prepared mind

Thomas Jefferson and Cryptocurrency

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What might the guy who invented our currency say about today’s world of cryptocurrency and DeFi (Distributed Finance)?

A bit of history

Thomas Jefferson (you know, one of the guys who signed the Declaration of Independence) was a smart guy and was thinking about the monetary system for this new country, the United States of America. So, he put his recommendation down on paper and wrote Notes on the Establishment of a Money Unit, and of Coinage for the United States in 1784.

He advocated for using the dollar and making smaller units decimal fractions of the dollar. Obvious, right? But he was the first to advocate such a system and the United States was the first country in the world to adopt one. (Although Congress messed up his plan with the quarter instead of a 20-cent piece.)

His defense for the decimal system was summed up in this statement: “…in all cases where we are free to choose between easy and difficult modes of operation, it is most rational to choose the easy.”

Cryptocurrency

Smart, techy people around the world are recommending a new approach to currency and banking based on computer programs and algorithms. Bitcoin is now “old” in that it was introduced in 2009. It’s well recognized but not in favor because of its huge energy usage.

But it’s not alone. We also have Ethereum, Cardano, Tether, Solana, Dogecoin, TerraUSD, Luna, and many, many more. They all have the same basis of being digital instead of paper notes or coins. And, supposedly, since there is no money to count, we don’t even need banks.

Their big drawback is their volatility, since they are not generally backed by “real” assets.

TerraUSD, Luna, and Anchor

Earlier this month, the story of TerraUSD, Luna, and their quasi-bank, Anchor, hit the news – and not in a good way.

TerraUSD

TerraUSD was touted as a “stablecoin” (A digital currency that is pegged to a “stable” reserve asset like the U.S. dollar or gold to reduce volatility.) However, rather than dollars or gold, it was backed by Luna, which was just another cryptocurrency. But these cryptocurrencies were linked by, essentially, an inverse algorithm. Supposedly, this would keep the TerraUSD stable.

It seemed to work. In 2021, Luna’s price increased a 100-fold and nearly $10 billion worth of TerraUSD stablecoins were created. Happy days!

To make it even more complicated, Do Kwon, the tokens’ creator, introduced Anchor, a quasi-bank for crypto users. They could “deposit” their Terra stablecoins and earn 20% interest. (20%! Not even Bernie Madoff promised that!) However, unlike a real bank, there was no deposit insurance.

Unfortunately, just like in the “old days” there was a “run on the bank” and system collapsed. The price of a Luna, once worth more than $100, dropped to $0.00001834 and the TerraUSD was no longer stable. Gone!

The future

Cryptocurrency is not dead and will play a role in our financial system “someday.” But like any new technology, the early adopters see it happening soon while the detractors hope it never happens. The reality will come somewhere in between.

Listen to Mr. Jefferson. He was a smart guy.

Labor improbus omnia vincit

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Sometimes it’s fun to read history just to remind ourselves that large mega-projects don’t have to be wasteful boondoggles. Go and read about some of the marvelous projects that were well planned and well managed. Let yourself be amazed.

Read about the Atlantic telegraph cable and how it connected America to the “old country.” Or read about the transcontinental railroad. Or read about the Panama Canal or the Hoover Dam and wonder at the marvels of early project management well executed.

The Erie Canal

The U.S. granddaddy of all these projects was the Erie Canal – and it sits in the dustbin of history. Too bad, because it was both an engineering and economic marvel.

Started in 1817 it was to be more than twice as long as any canal yet built in the world and had a projected cost that rivaled the annual budget of the federal government (but it was entirely funded by the state of New York.) It would run for 360 miles, require 83 locks, would require digging and removing eleven and a half million cubic yards of rock and dirt – ALL BY HAND. It was projected to be completed in ten years but was completed in eight.

Was it a useful project? Before the canal, it had taken three weeks and cost $120 to ship a ton of flour from Buffalo to New York. Once completed, it cost $6 and took about eight days. Don’t you wish your 6-sigma project brought that kind of productivity improvement?!

Oh, and the Latin title of this piece? It means “enormous labor conquers all.”

