The Rational Reminder Podcast

Welcome back to another limited series of Rational Reminder Podcast, focused on learning about cryptocurrencies. Our journey about cryptocurrencies has led us to speak to various experts on the subject, all of whom see some benefits to cryptocurrencies and the underlying blockchain technology. However, what does a skeptic think about cryptocurrencies and the benefits to the current financial system? In today’s episode, we speak to Stephen Diehl, a software engineer who works with financial technology within the finance sector and is an outspoken cryptocurrency skeptic. His engineering background, coupled with his experience working with financial technology, provides a unique perspective on the future of cryptocurrencies. We move through the episode learning about public blockchain technology, different consensus mechanisms, what potential problems blockchain technology can solve, whether crypto can improve the current financial system, if Bitcoin really is decentralized, what drives crypto prices, reasons why crypto will not work, what makes it similar to gambling, and more. Tune in today to hear a unique opposing view of cryptocurrencies and DeFi technology with expert and skeptic, Stephen Diehl!   Key Points From This Episode:   A brief breakdown of public blockchain technology. [0:03:28] The current problems that public blockchain technology is trying to solve. [0:04:16] Proof of work consensus and how it tries to eliminate the need for a trusted third party. [0:05:44] Some of the downsides associated with the proof of work concept. [0:07:41] How other consensus mechanisms have improved the proof of work concept. [0:09:21] What the costs associated with proof of stake relative to proof of work are. [0:11:09] Problems that both consensus methods have regarding recentralization. [0:12:07] What other problems blockchain technologies can be used to solve. [0:12:50] The problems in the financial technological system that public blockchains solve. [0:14:29] Why finality of payments associated with cryptocurrencies is not a good thing. [0:15:42] What limitations can blockchain technology remove regarding international money transfers. [0:17:06] How to prevent double-spending under the current financial system. [0:20:34] What Stephen thinks drives the value of cryptocurrencies. [0:21:15] Whether Bitcoin is decentralized in Stephen’s opinion. [0:23:19] Reasons why concentrated mining power does not cultivate decentralization. [0:24:46] How permissioned blockchains can improve on the pitfalls of public blockchains. [0:25:40] A discussion about the potential benefits of private blockchains. [0:27:15] We learn what a smart contract is. [0:29:49] Outline of other useful applications for smart contracts. [0:31:25] Examples of illicit activities associated with cryptocurrencies. [0:32:08] Code is law: deferring to code for implementing law. [0:33:17] What Stephen thinks is the value of the underlying blockchain technology. [0:34:32] Stephen explains what Web3 is and if it improves the financial system [0:37:05] We find out if there is anything about crypto technologies that excite him. [0:41:06] The most compelling argument for crypto that Stephen has heard. [0:43:08] He explains what he means by suffering stemming from cryptocurrencies. [0:44:40] Stephen shares his experiences as an outspoken crypto skeptic. [0:45:26] How he began working with researchers from the London School of Economics. [0:47:03] Discussion about the narrative of cryptocurrencies and why Stephen is outspoken on the subject. [0:50:33]  

In today's episode, we share some updates from our Financial Goals Survey, respond to a listener who says we are wrong about dividends, and talk about Scout Mindset by Julia Galef. We then respond to a listener question about whether our comments in Episode 205 on private equity extend to private real estate. In our main topic, we unravel what money is by looking back at its origin story and the two competing theories about what it is. We discuss the ideological underpinnings of money and how these ideologies can make choosing a definition of money highly political. We end the episode talking to Dan Solin about his reading habits. Dan Solin joined us almost four years ago for an episode on evidence-based investing. Tuning in, you’ll hear how Dan finds the books he reads, what his favourite types of books are, and whether he recommends books to people, plus he shares why he believes reading is so essential, and much more. Don’t miss out on another well-rounded and informative episode of the Rational Reminder Podcast.   