The logic of charlatans

Tl;tr: Can we logically refute a charlatan? No, we can’t.

A typical charlatan says with conviction that the Earth is flat, or that water can cure illnesses, showing an unusual ability to reason and push his convictions. This latter fact is very curious, how can someone argue that water has an inside mechanism that cure things? how do we explain ships that, far on the horizon, looks like sailing over a curved crest of water? Well, a charlatan laugh at these doubts, dismissing them with one hand and smoking a cigarette with the other hand, blowing the smoke on our face.

Now I was wondering, what logic charlatans use for reasoning? They must follow some rules that allow them to appear so self-confident. Actually, logic is their only instrument, because they do not have experiments to show (which would immediately refute them).

Let’s start with Aristotle syllogisms. For example

“All dragons are animals” (premise)

This is a given fact that we can use to conclude

“Some animal is a dragon” (tesi)

The astute reader may be startled, “Impossible!”.But actually this is not a deduction, rather in the Prior Analytics (part 2) Aristotle himself explains us that premises necessarily have this semantic property; if the contrary thesis “No animal is a dragon” were true, we would falsify the premise. The problem here is when someone states “homeopathy cures illnesses”, implying that “this homepathic cure will cure your illness”. It’s rather nasty that from a false premise we get the existence of something, albeit quite false too.

With the development of First Order Logic there had been some step forward and the language of syllogisms is translated conveniently as:

“If something is a dragon, then it is an animal” (premise)

and now we aren’t forced to claim the existence of a dragon, because the opposite thesis “No animal is a dragon” doesn’t contradict the premise, but it implies, naturally, that there aren’t any dragons! The premise is still valid, and we can repeat it like a mantra, logically sound, and if one day, walking down the street, we’ll spot a dragon, we’ll know it’s an animal. Wait and see.

Instead of dragons, that I greatly respect, charlatans use “Not Even Wrong” terms. He’ll never precisely define “homepathic water”, and he will use this at its own advantage when someone will try to refute him. “I took your homepathic water and I didn’t get any better” “OK, but what was the shape of your glass?”, and so on. A charlatan can play with generic terms in an indirect way too, like “Homepathic water is full of positive energy” and “positive energy cure illnesses”. How dare you to attack positive energy, you piece of contrarian waste! Something really similar happens with Flat Earth, whose real shape is unclear, because “the flat earth community doesn’t have consensus on a specific map”, but surely “it has consensus on Earth not a Globe”. Don’t ask me where I did take these sentences, but they’re real.

So we reach the bitter conclusion that if someone talks about curing water or flat earths, he will develop his logic as he wishes and he will counter any observation, because of nothing we can talk for hours and hours.

The forgot revolution

Oh, Science. Considered its success during the last century, like Nuclear Physics and Genetics, we could think its importance to be absolute and timeless; but apparently it’s not like this.

I read this book because fantastic people suggested it and because I wanted to examine a quite contemporary problem: the continuation of Science. What I fear is that after all conquers of scientific thinking, our posterity will only keep the tecnologies and, why not?, flush the rest. Exagerated, you may think. But this book gives a convincing example that happened in the past.

Greeks like Euclid (Geometry and Optics, 4th-3rd century), Herophilus (Anatomis, 335-280), Aristarcus of Samus (Astronomer, 310-230), Archimedes (287-212), Ctesibius(Pneumatics, 285-222), Apollonius of Perga (Conics, 3rd-2nd century), Ipparcus (Astronomer, 200-120), Hero of Alexandria (Automata, 10-70) and many others, were undoubtly following a knowledge method which was: abstract, deductive and that was leading to practical experiments and machines. Aka scientific method. What they wrote lead to results like the Lighthouse of Alexandria (300 BC – 1480). With a height of 130 meters, it lasted more than 1500 years, its light being based upon the Conics study of Euclid and Apolonius of Perga. Quite cool.

The lighthouse of Alexandria

It’s a long list, but I’ll skip that to the main point, the one I was missing before reading the book. The great majority of written texts, ideas, computations, prototypes, has been lost. Partly because much knowledge was considered (rightfully) strategic, so it wasn’t divulged. But also because the coming of Romans destroyed those ideas, that were then clumsily re-introduced in later writings, such as in Plinus the elder (Naturalist, 23-79) and Ptolomy (Geocentrism, 100-175). But those attempts looks, in my opinion, ridiculous.They couldn’t understand or appreciate what the Greeks were saying, they were mocking them whilst providing their own idea (that was usually quite wrong).

