions regarding when and how much to sell.

For those who have made significant gains, I would say there are two groups. The first group is loss averse, made up of those who are constantly worried about their crypto assets and constantly checking the prices throughout the day. To this group I would say, this is no way to live. If done in a healthy manner, making money should reduce the stress in your life, not increase it. If you fall into this group, I would sell enough so that even if all of your crypto assets go to zero, you will still be satisfied with the amount you made. The amount to sell to reach this point will be different for everyone but I would say a good starting point is to sell at least enough to get your initial investment back plus some on top of that. The second group is not phased by the extreme price changes and is not letting it affect their daily lives. To this group I say, seriously consider selling to rebalance your portfolio to a more appropriate asset allocation. Yes, crypto market capitalization has seen a fantastic increase, but that doesn’t mean it will continue forever, it almost certainly won’t.

Whatever you do, be sure you are aware of your country’s applicable tax laws (here is a great guide for US citizens). Even though it is in a gray area right now, I would err on the side of caution and report your gains to the government. You don’t want to get in a situation where you have made a bunch of money, didn’t report it, and then get in trouble for tax evasion down the road. That would cause stress and remember, making money should reduce stress. For those in the United States, the IRS has released guidelines which means your crypto gains are taxed as capital gains, just like a stock. If you have held for at least a year before you sell, it will be taxed as a long term capital gain, which means you will be taxed at a lower rate than if you held for less than a year. This should certainly factor into when you plan to sell, but don’t take this to mean you should wait a year no matter what. The extra tax associated with short term gains may pale in comparison to the loss of value of your crypto assets while you wait for the one year mark.

A lot of the narrative around cryptocurrencies is that they will replace our entire financial system and investing in tradition stocks and bonds no longer makes sense in this new world order. This is absolutely wrong. I think John Bogle’s thoughts on gold being a speculation instead of an investment apply to crypto as well. He argues “Bonds are supported by interest coupons, stocks are supported by dividend yield and earnings growth, and gold is supported by the ability that someone is going to take it off your hands for more than you paid for it.” Regardless of whether cryptocurrency proves to be a success and ultimately facilitates a large part of the world’s financial transactions, this doesn’t mean that investing in companies through stocks and bonds will be obsolete. No matter what happens in the crypto world, a steel company will still make and profit off of selling steel, and that profit will flow to its shareholders. The crypto world right now is where the web was in 1995. The pieces are there but no one quite knows for sure what’s going to be built. Bitcoin and all these other cryptocurrencies could very well be the Netscape of the crypto world.

Whatever happens with the price, the winners, the losers, don’t forget to appreciate how unbelievable all this is. A bunch of personal computers connected to each other in 2009 started something that the world’s largest banks and governments are needing to respond to. What a time to be alive.

We don’t Need Super Intelligence for AI to be Super

In The Impossibility of Intelligence Explosion, François Chollet writes:

“Arguably, the usefulness of software has been improving at a measurably linear pace, while we have invested exponential efforts into producing it. The number of software developers has been booming exponentially for decades, and the number of transistors on which we are running our software has been exploding as well, following Moore’s law. Yet, our computers are only incrementally more useful to us than they were in 2012, or 2002, or 1992…In this case, you may ask, isn’t civilization itself the runaway self-improving brain? Is our civilizational intelligence exploding? No. Crucially, the civilization-level intelligence-improving loop has only resulted in measurably linear progress in our problem-solving abilities over time.””

Using technological advancement as a corollary for “civilizational intelligence”, if the number of transistors is “exploding”, this means our intelligence is exploding as well, because it is increasingly difficult to maintain Moore’s law, yet we have. The amount of progress since 1750, is equivalent to the amount of progress from 12,000BC to 1750. Saying “our computers are only incrementally more useful” reminds me of Peter Thiel in his famous “What Happened to the Future” manifesto coining “We wanted flying cars, instead we got 140 characters” while also, might I add, touting Facebook, a company he is an investor in, as an example of true technological progress. Using the smartphone as an example, the advances of these devices are far more than simply “incrementally useful”, even since 2012.

“A smart human raised in the jungle is but a hairless ape. Similarly, an AI with a superhuman brain, dropped into a human body in our modern world, would likely not develop greater capabilities than a smart contemporary human. If it could, then exceptionally high-IQ humans would already be displaying proportionally exceptional levels of personal attainment; they would achieve exceptional levels of control over their environment, and solve major outstanding problems— which they don’t in practice.””

Yes, they don’t in practice because many with a high IQ, among other inhibitors, have difficulty with social interaction, something computers don’t need to worry about. Even if we can only replicate the intelligence of an average brain, this would be a huge breakthrough. Just look at all those things on your TODO list. What if you had 0 distractions, were always motivated, never had to sleep, eat etc. The amount you could get done would be amazing. And then what if we duplicated that average brain as much as we wanted, wouldn’t that be super?

Big Tech is Eating the World

In 2011 Marc Andreessen declared “Software is Eating the World”. It is now evident that the software doing the eating is owned by a smaller and smaller set of companies. These Big Tech companies (Alphabet, Apple, Amazon, Facebook, and Microsoft) are backed by serious infrastructure, profits, data, custom silicone, ecosystems, and are increasingly vertical. You argue Big Tech is just like any other powerful sector with a lot of big players. My point is that this is different because Big Tech isn’t limited by vertical, it is limited only by the problems software can solve, which is an ever increasing amount of problems. The Google reorg to Alphabet is interesting because it is an admission of Big Tech’s future, which is to do everything. Software is so flexible and so powerful, that it is giving the large companies who specialize in it an unprecedented amount of wealth and power. We call them “tech companies”, soon that will be like saying “color tv”, because all companies will be tech companies.

Think about it, a large tech company has the power to make a large portion of the human population believe the world is at nuclear war. Facebook and Google could simply promote fake news stories. Apple could spoof text messages to their devices and ensure they can only access websites promoting their fake news stories. With how much internet traffic run through Amazon and Microsoft, they could easily spread news of a nuclear war that doesn’t exist. Am I afraid this is going to happen? No. Am I worried this is even possible? Yes. What’s scarier though is the fact that two tech companies, Facebook and Google, own algorithms that shift the thinking of billions of people. I don’t care who owns the keys to that kind of power, that kind of power should not exist.

This sounds crazy, but just 10 years ago you would have thought it crazy for the company behind the iPod to be building a car, an online book retailer to earn an Oscar, a search engine to be solving aging, and your your mom to be on Facebook. It used to be every tech company could grab their own piece of the pie, now it’s about who is going to own the pie shop. Ok Google take search, Apple take laptops people actually like using, Microsoft own the enterprise. Now Big Tech is competing fiercely with each other on multiple fronts, squashing or purchasing smaller players, and making component makers like Qualcomm, Intel, and Nvidia obsolete. But now, these Big Tech companies are breaking out of their bubble. As I alluded to above, there is no such thing as a “tech problem”, there are only problems. Big Tech has chosen to eat media as an appetizer, transportation looks to be next, and I predict banking will come after that.

Big Tech has three possible outcomes. The first, is they get broken up with antitrust legislation. The second, a paradigm shift e.g. blockchain, that levels the playing field. The third, Big Tech keeps getting bigger and bigger until Big Tech is only one company, which we worship as our God and would never dare wish ill on it.