It’s the same thing – the technological letter

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What is Bitcoin, what is Ether, what is Doge? Most of the time, they are a game.

Because blockchain technology, which underlies cryptocurrencies such as Bitcoin, is such a fascinating development, and because it is based on very interesting mathematics and science, the cryptocurrency phenomenon has captured the imagination. people. Periodic increases in the price of Bitcoin and other currencies are also fascinating as a phenomenon, and they tend to attract disproportionate attention in the media.

These aspects of blockchain and crypto are so captivating, in fact, that most people don’t look at the reality of what crypto is. It’s just a game, just like Activision’s Call of Duty or Microsoft’s Halo 4.

Look at the underlying technology. Nvidia (ticker “NVDA”), which has sold graphics processing units, or “GPUs” for years, traditionally derived all of its sales from two things, people who analyze scientific data and people who play video games. The old market has expanded to include artificial intelligence, which is behind much of Nvidia’s stock price dynamics (up thirteen hundred percent over the past five years) .

But the other part of Nvidia’s historic franchise, which makes the sleek graphics that make video games exciting, is the same technology that is used to ‘exploit’, that is, to contribute to various blockchains in order to make cryptography possible.

In fact, a few years ago people were using Nvidia GPUs so much to mine Bitcoin and other blockchain-based currencies that it was becoming difficult for people who just wanted to play games to get hold of GPUs.

In response, Nvidia in 2018 created a separate category of chips to handle blockchain functions only, to prevent miners from buying all GPUs. This chip is called a “cryptocurrency mining processor” or CMP. Creating a separate type of chip also allowed Nvidia to be clearer with the street about sales from crypto in any given quarter compared to sales from games.

At the technological level, Bitcoin and Doge and the rest are just a use of graphics chips to do a lot of computer processing. The deeper reality is that crypto and video gaming are both activities in a feedback loop.

The feedback loop is a deep phenomenon, much deeper than crypto or video games, but beautifully illustrated by each. To get high marks in Halo or make money in speculation, we try to optimize today’s stock for tomorrow’s payout.

The player has received rewards over many eras of the game and is refining his strategy accordingly. The crypto miner, someone who contributes to the blockchain of a currency and receives a financial reward in return, knows from past gains that building a more powerful computer system will lead to ever larger gains.

As for the crypto speculator, the individual who does not deal in mining but is content to buy and sell currencies, he seeks in examples from past history those purchases and sales that will amass fortunes tomorrow. They are looking for new “airdrops”, that is, new currency issues that could become the flagship currency of tomorrow, which you want to address on the ground floor.

These are all examples of a game theory-based approach to activity, a fixation on maximizing results, gambling in its simplest form. And both types of gambling, Halo and Bitcoin, whether mining or speculation, are accelerated as the speed of computer chips forms an increasingly rapid feedback loop between action and reward. .

As semiconductor-driven feedback loop experiments, video games, crypto mining, and speculation are among the most powerful forms of pure advancement experience in recent years. of technology and the instant gratification it produces in the form of an adrenaline rush.

Advances in semiconductor technology in the hands of human beings spawn terribly captivating activities with intense feedback loops.

The computer chip revolution first made personal computers addicting, then phones. Incredibly lively gameplay and relentless currency speculation is the latest twist in this tech addiction.

Gamers play because they’re addicted not only to stories and characters, but also to the ever-increasing performance of semiconductors in the form of sharper graphics rendering.

Likewise, crypto miners play mining in order to be at the top tier to win virtual currencies by having the most powerful platform. Speculators play because new currency airdrops offer a breathtaking, constant and captivating display of novelty. All of these parts play to keep playing, to keep experimenting with the next development.

As Nvidia GPUs and CMPs become more and more powerful, there is a strong incentive to participate in using these chips to experience the latest level of chip performance and the latest level of loop gratification. feedback.

An interesting question one might ask is whether crypto or video games mean anything. The players let off steam and have fun. Reflexes may be trained by the whole game, a long-standing argument. Crypto miners and speculators can create vast wealth, and many have.

However, neither group appears to be creating anything of lasting value. Playing video games does nothing for the world other than consuming compute cycles. Bitcoin is a parasitic medium of exchange for the wealth created by fiat currencies. It doesn’t add anything. At best, it transfers the wealth created in the real world from one party to another in the virtual world, and perhaps transfers money to the real world if and when it is cashed.

In this sense, crypto has mainly democratized the kind of unnecessary financial speculation that was once the preserve of bankers. The many layers of derivatives that caused the 2008 global financial collapse can now be simulated by anyone with a Bitcoin wallet, as they move money back and forth, gamble, and accumulate paper wealth.

Some people believe that something lasting is on the horizon with the emergence of a new kind of ownership, the so-called “non-fungible tokens” or NFTs. These are cryptocurrencies that grant rights to a particular object.

The problem is, the tail is clearly wagging the dog, as many of the supposedly valuable items are gimmicks created to fit the crypto world. It’s not a property that everyone would care about if it wasn’t for yet another way to play the crypto game.

Take the NFT published by the editors of Time Magazine in September. Time invented a currency, called “TIMEPieces”, which gave people legal rights as owners of digital works of art. You can view a gallery of digital artwork on a webpage created by Time.

Individual tastes may differ – I think this is one of the ugliest things I’ve seen in a long time – but the important part is not so much the works themselves as the whole way that Evel Knievel has. proceeded to the offering of coins, a waterfall that stinks of greed.

Coindesk reporter Will Gottsegen wrote a good article on the shenanigans. People didn’t even know what they were buying until they shelled out nearly ten thousand dollars apiece on these digital works:

One caveat is that because the Time Collection NFTs only point to a red Time logo, rather than a digital artwork, shoppers still don’t know what they actually bought. Time chairman Keith Grossman said the individual works attached to the NFTs would be revealed today at 6 p.m. EST. Users will need to use the “Refresh Metadata” button on the OpenSea Digital Marketplace to find out what they have.

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