Lesson

The need to think big and act boldly about infrastructure has been with us for centuries.

Application

What big projects are needed for your organization? Look beyond your team to find the resources.

Clarke Stanley’s Snake Oil

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We can look back about 100 years or so and see simple people looking for simple solutions to complex problems. What fools they were!

Take for example, the 1916 advertisement for Clark Stanley’s Snake Oil Liniment. It advertised itself as “Is good for everything a liniment out to be good for.” It then listed some of the problems you might have.

  • Rheumatism
  • Neuralgia
  • Sciatica
  • Lame back
  • Lumbago
  • Contracted cords (huh?)
  • Toothache
  • SprainSwelling
  • Etc.  (I’m sure you’ve suffered from that malady.)

Fortunately, in 1917 the U.S. District for Rhode Island got them on a “misbranding” charge and fined them a whole $20.00. (No, I did not miss a decimal place, they fined them 20 bucks.)

Fortunately, we are so much more sophisticated today. Or are we?

Today’s Snake Oil

I like to roam around bookstores and look at the titles of serious business books. Heck, I’ve even written a few. But I cringe when I see books with titles that include any of the following snake oil phrases:

  • “The Secret of …….” (Really, is there a secret I’ve missed and can now find for 30 bucks or so?)
  • “The One Skill You Need to ……..” (Wow! I can become rich and famous by picking up a single skill? I wonder if Tiger Woods will ever write a ‘one skill’ golf book?)
  • The Leadership Secrets of ……” (Hmmm, I wonder why Jesus and Atilla the Hun are two titles I’ve seen. I never realized they had so much in common.)

If you think life is so simple that it comes down to “one thing” improvements, you are a 21st century version of a snake oil customer. You’re either desperate or looking for the easy way out.

Lesson

Here’s the punchline – LIFE IS COMPLICATED, DEAL WITH IT. Think, dammit, think!

Application:

Consider the problems and opportunities facing you. Now, create a Mindmap of the situation. Look at the elements and connections. You’ll see the complexity of life.

The Covid Roller Coaster

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Wow!

2019 – Everything is (kind of) going accord to plan.

2020 – The world went Covid-crazy.

2021 Q1 and Q2 – “Let’s find the new normal.”

2021 Q3 – Oops! The new normal has been put on hold.

So, here are three opening thoughts to a series we are starting at MindPrep. You can get the full newsletters HERE.

It’s a Wicked World – deal with it

No, this is not a commentary on morality. It’s a commentary on working in a world without precedent. First, some simple explanations.

“Kind” environments have repeating patterns and feedback is accurate and rapid. Therefore, decision making can often improve with added experience. You can learn “the rules of the game” and become an expert by developing expert intuition. Examples of people in this environment range from chess masters to golf professionals to suburban firefighters to business strategists before 2020.

“Wicked” environments exist where the rules of the game are unclear, feedback is spotty at best, and patterns are lacking or not obvious. Expertise-based thinking may be helpful or, more likely, may lead you astray because it is based on a past that is no longer relevant and will likely not return.

Planning and decision making in this environment is anything but routine and intuition must be challenged. This is the environment we are living in right now with the pandemic. The “new normal” is and will be very wicked.

It’s time to think like an explorer.

Throughout history explorers prepared for expeditions by understanding, as best they could, the conditions they were about to face and then went about improving the equipment they would use.

Early explorers to the South Pole knew that they needed warm clothing and lightweight (but strong) sleds, so they focused a lot of their efforts on improving their equipment. Sometimes explorers opted for maximum flexibility because they didn’t know how the conditions would change over time. Blankets can be used for warmth; they can also be used for shade.

The explorers’ reality is a world of known and unknown; and it calls for elegant flexibility.

Consider the most flexible equipment at your disposal – the ability to think and imagine new ways and new things.

Mistakes will be made. Pick yourself up and dust yourself off.  

We’ve spent decades fine tuning our careers and business models. Efficiency was paramount and rewarded. We gave lip service to “innovation,” but punished experiments that didn’t provide rapid ROI.

