Simplifying the Geometry of Conscience

November 14, 2022

My first brush with crypto currency was a request to include the topic in a lecture for an outfit running international training programs for law enforcement and intelligence professionals. In 2013, I was in my first year of retirement and interested in what I called CyberOSINT. My definition of the term pivoted on the companies providing tools and software to deal with was grouped under the category of cyber crime. A decade ago, cyber crime was big, but it was propelled by what now seems to have been bad actor minnows.

The hot topics were the Dark Web, forums offering tips and tricks for hacking, and CSAM (child sexual abuse material). Digital currency, specifically Bitcoin, was the lubricant for cyber crime. Therefore, my team and I had no choice but take a look at the Nakamoto white paper, poke into the universities in England beavering away on techniques to deanonymize individual transactions, and the early research efforts of everyone’s favorite online bookstore Amazon. We attended meet ups about digital currency and spoke with seemingly well meaning people who were excited about doing money things without annoying intermediaries and regulatory authorities.

It became clear at least to me and my team that digital currency would become a replacement for paper and coin currencies because [a] money costs a lot to produce, manage, and make counterfeit resistant and [b] values could be whipped up using the juices that bad actors, money launderers, and financial “innovators” have pumping through their veins.

Today digital currencies have become a big financial play. It works… for a while. Then like the tragedy of the commons, the open green field is trashed. I thought about the current big time mess a whiz kid has created. The scale of the fraud makes those early players look less like minnows and more like clueless paramecia with math skills. “Sam Bankman-Fried and the Geometry of Conscience” is an interesting essay. However, it is difficult for a simple and somewhat dull person like myself to understand.

The write up says (and I urge you to read the complete 1,400 word essay. I want to cite one passage, if I may:

On reflection, maybe I’d just try to convince SBF to weight money logarithmically when calculating expected utility (as in the Kelly criterion), to forsake the linear weighting that SBF explicitly advocated and that he seems to have put into practice in his crypto ventures. Or if not logarithmic weighing, then at least some concave utility function—something that makes, let’s say, a mere $1 billion in hand seem better than $15 billion that has a 50% probability of vanishing and leaving you, your customers, your employees, and the entire Effective Altruism community with less than nothing.

Interesting, right.

Here’s my take. The SBF innovator attended MIT. In theory, he was exposed to MIT thinking, which as you may recall, involved taking money from everyone’s favorite poster child for questionable behavior Jeffrey Epstein. Several questions:

  1. What’s up with an MIT education and inculcation of such quaint concepts as moral behavior?
  2. Why are individuals willing and able to commit financial fraud when it is comparatively easy to deanonymize some crypto activities?
  3. Do we need big thoughts like “linear and concave utilities” to explain criminal behavior?

My take. Effective altruism is word salad. Say crypto to me I think of cyber crime. End of story. No Hopf fibration or wordsmithing needed, thank you very much.

Stephen E Arnold, November 14, 2022


One Response to “Simplifying the Geometry of Conscience”

  1. Jimmy Gauvin on November 16th, 2022 6:41 pm

    Some people seem to live up to their name :

    a burned financial huckster by the name of fried bankman,

    this stuff is hard to invent.

    Robin : “Holy banks”

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