Episode 177 - Lessons from Past Predictions on Autonomous Vehicles, Bitcoin, Covid, and Decentralization
Max goes deeper into some of the topics and predictions going back to 2015 brought up from the predictions panel earlier this month. He finds lessons and raises questions about lockdowns, the tyranny and unraveling of big tech, bitcoin, and self driving cars.
Links
FP: El Salvador makes Bitcoin official Currency
Bitcoin Magazine: Is Lightning Censorship Resistant
Jack Dorsey: Twitter to use Lightning Network
Business Wire: Strike Drives Bitcoin Forward in El Salvador
Related Episodes
Episode 175 with our latest prediction panel
Episode 174 with Jeremy Kaufman on Odysee, the YouTube alternative
Episode 172 on the theory of the Fourth Turning
Episode 159 on Waymo Expanding Autonomous Vehicle Service to San Francisco
Episode 153 on the acceleration of the unravelling and decentralizing of the internet
Episode 120 on the first so-called reopening
Episode 113 with our Quarantined prediction panel
Episode 43 with our first coverage of self driving cars
Episode 6 on Cryptonetworks replacing centralized tech
Episode 5 with Christian Lundkvist on Ethereum Smart Contracts
Transcript
Max Sklar: You're listening to The Local Maximum Episode 177.
Time to expand your perspective. Welcome to The Local Maximum. Now here's your host, Max Sklar.
Max: Welcome everyone, you have reached another Local Maximum Episode 177. Today, middle of June, really hot outside. I hope that you enjoyed last week's interview with Gene Epstein. And I'll tell you about next week's interview at the end of the show. It's switching gears a lot, but still very interesting. But today, I wanted to follow up on our predictions panel that we had a couple weeks ago, which was great. But as you know, sometimes the prediction panel, we're kind of jumping from topic to topic very quickly, and that was Episode 175. And sometimes I don't get to go into detail enough on some of the topics. So that's what I'm going to do today.
For those of you who weren't listening, you don't have to listen to that one. But just to bring you up to speed, the predictions panel is something that I do every year / every five quarters. And, basically, we make predictions on mostly future technology, but other other areas as well. And we try to check what happened with our past predictions. Was it correct? Was it not correct? Were we on the right track? Were we on the wrong track? And that's sort of a check of how well our understanding of these technologies are. Because many of them, if you talk about something like, what's going on at Foursquare, maybe some of the machine learning stuff, I have a very good idea of where we're at.
On the other hand, I probably would be very bad at predicting where we're going to be in five years from now, although I do know that people who are predicting that AI is going to become sentient in five years. I know that's not going to happen. But I actually do try to research this stuff. And I try to use my knowledge to figure out where you could think the markets can go. How are we going to be living in five years? How are we going to be living in 10 years? What are the trends? And you want to check yourself. You want to see how well did you do. And you want to learn from stuff that you said 5, 10 years ago. There were no predictions 10 years ago, but there were predictions 5 years ago. Not on the podcast, but we still did them.
So today I want to dive a little bit deeper into several topics. One is the types of predictions we were making last year during lockdowns. The second is the behavior of big tech. The third is the state of the cryptoverse, Blockchain, and Bitcoin. And fourth is driverless cars. Just because everything in the news is Big Tech and Blockchain and it's like, “Hey, are we gonna get any real products that we're gonna use in the future? Isn't a company gonna come out with something?” Yes, I know. Bitcoin is huge. But, come on, people want to know about the physical products too. So let me just start with them.
So first of all, let's start with the lockdowns because our previous prediction panel, previous to this year, was the one in March 2020. That was a very interesting time to do it. That was the very beginning of COVID. And it was sort of in the period where we were all being extra careful. Some people are extra careful, even till today. But that was the overly cautious point for me when the way I did things was, I was overly cautious when I didn't have enough information. It was information gathering.