But now its time to think and act using less time than you want. Wicked worlds keep morphing and doing so in novel ways.

For those of you who know me, you know that I’ve been running workshops for decades built on a simple cycle of Sense, Make Sense, Decide, and Act. I refer to this cycle as the Sense-Response Cycle (SRC) and admonish attendees to “keep up with the pace of change or become irrelevant.” But what was fast in 2019 is normal today. We have to run this cycle uncomfortably fast.

Don’t let perfect get in the way of good-enough progress. All of us will make mistakes. It’s the reality of a wicked world. Deal with them and keep moving. We don’t have time to feel sorry for ourselves.

Remember, the future favors a prepared mind. And preparing your mind is a never-ending responsibility. You can get our recent MindPrep Newsletters HERE.

Next

The next couple of newsletters will focus on understanding the future and ways of dealing with it.

The Illusion of Explanatory Depth

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I read a lot of non-fiction books. Some I throw away and some stay on my bookshelf. Some stay on my bookshelf because they are good “in general.” Others stay there because of one or two “thought-nuggets.”

The Knowledge Illusion: Why We Never Think Alone (Sloman and Fernbach, 2017) presented a nugget that keeps popping back into my head – the Illusion of Explanatory Depth.

Simply put, the Illusion of Explanatory Depth (IoED) is the phenomenon we experience when we think we know a lot about something because we are familiar with it. We form an opinion based on surface knowledge and don’t dig into our ignorance. We fool ourselves.  

Here’s an example from the experiment described in the book. Assume you didn’t see Q2 until you answered Q1.

  1. On a scale from 1 to 7, how well do you understand how zippers work?
  2. Describe in as much detail as you can all the steps involved in a zipper’s operation.

Silly example, right? Is your ignorance of the detailed working of a zipper really important? What difference does it make?

Now, step into the world of technology and politics and apply the same two-step process. I did, and I scared myself. Here are three examples of current-day issues to test yourself.

  • Cryptocurrency (e.g., Bitcoin) will become a de facto global currency in the next five years. Yes, or no? If yes, you should invest in it now.
    • Explain the assumptions behind cryptocurrency and how it works.  
  • Critical Race Theory (CRT) should be taught in high school. Yes, or no?
    • What, specifically, is CRT? What are the facts underpinning CRT?
  • We have the best healthcare system in the world. Yes, or no?
    • Can you explain the major components of the system, how they work together, and the “weak link” in the system?

We live in a country (world?) where opinion is more powerful than knowledge, politics rules over science, and the fear of “micro-aggressions” blocks learning.

According to Sloman, “The knowledge illusion occurs because we live in a community of knowledge and fail to distinguish the knowledge that is in our heads from the knowledge outside of it.” To put this in the vernacular, as Bill Welter says, “Don’t confuse me with the facts – I’ve already made up my mind.”

Digging deeply into your Illusion of Explanatory Depth is an opportunity to study your ignorance and then plan to learn about those things that are important to you and your organization. Either that, or General Artificial Intelligence will run your life in ten years.

Hmmm ………, what’s general AI?

Open the pod doors, HAL.  

If you want to see recent issues of MindPrep, you can find them here

QUESTION ZERO

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Last year Oliver Cummings and I created a free mini class for managers who are called upon to implement big-picture, organizational strategy. We approached this challenge by asking ten questions that had to be successfully answered if they were to succeed.

Then we realized that there is almost always the “unasked” question, which we refer to as Question Zero. It’s in the back (or front) of every manager’s mind but it often goes unasked and unanswered.

Ready? Here it is.

How will I make the time to implement the strategy?

You have to make time – you will never “find” it.

Now, I already know what you’re thinking. “He just doesn’t understand. I have to do my day job AND take on this new task.”

Sorry, but, as they say, “I’ve been there and done that.” So, let me be blunt – you will make time or you will have more problems than you want. You can’t keep adding items to your “to-do” list. Something has to drop off and it’s up to you.

Want to see the other ten questions we asked? Go visit the mini-course. You can fine it HERE. Sign up, watch a couple of videos, take the quiz and get going. Time’s a-wasting.

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