Key Points From This Episode:   An update on the progress of our Financial Goals Survey. [0:03:32] Your monthly update on the reading challenge and how to get involved. [0:04:52] An update from our limited crypto series and some of the feedback we’ve received. [0:08:00] This week’s book review: The Scout Mindset. [0:16:29] Simple set of tools to help you assess biases when receiving new information. [0:19:18] Following up on private investments concerning real estate. [0:24:32] Onto the main topic of the show with Dan Solin: money and what it is. [0:29:09] Where the perception and definition of money originated from. [0:31:00] Unpacking an alternative definition of money by Adam Smith. [0:37:32] The quantity theory of money and its application in the economy. [0:40:14] An interesting political aspect to forming John Locke’s theory of money. [0:46:49] Outlining of the history of opposing views on the theory of money. [0:47:25] A break down of the findings of an anthropological review investigating money. [0:49:47] How money is neither commodity nor quantity but rather a measure of credit. [0:51:32] The state theory of money and how it is different from other theories. [0:53:39] What sets the price level of money based on credit theory. [0:55:06] A discussion around money based on the several theories of what it is. [0:57:22] Why fiat money is not a derogatory term for currencies. [0:59:30] Some of the nuances regarding the definitions of money in a modern context. [1:00:07] Dan shares his reading habits as an author. [1:01:05] Whether Dan reads hard copies, audiobooks, or Kindle. [1:01:32] The difference between reading and streaming in Dan’s opinion. [1:02:08] Insight into some of Dan’s favourite types of book. [1:03:11] How he finds new books to read and what inspires his reading interests. [1:05:40] Ways in which Dan organizes what he reads and learns. [1:08:47] Whether or not he recommends books to other people. [1:09:33] Reasons why Dan believes it is important to read books similar to his latest book. [1:12:21] Dan’s advice for people that want to read more. [1:14:10]

Welcome to another special episode of Rational Reminder Podcast, a show to help us learn about cryptocurrencies and their role in our current and future financial systems. In today's show, we speak to Tobin Hanspal, an Assistant Professor of Finance at the Vienna University of Economics and Business who has written several papers focused on household finances. Tobin's research area offers insights into the behaviours of retail investors in the crypto space and how this may affect household finances. In this episode, we take a deep dive into some of the papers that Tobin has authored and how his findings relate to the behaviours and biases of crypto adopters. We discuss the investment behaviours of early crypto adopters, the role of EFTs in reducing risk, the different types of investor groups, how past experience negatively affects investor confidence, how behaviours change after an initial crypto investment, the disposition effect, how cryptocurrencies are an extension of existing behaviours, and much more! Be sure not to miss out on this informative episode with expert, Tobin Hanspal!   Key Points From This Episode:   How Tobin investigated the investment behaviour of early crypto adopters. [0:04:24] Whether indirect crypto investments are a good proxy for crypto investors. [0:08:10] Why it is important to consider the different types of investor groups. [0:10:23] The differences between individual characteristics of crypto adopters and non-adopters. [0:10:55] Comparison of eventual crypto adopters and non-adopters [0:12:37] What kind of sector ETFs do crypto adopters choose to invest in. [0:13:48] Differences between the crypto and non-crypto investors, in terms of typical investor behaviour biases. [0:15:01] How cryptocurrencies are an extension of traditional high-risk investing. [0:16:39] Whether the behaviour of investors changes after their first crypto investment. [0:17:37] The differences in behaviour between early and late adopters. [0:19:15] What insights Tobin has regarding the geographical location of crypto adopters. [0:20:36] What percentage of their portfolios’ do adopters allocate to crypto. [0:21:11] Find out if crypto investors buy lower-risk assets to make up for cryptocurrencies. [0:21:36] What differences exist between crypto and non-crypto investors regarding efficiency. [0:22:51] Description of the typical crypto investor characterized in their study. [0:23:39] Tobin explains the disposition effect and how belief systems play a role. [0:25:56] How risk appetite is related to the disposition effect. [0:28:05] People’s beliefs: are expected returns affected by past experience in expected realized returns. [0:29:20] Whether positive or negative realized past return experiences have the same effect on beliefs. [0:31:19] How peoples’ beliefs affect investing in riskier assets. [0:32:07] Changes in behaviour on a household level from past negative investment experiences. [0:33:23] The role experiences of peers and/or relatives have on investment belief. [0:38:16] Reasons for people reducing risk in their portfolios. [0:38:50] Tobin shares if he thinks cryptocurrencies will have similar effects on peoples’ behaviours. [0:39:42] How applicable the findings are from Tobin’s study to other parts of the world. [0:41:54] What the ideal theoretical response is to losing money on an investment. [0:42:47] Important takeaways that Tobin has for crypto investors. [0:43:23]

In this engaging discussion, Professor Vanessa Bohns, a social psychologist from Cornell University, dives into the surprising influence we all wield in our interactions. She reveals the 'invisibility cloak effect' where people underestimate their impact, particularly introverts. The conversation also explores how observing others can amplify experiences and the dynamics of asking for favors—often leading to unexpected positive outcomes. Bohns warns about misinformation spread through bullshitting and emphasizes the importance of recognizing our influence to uplift others.