The result is that we didn’t have a knowledge bubble like the Greek one for a long time. For example, nobody knew how to build a lighthouse like the Alexandria’s. The lighthouse of Genova is 77 meters tall and its light is not based on conic sections like the Greek ones because they didn’t know how to apply them. But they did know that something was there, they really did. Thinkers like Leonardo da Vinci (1452-1519) or Galileo Galilei (1564-1642) probably had access to some, now lost, Greek writings; surely they knew about some lost ancient Greek-Roman knowledge.

I conclude this overview, not review, of the book, that is not an easy reading. What happened to Greek Science is sad, but it’s also interesting because it’s human, too human.

Questione di virgole

This book is about Italian grammar, which is really different from the English one, so the interested reader is invited to read the Italian version.

Triggers

Marshall Goldsmith is a coach paid for sparking a lasting change in a person’s behavior. In writing the book he wants to explain how people are oblivious victims of their environment. He is pragmatic and brings many examples of managers he coached (and saved from getting fired). A trigger is something, coming from the current environment, that influences our behaviour. The main point is that we often live situations where we cannot control external stimuli and, on the contrary, we must live with those. Thus, the only option left is to control our reactions to those. On the other side, not every stimulus must be bad, many can lead us to better behaviour and kindness. Anyway, we usually completely ignore how much the environment influences our behaviour.

The books starts with two immutable truths. They look obvious, but the more I think about them, the more I find important consequences in every social context:

Truth 1: It is difficult to have a significant change in behaviour.
Truth 2: Nothing can make us change if we do not want it.

A thirt truth follows, but it looks more like a sad observation: each of us is an excellent manager and a bad doer (this is the reason for which we are not the person we wish to be, the book explains). We tell ourselves we will go to bed early and that our diet starts today, as changing was all about having a sudden enlightment; then at three a.m. we are devouring a chocolate cake for restoring energies after choosing karaoke over promises. (This last example is totally mine).

Marshall describes the steps he takes with his clients, after figuring out if those clients are really willing to change. Apparently, his method works on truth 1, because truth 2 requires a real social threat – change or get fired.

Step one: Decide an objective w.r.t. four point of views: Create new roads; Remove what does not work (and we are not willing to admit); Accept what cannot be changed; and Preserve what works.

Step two: choose an active form when formulating questions to yourself. A passive question is the following: “Did I have a good day?”. In this way we have room for blaming others for not having a good day. The same question in active form is the following “Did I make an effort to have a good day?”. Stated this way we ask the question to ourselves (only) and to our responsibility, making obvious those selfish ways to find excuses.

Step three:write down the questions as objectives and track them daily, daily, giving a 1 to 10 mark.

Active questions remember us what to do and create a focus, splitting it in parts small enough to pass through our ego. Marshall cites an example of a girl who wants to lose weight, but her family members are skepticals. This is probably one of the most tough changes to do in an ostile environment. More than that, the girl does not have previous success stories, because, Marshall says, people used to success face personal changes with more easiness.

Marshall explains that his system works very well and that his best clients reached their objectives and then, excited by their success, followed with other changes. In doing this, they got better in the process of change and they also got faster in it. They became coaches of themselves. Marshall says that everyone should put effort in being a better person, by asking ourselves if, in each moment, we are making a positive impact to what is happening at the moment. He wants to make us into a positive stimulus in our environment. Or maybe just being less negative, I suppose.

The third part of the book collects other aspects, in no particular order. Marshall underlines the importance of finding a structure for our days and living with point of references. As example, he cites surgeons who wash their hands before each operation and the fact that often is just our ego who denies us to embrace rules that would clearly make us happier. Then Marshall talks about Ego depletion, a mental fatigue that we have after a day filled with meetings and decisions. Ego depletion weakens our self-control and encourages bad behaviour. It is our ego that absolves ourselves from our sins and that makes us point to finger to something else but the only actual thing we really can change, ourselves.

In conclusion, a personal comment. The book’s material is not well organized. But it is direct and clear, with many examples and practical suggestions. What stroke me is the huge amount of Buddhism and Stoicism behind everything stated by the author, applied to problems that are very real and practical. Marshall does not joke, even if he looks like an easy-going fellow, he can hit your ego like a black belt of martial arts, who repeated the same move under a cold waterfall for more than thirty years.

