"The Riff" with Byrne Hobart and Erik Torenberg E39: Mental Models and Financial Infrastructure with Patrick McKenzie
13 snips
Aug 1, 2024 
Patrick McKenzie, known as patio11 and host of the Complex Systems podcast, joins the conversation to delve into the fascinating world of financial infrastructures. They explore the historical evolution of financial products and the precarious balance between security and usability in transactions. McKenzie uncovers unique aspects of financial fraud, including quirky laundering methods, and reflects on the collapse of FTX. The discussion also highlights innovative recruitment strategies and emphasizes the importance of networking for talent discovery.
AI Snips
Chapters
Transcript
Episode notes
Infinite Complexity of Finance
- Financial infrastructure is endlessly fascinating because it has infinite levels of detail and complex incentives.
- Money and technology domains are never boring due to their layers of history, culture, and technological substrates.
Evolving Security Trade-offs
- Early check and credit card systems accepted lower security due to technological limits and threat models.
- Newer methods like QR code payments avoid old fraud pitfalls with real-time checks and expiring tokens.
The Optimal Fraud Rate
- Optimal fraud rate for businesses is above zero to balance cost and usability.
- Fraud is considered a business cost like rent or salaries by capitalist institutions optimizing margins.