Welcome back to another episode of our series focusing on cryptocurrencies. In this episode, we dive into conceptual complexities surrounding cryptocurrencies and how this might affect the financial system in future. To help us unravel this nuanced subject is Professor Eswar Prasad, a senior professor of trade policy and Professor of Economics at Cornell University, and a senior fellow at Brookings Institution. He is also a research associate at the National Bureau of Economic Research and was a former head of the IMF China Division. Besides his wealth of experience regarding traditional economies, he is also an authority on cryptocurrencies, which he explains in detail in his book The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance. In today’s conversation, we discuss broad conceptual ideas surrounding money and finance, such as the basic functions of money, the difference between outside and inside money, the limitations on creating wealth, how cryptocurrencies work, how cryptocurrencies may disrupt financial systems, why cryptocurrencies need trust to work, the future of cryptocurrencies, and much more. Tune in today to get insider information on cryptocurrencies with our special guest, Professor Eswar Prasad.   Key Points From This Episode:   A brief outline of Professor Eswar Prasad’s professional background. [0:01:14] Professor Prasad explains what the basic functions of money are. [0:01:59] We learn if money is a commodity or a social contract. [0:02:33] The problems associated with fiat currencies. [0:03:00] What the concepts of inside and outside money are. [0:04:12] Factors that constrain the creation of outside money. [0:05:34] Whether mechanically constrained money is good for economies. [0:07:07] Learn whether commercial banks need deposits to make loans. [0:08:46] What the definition of fungibility is. [0:10:24] How and why reserves are usually maintained by a central bank. [0:11:19] What the differences are between physical cash and electronic money. [0:12:25] The anonymity associated with each of the payment methods available. [0:13:28] What the main functions of the financial system are. [0:15:14] Find out what the definition of shadow banking is. [0:17:01] How trust in the financial system is facilitated. [0:18:29] We find out if modern financial systems can be disintermediated by technology. [0:20:33] The potential effects that intermediaries can have on economies. [0:22:59] What Satoshi Nakamoto’s 2008 innovation was. [0:25:51] The resilience of the underlying system for Bitcoin is explained. [0:28:12] Learn about the three elements that make Bitcoin decentralized. [0:30:12] How the decentralization of Bitcoin can be overcome. [0:31:39] Learn about the value of blockchain and emerging validation technology. [0:34:07] The key reasons why cryptocurrencies have value. [0:36:14] Ways in which a decentralized system would be beneficial. [0:38:32] Outline of the downsides to decentralized finance. [0:41:01] Why trust is also essential to the long-term viability of cryptocurrencies. [0:43:03] What role unofficial digital currencies will play regarding monetary policy. [0:44:05] The influence that Satoshi’s innovation had on the development of a central bank digital currency. [0:45:49]

Welcome to another episode of the Rational Reminder Podcast. In today’s jam-packed episode, hear updates regarding our goals survey, the schedule for upcoming guests on the show, the latest news and highlights from the financial world, and some of the feedback we have received about the show. We also highlight interesting articles and papers regarding tech valuations, expected stock returns, the performance of venture capital funds, and a book recommendation that will help you understand the finance game. Tune in to learn about the results of the recent social survey in Canada, the basics of private equity funds, the challenges of calculating the Internal Rate of Returns for investors, some of the misconceptions surrounding private equity, and much more! Don’t miss out on this informative and well-rounded episode of the Rational Reminder Podcast with your two favourite Canadians!   