Is Bitcoin a Ponzi scheme?

Since 2013, when my interest in Bitcoin started, I have read articles written against Bitcoin and Crypto. I was naive in thinking that the success of Bitcoin would have made this type of articles disappear, and their writers move on other topics. It did not happen. On the contrary, new types of slanders appeared.

On July 6 2019 this article by the Italian newspaper La Repubblica was published. It has two characteritics: it sums up many silly criticisms (that are widely known by now) and it is very recent. I use it as a reference to talk about those arguments and how they look impulsive rather than rational, written for non-experts by non-experts (so it does not matter who wrote them).

  • First point: “Bitcoin… does not have any underlying asset. ” I keep reading this observation in many variations. Donald Trump also tweeted that Bitcoin’s value is based on thin air, the general idea being that Bitcoin is actually nothing. Too bad that Bitcoin provides the mathematical certainty that a quantity can be transferred from user A to user B, worldwide, 24/7. This makes it a unique and independent asset, and this is the main strenght of Bitcoin.

    But I am hearing voices from down the hall asking “Why does it have a value?”, “Who’s profiting?”. Indeed the article follows asking if

  • Second point: “Bitcoin works similarly to a pyramidal scheme“. The thesis here is that who buys Bitcoin will profit only if a new buyer enters the market, buying at a higher price. Then the author adds an imaginative reconstruction applied to Bitcoin: the majority of virtual currencies belong to few individuals who probably have created the whole scheme.

    Here there is a false sillogism: something is a fraud if someone wants to profit on it. I mean, sure there is plenty of frauds. But really, who is going to investing in something willing to lose money on it? To look for profit is not, in itself, fraudulent, and it is at the base of capitalism. I can hear screams coming out the frigging walls, but what I mean is clear.

    Then other two false steps. Firstly, thinking that those inventing Bitcoin wanted to create a fraud. It is like thinking that cars have been invented for selling iron and rubber at a high price, or that Tesla wanted to create the lobby of electricians. More than that, those individuals would have foreseen the price growth. Satoshi Nakomoto would be an unphatomable genius in Computer Science and Finance, but devoted to cheap scams. Secondly, the author trivializes markets driven by demand and supply. Adam Smith docet, this is a unique source of knowledge we have for assets. If Bitcoin has a value on a a free market, that must be taken as a fact. Thinking that its price holds because of a conspiracy fits a Flat Earth forum, or at least should be based on strong data.

  • Third point: “to sustain costs, miners must sell earned Bitcoins and thuse need a constant influx of new buyers… eventually Bitcoin is going to fail.”

    I do not think anybody can foresee the future, but I would like to maybe indulge on the possibility that Bitcoin will be really used, and this use will be paid by its users, in the same way for credit cards. But here I succumb in the tautology: it is certainly true that a system works for as long as it is used and that will fail in the moment nobody uses it.

  • The fourth point is about its address distribution: “less than 2000 entities hold about 42% of Bitcoins”. This analysis is probably too simple, because I am not sure exchanges were taken in account and the pyramid may be different from what is imagined by the author. Anyway, let us recall that just 1% of families in the United States hold 40% of the country’s total wealth. I do not know if this is good or bad, but surely it does not determine a pyramidal scheme, unless we start considering national currencies as big, fat, Ponzi schemes.

  • The fifth point is not a presented argument, but those absent, those things which are always present in pyramidal schemes and that really define them: arcane interests paid without taking any risk, the need to look for new people entering the scheme, earnings that depend on the time you entered the scheme, the system’s opacity (whereas Bitcoin are pseudonymous). I mean, how can Bitcoin looks like a Ponzi scheme as the one played by Bernie Madoff?

Summing up, the article tries to be very specific while, at the same time, providing just misinformation. I hope readers will stop paying for stuff like this, but I will not rest my hopes there.

Libra Coin: just jokin’ lalala

A month and a half after promising a digital currency that would have rescued 1.7 Billion people without access to the banking system, Facebook now says “too risky”. No wait, let’s read their own words from their second quarterly report:

We recently announced our participation in the Libra Association, which will oversee a proposed digital currency powered by blockchain technology, and our plans for Calibra, a digital wallet for Libra which we expect to launch in Messenger, WhatsApp, and as a standalone application.

[…] laws and regulations may delay or impede the launch of the Libra currency as well as the development of our products and services, increase our operating costs, require significant management time and attention, or otherwise harm our business. In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all.