So March 2020, there was a lot that we didn't know about how this pandemic would play out in the world or here in the United States. And so that snapshot in time, I was interested to go see what we said. I said that we’d hopefully not be locked down by the spring of 2021. Fortunately, I was right about that. But there is a caveat there. I would have been hoping by spring of 2021, we'd be on to talking about something else. And it wouldn't be a factor. But it still is, and so much has changed that even though we're not really locked down, in New York, the “lockdown” was really about 10 weeks.
I have an episode, Episode 120, I talked about the reopening and what that meant for New York City and New York. But it wasn't really a reopening. It was more of a partial reopening where, “Hey, you know, we kind of encourage you to go out and walk around and stuff, but everything, all the places that are open are going to be highly restricted in capacity. There's going to be massive mandates everywhere.” So it really wasn't back to real life.
And I feel like the real reopening for me was when I moved to New Hampshire here. And really more recently, we're now here in New Hampshire, everything is completely back to normal. I can see almost no, except for some signs that are leftover. I see places to get vaccinated and stuff. But I see no evidence that there's a pandemic going on. So things are back to normal here in New Hampshire. But last week, I was down in New York City, where I visited recently. I visited in May, and then I visited again in June for work. And sure, it's open. But look at all the mandates and restrictions. I was required to wear a mask just to get ice cream. And plus, you could say that the businesses have reopened, but many actual small businesses never will reopen. And there are a lot of storefronts there that are just simply for rent. So I guess my prediction there was true. But unfortunately, we had a “reopening” in like two, three months, but it wasn't a real reopening. The consequences of what we've done here are things we're going to feel and be talking about long into the future.
Last year, one participant suggested in the predictions that a coronavirus, and remember this is March 2020, coronavirus vaccine is released and the stock market recovers. That actually might have been seen as overly optimistic at the time. But fortunately, that totally did happen. So again, sometimes the positive thinking does come true. Sometimes, the pessimists don't always win. There are a lot of people who want to be overly pessimistic. And I understand the stock market recovers, but it might be, there's a lot of problems with the economy, and I've talked about it. But no, we didn't think there'd be a vaccine. There's a vaccine. So that's good too.
All right. So that's kind of all I wanted to say about that. I just think that if I wanted some input from you guys, it was like, “What were you thinking in March of 2020? And how has that changed with—how has your expectations at the time when we didn't have a lot of information, how is that lined up with where we are today?”
Now, I want to get into Big Tech, fake news. Yes, everyone's talking about it. So I've been talking about the show for a long time. But one participant, and I mentioned this a couple weeks ago on the predictions panel. But one participant said, “Facebook/Twitter/etcetera will stop trying to eliminate fake news. And instead, they embrace fake news and use it to sell more ads. And they become more popular than ever.” And then he also said, “AI will become widely used for censorship of unpopular beliefs and views.” And this is something that he said, I think two and a half years ago, maybe five years ago, I'm not sure. I think it's two and a half. So this stuff is already starting to happen. But yes, this is the case where the pessimists kind of win.
But I want you to remember the Fourth Turning episode in a few episodes ago, in Episode 173. I'm not saying that the Fourth Turning theory is correct. But one of the steps in that when you have a Fourth Turning, or you have any type of creative destruction, as the previous order dies, and we do have a previous order in terms of information, which is Big Tech, which is not that old as the Fourth Turning suggests, 80 years old. It's more of a 10-year phenomenon, not even. But as the previous order dies, it gets increasingly worse. And you could think of this as a kind of media too. It gets increasingly bad before giving way to a new order. And so what is that new order? Well, we've been talking about it all throughout the show, Episode 174. Recently, we talked about LBRY being a decentralized YouTube and how it's actually something that's been doing very well. It's gotten traction. Obviously, Bitcoin’s gotten traction.
In Episode 6, way back in Episode 6 in 2018, I talked about cryptonetworks coming to the rescue of tech centralization and bad policy on the part of Big Tech. And the fact that these centralized services honestly don't have a very good… They could do better than they're doing. They have a problem where they can't please everyone. So these decentralized social networks will rise in their place. And I talked about that in Episode 6.