Key Points From This Episode:   We start the show with an exciting announcement for our listeners. [0:02:07] An update regarding the Goals Survey Project and what needs to be done. [0:03:30] A rundown of the upcoming guests for the show. [0:04:44] Outline of the reviews and criticisms received about the show. [0:05:55] A breakdown of the book for today’s review, Finite and Infinite Games. [0:10:07] Background about the author of the book, James P. Carse. [0:10:57] The main point of the book: the differences between finite and infinite games. [0:11:16] An interesting quote from the book regarding culture. [0:14:42] Highlights of the recent news and updates in the financial world. [0:17:02] Insights from an interesting article about tech valuations by Cliff Asness. [0:19:47] Another interesting paper by David Blitz about expected stock returns. [0:23:09] A discussion regarding the recent social survey implemented in Canada. [0:26:07] We discuss the basics of private equity as an investment strategy. [0:30:06] Why the math used is problematic for calculating the Internal Rate of Return. [0:32:35] The results of a paper which investigated the performance of venture capital funds. [0:39:01] More insights from follow-up papers about private equity. [0:42:24] Examples of the type of risk exposures that private equity provides. [0:49:36] The impacts associated with the preference for illiquid assets. [0:52:00] Some of the misconceptions surrounding diversity in private equity funds. [0:52:44] What are the best metrics to use to measure returns on private equity. [0:56:00]

Understanding the complexity surrounding cryptocurrencies is essential in making the correct decisions regarding investing in DeFi technology. To help us understand the basics, we talked to Dr. Igor Makarov who is an expert on cryptocurrency and Bitcoin, particularly Bitcoin and the associated mining processes. He is based at the London School of Economics, where he serves as an Associate Professor of Finance. Dr. Makarov is also the author of several papers focusing on DeFi and crypto markets in general and has provided new insights surrounding governance and mining processes. In today’s show, we learn about the basics of cryptocurrencies, mining and the future of DeFi. In particular, we talk about the role of intermediaries, what drives the prices of Bitcoin, how concentrated mining processes are, the role DeFi in increasing governance, the upsides and downsides of cryptocurrencies, and much more. Tune in to make sure you don’t miss out on advice from a respected figure in the industry, Dr. Igor Makarov!   Key Points From This Episode:   A brief outline of Dr. Makarov’s professional background and experience. [0:00:39] What role do intermediaries play in the traditional financial system. [0:02:36] Find out if economic rents that intermediaries collect are unwarranted. [0:03:36] Makarov explains the complexities of cryptocurrencies and the elimination of fees. [0:06:06] How rents are different on cryptocurrency exchanges. [0:09:44] Systemic risks associated with the traditional banking system. [0:11:24] Whether Bitcoin and DeFi can improve banking by reducing systemic risk. [0:13:22] Learn if blockchain or DeFi ecosystems can exist without human intervention. [0:15:06] Why it is unlikely decentralized autonomous organizations will improve governance. [0:17:06] Breakdown of the potential problems that concentration of ownership could have on governance. [0:19:53] Opportunities where cryptocurrencies and DeFi can improve the traditional financial system. [0:21:44] Some of the potential benefits of a permissioned distributed ledger system. [0:24:39] Why is it important to understand the Bitcoin ecosystem. [0:26:22] What are the limitations of understanding the Bitcoin ecosystem. [0:27:12] How Bitcoin addresses are associated with with real-world entities. [0:29:36] Ways to differentiate between addresses belonging to individual investors and those belonging to intermediaries. [0:31:42] What happens when you send Bitcoins to an exchange. [0:32:49] Details on how Dr. Makarov calculated the concentration of Bitcoins. [0:33:25] How did Dr. Makarov gain an understanding of what Bitcoin is used for. [0:37:14] The role exchanges play in influencing the total volume of Bitcoin transactions. [0:39:00] Why exchanges are essential to the overall network. [0:41:06] The challenges in enforcing KYC and AML rules for the crypto ecosystem. [0:41:56] How fungibility could effect the use of cryptocurrencies in the marketplace. [0:45:19] Whether most important cryptocurrency exchanges are generally decentralized. [0:46:36] What portion of Bitcoin transactions does Dr. Makarov consider to be economically meaningful. [0:47:06] Why most Bitcoin transactions comprise of irrelevant transactions. [0:48:08] What the meaningful Bitcoin transactions are being used for. [0:50:06] Why the estimates of illegal activities by Dr. Makarov differs from other studies. [0:52:56] A more in-depth explanation of what is driving the price of Bitcoin. [0:55:54] How Dr. Makarov was able to identify individual Bitcoin miners for his paper. [01:01:57] Makarov explains why the original vision of DeFi has not been realized. [01:05:52] Reasons for the concentration of miners in the Bitcoin space. [01:06:42] What are the risks are for the Bitcoin ecosystem when mining concentration is high. [01:08:24] How Dr. Makarov determined the geographic locations of mining operations. [01:10:52] What the function of a mining pool is. [01:13:36] How the concentration in mining power affects the security of smaller proof of work blockchains [01:16:20] How concentrated the ownership of Bitcoin in the hands of individual investors is. [01:22:40] We find out if cryptocurrencies are democratizing financial services. [01:25:03]

