Dear Q&A friends,
This edition of our weekly newsletter is brought to you from our mobile editorial office somewhere between Malmö and Göteborg.
Wholly in style, we present you a smörgåsbröd, which we hope is as tasty as diverse. Enjoy!
Most of us have heard about the substance 'dopamine' in relationship to social media. The hit you get when your post is liked, when an 'unread message' banner appears. Contrary to popular belief, however, dopamine does not control happiness.
As an experimental episode of the Tim Ferriss podcast, Tim invited guests to share great sections of their own podcasts. Andrew Huberman, professor of neurobiology at Stanford, shared a bit of a podcast episode that can best be described as a dopamine masterclass. It opened my eyes to the workings behind the substance and the way to use it to your advantage.
Dopamine can be best summed up as the molecule of more. It motivates us to continue the behaviour we're engaged in, spurring us into action. You can easily see how this is a useful evolutionary mechanism, as going out to hunt and forage was risky behaviour for our ancestors.
Now, the tricky part about dopamine is that we all have a baseline level, on top of which we get a little peak when we act in certain ways (finish a puzzle, win a race, hand in an RFP, ...) which then drops below the baseline level. This drop makes us feel miserable, spurring us into action to get another dopamine hit. More!
Huberman then goes on to explain how external rewards cause us to associate less pleasure with an activity itself, as demonstrated in the classic 1973 experiment at a Harvard nursery school. Kids being rewarded a 'gold star' for drawing lost interest in that activity after the reward was abandoned, because the dopamine hit shifted from the activity itself to receiving the reward.
If you want to reap rewards from our dopaminergic circuitry, according to Huberman, you can trick your mind into dopamine release during a hard activity by telling yourself "I'm doing this by choice and I love it!" at the moment of maximum friction. Spiking your dopamine after an activity by rewarding yourself makes the activity itself even harder.
Any intervention distorts the 'normal course'. The results of such actions are what is useful to observe and to learn from. We wrote earlier about the usefulness of economic sanctions in the context of the conflict in Ukraine.
"Sanctions seem most effective to take the 'energy' (pun intended) out of a conflict."
They seem to have only partially sorted that effect. Freezing bank accounts and Russian international reserves did not create the intended banking and financial crisis in Russia. Continued sales of energy products (mostly oil and gas) created a stabilizing counterbalance. Therefore, the sanctions did not have a short term effect. Today, we notice that the sanctions seem to be relatively successful in its intended medium to long term effects: ensuring Russia has trouble maintaining its military capacities.
On the other end of the spectrum are subsidies. The Dutch financial times recently featured an interesting article about subsidies on energy, also in the context of the Ukraine conflict. The common denominator in Europe seems to be to compensate for its mistake to become too dependent on Russian energy by subsidizing current energy bills. However, this will undermine the efforts to search for and implement alternatives. Alternatives that are both useful to become more independent as well as to decrease our carbon footprint.
On the effectiveness of subsidies, the article essentially comes to similar conclusions as the effectiveness of sanctions: they could work, but compromises should be minimized and implementation fast.
"Subsidies are only acceptable when they avoid great suffering of vulnerable families and support sectors where otherwise large amounts of jobs would be lost."
Sometimes, interventions are necessary. When doing so, we could take into account the power of the mass and the creativity of human beings to solve and self-correct.
The usefulness of cryptocurrencies and the blockchain technology features often on the Q&A discussion table. Though we see merit in the technology and numerous application, we're concerned about its environmental impact. Most of the current blockchain implementations consume a tremendous amount of energy. Additionally, we believe the technology is still in its early days and you need to be quite tech savvy to understand its workings. With most of its applications focused on creating new financial instruments, these new worlds have a tendency to become crowded with crooks.
However, like with any big innovation, time is required to get it adapted to what society really needs. The Economist recently reported on a seemingly big step forward in blockchain technology that is happening in the so-called 'Ethereum' network. On September 15th, it plans to change its algorithms in such a way that its network will reduce its power usage by 99%. This move, dubbed 'the Merge' (as it entails merging the current network with one that has been running in parallel in testing modus), will reduce Ethereum's energy consumption overnight by almost 100TWh, the energy usage of a small country like The Netherlands or Chile (see graph below from the Economist article).
"It can be surreal to watch this happening in real time. It is as if The Economist started to live stream its editorial meetings and allowed subscribers to commission articles and select covers."
This overhaul of software, that currently represents >$200bn in value, will be done with no downtime, has been tested for more than 2 years and was done by a decentralised group of 122 developers in 30 different countries. That is a huge achievement.
"More important still, the merge will, if successful, suggest that Ethereum has the capacity for self-improvement, opening the door to more sweeping changes."
I also wonder about the impact on power prices and global energy distribution. All in all, a big step forwards for blockchain technology. I'm more curious than before to see what it'll lead to.
Balancing your ego with a sense for the unity of our universe is often a matter of seeing the right illustration of the facts. A story that resonated highly with me was told by a monk who once confronted a person that thought a little bit too much of himself and needed no one. The monk pointed at a nearby tree and explained how the man's lungs could not function without trees and plants doing the reverse, turning carbon dioxide into oxygen. The mirror images of leaves and lungs could only co-exist because of each other.
Steve Jobs often sent e-mails to himself to capture what was on his mind. In a recent release of some documents from his family, one of these e-mails reminded me of the lungs & leaves story.
Accepting our dependencies might be a great step. Loving them might even be more joyous.
That's it for this week! If you got forwarded this newsletter and like what you read, get your own. Or get an impression of everything else we shared in our renewed, searchable archive.
As always, we would love to hear your thoughts and tips. Just reply to this e-mail to get in touch with us.
Have a great week!
Quinten & Alphons