And then in Episode 153, which was, I believe, last year, maybe six months ago. Actually, I think that was the beginning of this year. I just talked about how everything is becoming decentralized before our eyes. And you're actually seeing services that are gaining some traction. Maybe it's not enough traction. I talked about Mastodon in Episode 153, as an alternative to Twitter. Maybe not so much traction that you often see people using it that much, even though it does have a lot of real users. I just don't see a lot of people using it. But the stats speak for themselves. And it just shows that people are hungry for this stuff. And when the right entrepreneur with the right product, the right design comes along, as they did in Odysee/LBRY, you'll see consumers hunger for this new interface. So that said, that's great. But that said, it may take a while.
And obviously, keep in mind, there's no utopia. Human nature and organizational nature does not go away. And so all of these new systems will then eventually generate new problems down the road. But hopefully, we'll have solved old problems. And so the new problems are kind of a step ahead. They're a higher level. We've graduated a grade in terms of how to organize the information of billions of people, which, when you think about it that way, it's hard to fault people for not being able to get that right, because that is a very, very hard problem.
Furthermore, there were a lot of predictions in the past about Bitcoin, and specifically, the block size debate and how many people would be using it and would Bitcoin still be dominant? I remember this from way back in 2014. When I heard a talk by Chris Dixon. Actually, Chris Dixon, I really want this guy on my show. Hopefully, I'll get in touch with him soon. But he's the guy whose articles I referenced in Episode 6 where he talked about cryptonetworks. And I heard him speak at Foursquare once.
He was talking about Bitcoin way back in 2014. And somebody asked him, “Well, sure, there's Bitcoin, but there's all these alternative coins as well. So how do I know that they won't win?” So that was even a problem back then, even before Ethereum existed. And I think that was even before the Ethereum blocks sale. So Ethereum was still just a project in the mind of a few people. Vitalik and a few people just building out what they're trying to build and searching for funding. So this has always been an issue. And people are really interested in how the space is gonna play out.
I remember at the beginning, people were like, “Well, Bitcoin is like Myspace and bait. Then Facebook is going to come along.” But you have to remember, this is a very different type of space. And some people say, “Well, Bitcoin is more like a protocol.” So you're not going to build the internet off of TCP-IP, or the World Wide Web off of a series of HTML documents, then all of a sudden, have some other protocol come along and beat that once everyone has agreed on that protocol. You're just going to build on top of it. And so, it could go that way, where people just continue to improve it and build on top of it. We don't know. I'm not saying it's definitely one or the other. It's every space, every idea that comes along, is going to develop very differently. If they all develop the same way, predicting and investing would be really easy. So that's just the way it is.
So I predicted several years ago, I think it was four or five years ago, I think it was four years ago, that Bitcoin will have moved beyond the block size debate and wins the crypto wars. And then, in parentheses, I wrote, “It doesn't mean that it's the only currency, but it's the main one.” So let me give some of the backgrounds on the fork.
So what happened was at the time, there were fights in terms of how Bitcoin is going to work. How is this currency going to work? And the fight was big blocks versus small blocks. Right now, Bitcoin has small blocks. They're 1 megabyte in size, which means it can only contain every 10 minutes, there's a new block of transactions. That means very few transactions, 1 megabyte’s worth, I'm not sure how much that is, can make it into each block every 10 minutes. So that means that if you're going to build a global payment system off of Bitcoin, then most of those payments are not going to be on the main chain of transactions. They're going to have to be taken “off-line” elsewhere.
And the idea there is if you have the most decentralized currency, and you want everyone to keep track of the ledger, then you don't want the ledger to be too big. So that's the best way to go. And then the big blockers want more and more in the ledger. And they say, “Well, if fewer people are running nodes and keeping track of that, that's fine. But then everyone can make payments and go on the ledger. And they could just make payments on the first layer.”
I mentioned this in a few episodes. Again, I'll combine episodes from 2018 to today. One of the interesting ones where I talked about this a little bit, touched on it, was Christian Lundkvist in Episode 5. He is one of the engineers who works on Ethereum. And he does really cool stuff, and he knows so much. And so even in 2018, we’re mentioning this because that was just when the fork occurred.