John List is the recently appointed Chief Economist at Walmart, and is also a Professor of Economics at the University of Chicago, having worked as the Chief Economist at Uber and Lyft. He has published a huge array of important papers in the field of economics and is also the author of the recent book The Voltage Effect, which deals with the question of how to scale ideas successfully. We are very excited to bring you this episode, which is a particularly illuminating one, in which we draw on John's treasure trove of insight and experience, to answer a long list of questions related to personal finance decision-making. A large portion of our chat focuses on the central ideas of critical thinking and fieldwork, practices that our guest views as indispensable in making the world a better place. Along the way we get John's thoughts on retirement planning, public policy, charitable donations, and much more, so make sure to press play on this fantastic episode of the Rational Reminder Podcast.   Key Points From This Episode:   John explains the importance of fieldwork in the study of economics. [0:03:51] Examples of field experiments that overturned a supposed economic truth. [0:05:15] Finding ways to test theories that previously proved difficult. [0:08:30] The question of generalizing findings from an experiment to a wider rule. [0:13:30] Replication in academic studies; John unpacks its central importance. [0:20:46] Why positive results tend to garner a publication bias. [0:23:38] John's perspective on checking in on investment portfolios. [0:24:40] What the data shows us about investment behaviours of men and women. [0:28:38] Accounting for the drive to give to charity. [0:35:20] Advice for how to make the most of your donations. [0:39:42] John unpacks his findings on scaling, its importance, and what he calls 'the voltage effect'. [0:44:41] The impact of technological advancement on our ability to scale certain solutions. [0:48:27] How field experiments can influence the process of scaling big ideas. [0:54:47] Hindrances to healthy scaling; confirmation biases, and herding. [0:56:17] Impacts of loss aversion and marginal thinking when scaling ideas. [1:05:28] Reasons for the difficulty of tackling globally important issues; multidimensionality and politics. [1:15:10] Weighing the utility of incentives when trying to encourage retirement savings. [1:19:16] Thoughts on bringing more reliable science into the policy-making process. [1:21:26] How parents can approach the promotion of critical thinking in their children. [1:25:45] John's approach to the questions he pursues; how he evaluates potential ideas and questions. [1:31:10] A little bit about John's new post as Chief Economist at Walmart and what the job entails. [1:33:53] How John defines success at this point in his life and his focus on inputs. [1:33:53]

Fundamentals of the Blockchain with Daniel Mescheder   Episode 1: Show Notes   Welcome to the first episode of our limited series focusing on cryptocurrencies and everything you need to know about them. Our first guest is Daniel Mescheder, who joins us to appropriately break down some of the basic concepts and engineering of the blockchain, using his expertise as a software engineer as the lens for this discussion. We felt this chat was the best way to launch the series and prepare listeners for the following episodes on the subject, and you can expect to hear Daniel share very helpful insight and explanations of fundamental terms and concepts such as distributed systems, consensus, hashing, digital signatures, and more. We also have time for our guest to weigh in on the subjects of smart contracts and NFTs, both of which are regular points of intrigue for the uninitiated. Importantly, we do hear from Daniel about the limitations of the technology at present, and which types of technological problems that he believes the blockchain is well-suited to address. So for all this and more, and to start this journey with us into such an important and hot topic, make sure to listen in.   