Even thought the quarter ended on June 30, the document looks like finalized on July 19, three days after the Senate hearing with Calibra leader David Marcus. So I believe it’s written as a consequence of that hearing, where reception was cold and some senators ended up praising Bitcoins rather than Zuckbucks.

My personal opinion still holds, it’s an interesting, over-the-top, idea (albeit unrelated to cryptocurrencies), but we won’t see it developed very soon.

My take on Libra Coin

Summary of the previous post: Libra coin is a token whose value is based on an ETF. Tokens creation and transfers are managed by a centralized database, but only members of the Libra association may access this database. Being part of the association needs an investment of 10M$ and it’s invitation-only. Normal users will have to go through the Calibra wallet. The token is actually being pushed by Facebook for forcing merchants into their platforms, but disguised as an attempt to “provide banking services to 1.7 Billions people”.

The whitepaper does not provide many important details about the ETF governance. Really, it does not provide any relevant detail at all. So take my take as educated guesswork. For sure, Libra coin is not a cryptocurrency. It’s a new form of digital pegged currency, like the Lebanese Pound but without a physical form.

If I overcome my disdain for the buzzwords marketing crypto-coating and I consider the idea by itself, I think it’s very interesting and it’s actually big at unthinkable levels. No fractional reserve, bank account in your smartphone, transparent value entirely managed by a trustable non-political entity (national politics), instant transfer of money. On paper, this really is dream money. So what’s the problem here?

How it would actually play out.

Let’s suppose that Libra Coin’s reach is half billion people, and that 1K$ are needed on average. This would make it an astounding 500B$ ETF, that is larger than the largest ETF currently available, the Spider S&P 500 (286B$). This is huge and could be even bigger. But there’s more, the fund would not traded for profit, but probably only for stability. Akin of a virtual nation, but run privately.

Then they would have to comply to all different regulations of literally all countries in the world, like paypal but worse, since they propose their own pegged currency and they need to explain to people what they are owning when they have Libra.

Finally, they have to make sure they don’t screw it up.

For what I see that is a bank and a virtual nation at the same time. There’s also the difficulty of managing a huge association made of completely different members, many of them businesses with their own, always changing, agendas. If all of this is viable, it would be a costly colossus. At that point it’s all about competition and what is cheaper w.r.t. Paypal or Moneygram, that are quite similar but manage many currencies at the same time, earn on currency exchange fees, and are, in comparison, much more agile.

Last but not least, there surely are moral issues in issuing a currency whose governance isn’t based on democratic values, but on private companies. I’m not an expert, but my gut feeling is that this is wrong.

What Libra Coin actually is

The Libra Coin whitepaper has this hide-and-seek writing style that makes it few things explained in a confused way. I’ll try to summarize them here.

The starting point is an exchange-traded fund (ETF) pegged to a basket of currencies (USD+EUR+…), but there aren’t details on what kind of rules this fund should follow. Basically, there aren’t details at all, only a clear statement that if there’s profit from this fund, it will go to members of the “Libra Association”, not to owners of Libra. This association and the fund will be based in Switzerland. The ETF value will be divided into tiny shares, or vouchers, or tokens, called Libra Coins. So the Libra Coin will have a known value that depends on the ETF.

The “Blockchain” part isn’t really blockchain, but it’s a centralized database where writing is permissioned from members of the Libra association (entry fee 10M$, invitation only). There actually are some sugar-the-pill details that makes it look like an advanced distributed system, but they’re minor and pointless and everything could have been done in the same way in the nineties.

Libra coins can be moved through any “accepted by the association” wallet, but only the Calibra wallet will be integrated with Whatsapp or Facebook or Instagram. Obtaining the Calibra wallet involves KYC/AML.

Marketing sweeteners abound in the whitepaper(s), they say they would like to become a real permissionless cryptocurrency in five years, but first they would like some problems to be solved. Unfortunately their list of problems is the entire specification for a new incredible cryptocurrency. Stonk. They also point out that Bitcoin consumes a lot of energy “We did not consider proof-of-work based protocols due to their poor performance and high energy (and environmental) costs”, which is a reasonable criticism, but the association doesn’t include any environmental friendly member. Sbirch.

TL;TR Libra is a voucher managed with a centralized database, whose value depends on a huge ETF managed in Switzerland and whose association will allow only Facebook to move the coins. And some crypto-related buzzwords for the lols.

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