And the fork occurred when the big blockers and the small blockers could not agree on how to run Bitcoin moving forward. And so they decided to change the software, and essentially, some people choose small blocks, some people chose big blocks. To be more specific, the big blockers changed the limit, so they were the ones who changed. So they forked off of Bitcoin and created Bitcoin Cash. Right now, Bitcoin Cash is much smaller than Bitcoin, and some of the big blockers are people who are critical of Bitcoin. Not all of them say Bitcoin Cash is the way to go. They've also created their own cryptocurrencies to kind of compete there. So Bitcoin is still very dominant in that way. In fact, Bitcoin Cash itself forked.
I also talked in Episode 165 to Peter McCormack about this, and he started his podcast around the same time. He is more of what they call a Bitcoin maximalist. He's Bitcoin only. And so you get his point of view in Episode 165.
So today, you could point to Bitcoin Cash and say, “Hey, look, Bitcoin Cash is faster and cheaper because they allow more transactions per block.” But that's for transactions. First of all, you haven't been doing as well hanging on to it. So it hasn't been as good as an investment as Bitcoin. And so if you want to buy and hold as an investor, you don't want to be too ideological in terms of how you're going to spend the thing. So that's something to consider. But also, you could say, “Well, Bitcoin Cash is faster and cheaper because so few people use it.”
I mean, yeah, if I build a road that nobody uses, then I maybe could drive through it very fast. But it means it's going to be more profitable for me to run the road that everyone is trying to use. I guess I don't know if that's a great analogy. I’ll actually get into why it's not a good analogy. In a little bit, I'll come back to that. And well, I'll tell you, it's because it's digital. So the fact is that when you build a road, and the road has limited capacity, then there's only a certain number of cars that go through it, and you'll end up with a traffic jam if it's too crowded. And that'll be that. It'll just be a jammed road forever. We all know areas that we've driven through that have roads like that.
But when you're talking about a digital good, and you're talking about the idea that someone can figure out a way to take these transactions “off the blockchain” and have side deals going on without your small transaction going on, everyone's computer who's running everyone's device, who's our minor, whatever, who's keeping track of these transactions throughout the world. And you kind of do that on the side. Well, if people figure out how to do that, then you can increase the throughput without increasing the size of the road. So that's sort of where the debate is. Some people say, “Yes, we could do this.” Other people say, “No, that's not a good way to go about it.”
So right now, yes, and other coins can be used to transact other than Bitcoin, but it's the same deal. They have a smaller market cap. Fewer people are using them. So there's definitely a trade-off between decentralization and throughput on the base layer or layer one, as I'll talk about. Because if you have a huge blockchain and an example like Ethereum is getting pretty big, I don't know if it's like terabytes now, but Bitcoin, the entire transaction ledger is just megabytes. So it's still only $5 to transact. So you want to take that off-line if you want to make smaller transactions, but it's not prohibitive.
What does layer two look like? If people are going to build layer two on top of Bitcoin, I think the main contender right now is something called the Lightning Network. For those of you who have been following this space, very exciting news, El Salvador, in the last couple of weeks, announced that they were going to make Bitcoin legal tender. That means that it's one of two major currencies in the country: the US dollar and Bitcoin. Now, maybe it's easier for a country to do that if they don't have their own native currency. And apparently, they're using an app called Strike that uses this Lightning Network.
I could do a whole show on Lightning Network. I don't want to get into all the details of how it works. But basically, you take all your transactions off-chain, and you only transact with the people you need to. And then, if there's dispute, that's when you go onto the blockchain. And keep everyone honest. So there's kind of a failsafe there. And the mechanics of how it all works is quite complicated. So I don't want to get into that today. I'm probably not equipped to discuss it. I have kind of in my head, how it works.
So Salvadorians have been using this, particularly, from what I hear, in this town called Bitcoin Beach where Strike has been set up, this app using Lightning Network, Strike. But I have a different Lightning Network app. And so you can transact, but you don’t have to wait the 10 minutes, you could just transact with someone else with a Lightning Network wallet almost instantaneously, like swipe your credit card or something like that. So that's pretty good.