Key Points From This Episode:   The reasons for Daniel's interest and involvement with the blockchain and cryptocurrencies. [0:03:33] Daniel compares the hype around AI in the 1980s and the current atmosphere for crypto. [0:04:50] Getting to grips with Daniel's specific perspective on the blockchain and explaining distributed systems. [0:06:34] How the concept of consensus fits into the subject of distributed systems. [0:11:17] Looking at Byzantine consensus problems and how these occur on the blockchain. [0:13:51] Daniel gives an overview of the elements that make the blockchain functional; hashing and digital signatures. [0:19:17] How Satoshi Nakamoto introduced an economic incentive to comply with the protocol. [0:24:09] Differentiating between the public and permissioned blockchains, and databases. [0:27:33] How Bitcoin achieves consensus and some of the downsides of proof of work. [0:33:31] An assessment of the decentralized status of the Bitcoin and Ethereum blockchains. [0:41:16] The amount of control that is held by miners in relation to transactions. [0:45:27] Understanding interactions between the blockchain and other external systems. [0:49:16] Immutability and the blockchain; what the rules allow and the questions that still need to be answered. [0:52:47] Basic engineering downsides to the blockchain. [0:54:40] Vulnerabilities on the blockchain and how these have been exploited by hackers. [0:58:23] NFTs, DAOs, and smart contracts; weighing how neatly these fit into the current blockchain ecosystem. [0:59:27] The abundance of rhetoric surrounding discussion about the future and validity of the blockchain. [1:06:09] Which problems would be well-suited to a solution found within the blockchain? [1:08:10]  

We have a jam-packed episode for all of our listeners today, with two guests, a lot of news, and many great resource recommendations. We start off by rounding up some recent updates from the world of finance and the Rational Reminder community, and spend some time talking about Ben's recent paper, titled 'Finding and Funding Good Life'. We are then joined by Robb Engen, for his third appearance on the show, to talk about how he helps his clients move on from unhealthy advisory relationships. Robb shares some of the surprising, disturbing, and ridiculous rebuttals that he has come into contact with over the years, and we reflect on the recent Twitter storm that occurred as a result of Robb sharing some of these. After this great chat with Robb, we are very happy to welcome back author of How to Change, Katy Milkman, who was recently a guest on the show, to discuss her reading habits, tips for memory, and how she balances producing and consuming both podcasts and books. To take part in this bounty of great information and inspiring ideas from these two guests, please make sure to join us today.   Key Points From This Episode:   Reflecting on and investigating Ben's paper, 'Finding and Funding Good Life'. [0:10:59] How this podcast has increased our interest in learning about and sharing non-financial ideas. [0:15:30] The part that hindsight and regret play in our estimations of happiness. [0:20:08] Looking forward to our podcast miniseries in which we explore cryptocurrencies. [0:22:41] The basics of the blockchain and digital cash in light of new technology. [0:29:02] The context that sparked today's conversation with Robb. [0:35:49] Robb explains his typical client, their portfolio, and why they contact him. [0:38:30] How Robb approaches assessing a portfolio and communicating possible drawbacks. [0:40:43] Ways in which active managers are practicing bad investment habits themselves. [0:44:02] Tracking the progress from active to passive for those that Robb works with. [0:47:09] Advice from Robb for managing the end of a relationship with an active manager. [0:48:15] Robb shares some examples of how advisors have responded to 'break-up notices'. [0:52:07] A round of Talking Cents cards with Rob; addressing social issues in a new business, quitting a job, saving versus spending, and more. [1:02:26] Katy describes her reading habits and her use of audiobooks. [1:08:15] Tips and tricks from Katy for information retention and idea compilation. [1:09:20] Thoughts on the connected nature of the behavioural science community and the benefits that Katy sees in this. [1:13:39] Some of the classic behavioural science books that Katy recommends. [1:15:07] How Katy approaches podcasting, writing, and consuming the different mediums. [1:17:05] Advice from Katy for anyone wanting to increase the amount that they read. [1:21:00]