There are some people who say, and it is a concern, “Well, you know, this network is a little bit more, you kind of have to connect to a lightning node to do it. And to create your own, you have to create a transaction on the blockchain, or several, which at $5 now, it's not that big of a deal, but it might be a big deal for people in Central America. And what happens if Bitcoin scales up, and then all of a sudden, it costs hundreds of dollars to make a transaction on the blockchain. How are you going to get access to Lightning Network?” And the answer is, it'll probably have to be custodial, it'll have to be value that's already locked up somewhere. So you don't have to make too many of these $100 transactions to start trading because nobody wants to spend that kind of money to open a bank account.
Now, you might spend the $100 once to open a bank account, particularly if you're in a developed country, but still, maybe you don't have to. So that's one way it could play out. But then, you have to ask permission from a bigger organization that's running this node to do it. So that could lead to some censorship is the way that is the way I think about it.
But then again, it might not be that expensive to fire up a Lightning node, and therefore, the censorship might not be that big of a problem. So I don't know. I don't know how this is going to go. I guess we'll just have to see how it plays out. But my prediction about Bitcoin moving beyond the Blockchain block size debate and winning the crypto wars, I'll give that a partial because it's still ahead in the crypto wars. And Bitcoin itself no longer has a block size debate because they've forked, and they've offloaded that to another coin. And it's like, “Alright, who's gonna win the marketplace?” Five years later, Bitcoin is still winning. But that's not necessarily true in the future.
I don't know if that's going to be true in the future, but I would be very scared betting against Bitcoin being the one, and I'll tell you why. It's because it has such a high market cap: over a trillion dollars. And you could say, “Well, it's slow. There are fees.” But there's so many people working on the problem of getting around that. And it's not just one organization. It's permissionless innovation, and it's worldwide. People around the world are working on this problem. There's an economic incentive to do it. You want me to bet against the event that a bunch of people figure this out? That is a scary bet that no one in the world figures this out. That is not a bet that I'm willing to make. I will see how this plays out.
I'm not all-in on Bitcoin. I have some other coins. But I think that it's very likely they'll pull it out and become the main coin. It really looks like it's happening with organizations buying it like Michael Saylor of MicroStrategy and Elon Musk to some extent, though he's playing cat and mouse with the market, which maybe is a little annoying, but that won't be a big factor in the long run. And then now, El Salvador, and I believe countries will keep Bitcoin on their ledger, keep Bitcoin as part of the reserve before other cryptocurrencies. So that looks like a pretty big indicator to me.
I predicted in 2015 that Bitcoin will become the most popular currency in the country around the year 2035. I have since revised my tipping point for global currencies. I think that Bitcoin is going to be a big global currency in 10 years, more or less, by the year 2030. And 2035 for Bitcoin to become the most popular, so quickly, after 2015, I realized that this space is moving much faster than that. And now it looks like for El Salvador and perhaps others, many may beat this. The app, the Lightning Network is growing fast around the world, including in El Salvador, maybe it gets to the point where it doesn't scale, and maybe at some point, it's like, okay, yeah, 20% of the people use that. And then 80% use some other currency. And that's it. It kind of stops there. So Bitcoin never becomes the most popular currency in a country.
But again, I wouldn't bet against Bitcoin on this. And if it happens, I think it will happen long before 2035. And now with the news from El Salvador, probably before 2030 because El Salvador is not going to be the last country to do this. If you want to hear more about the idea that there could be censorship on Lightning supernodes, a lot of this is very technical in nature. I know I should do maybe an episode on it to break it down. That's not today. But I'll post an article in Bitcoin magazine on the show notes page, localmaxradio.com/177.
I also predicted that Ethereum gets a second win. Not all coins did. Bitcoin Cash, for example; it got a second win when everything went up. But compared to Bitcoin, it didn't do well versus Ethereum, which is compared to the market cap of Bitcoin, it went down, and then it went back up. And that's just because I think that Ethereum, with its focus on smart contracts and decentralized finance, actually does give use cases that Bitcoin is not focused on right now. And they are use cases that the market is interested in. People are interested in it. And just the idea that you have a world computer that can't be stopped, and that's again, permissionless innovation that anyone in the world can use, the idea that nobody's gonna figure out a good use for it, I wouldn't bet against that either.
So, again, if Bitcoin continues to win, I think, “win,” which is be the dominant coin, we’ll kind of see things go as they go. What is it? What does the world start to look like if Bitcoin starts to lose? What takes its place? I'm not so sure about that. What do you think? If you have an opinion, email me at localmaxradio@gmail.com or just go on locals, maximum.locals.com. Because would it just be that some currency flips Bitcoin in market cap? And then everyone starts, then countries start adopting that, and companies start adopting that? Or do you think that it's going to be the small transactions that these alternatives went over?
Bitcoin is going in the other direction. They're saying, “Hey, we want to be the world reserve. We want to deal with the large transactions, the big stuff.” But that sounds like that's going to be the dominant one, whereas the small transactions are just going to be tiny coins. So again, that's how I'm thinking about it now, but we will see. I can be disproved.
Finally, we'll talk about self-driving cars because we talked about the other stuff too much and reminded that there's more technology coming out than Blockchains and Big Tech run amok. This is more of a real sci-fi–type thing that you think of that might actually happen. So my original prediction in 2015, when I knew a little less was, around 2025 for the first commercial driverless car, which is level four or above. So level four is kind of true autonomy, you can't get rid of the driver's seat; you still have to take over from time to time. But the car largely drives itself. And this is the type of thing that Waymo has been experimenting in, now in Arizona, and a few other cities.
I also, after 2015, revise that for a little to 2030, just because the last mile of the so-called like, taking this project over the finish line, like Waymo and some other organizations have great products. But it's so tough to finally get this into what we call a shippable product because there's so many edge cases, so many things that can go wrong, and you really don't want things to go wrong, that it's going to take years to get it out.
So may the first commercialization actually come by 2025? It might. But I still think the 2025 to 2030 range looks pretty good. So I have in mind late in the decade. But still, it'll probably only be off a few years from 2025. And then I thought they'd be more common, maybe you'd need 10 years. So these are slow-moving technologies. I was... indoctrinated is not the right word. But you often see these charts on how technology is adopted faster than it was in the past. Like, hey, something came I don’t know, the electric light bulb came out. And then it took like 40 years for it to be adopted. And then in the 1950s, something came out, and the TV came out and took 10 years for it to be adopted, and so on, so forth. So the adoption cycle is getting less and less.
But I still think that there are long-term projects that take 20, 30 years, and those are the interesting ones. And it could just be they have more magnitude, more impact than the... I wouldn't even argue that. It's just we're on the next level. We're leveling up in terms of our economy and our use of technology in the world, which is inevitable. It's a good thing. But technology is always a double-edged sword. So we'll see what happens to this.
I'll continue to follow driverless cars on the program. I didn't want to get too deep into the actual tech and how everything worked today. I just wanted to give you my roadmap for how the world is going to go on these particular topics over the next few years and how predictions from the past kind of played out and then in some ways didn't, and what we can learn from it, and what we can look forward in the next few years.
So I hope that was helpful. I hope you enjoyed it. Join me next week because I did this interview with Scott Berkun who wrote a book called How Design Makes the World. and I'm finally getting into design, which is closely linked with engineering. Everyone is the designer. You design. You might do interior design. You design your house. You design your desk. Everything is designed. You might use products. And you might think, “Well, why is this designed badly?” And oftentimes, there's a good reason for it. And sometimes we armchair design things. Well, this should be this way, this should be that way. And sometimes there are good reasons for it.
So it really helps to understand the world, to understand design. Not to mention understanding design, in particular, this discussion that I had is really helpful for anyone in the workplace and anyone just trying to get things done. So because we talked about organizational dynamics, too, so definitely join me next week for that one. Have a great week, everyone.
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