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Comment by wewewedxfgdf | Hacker News Reader

A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

https://www.laphamsquarterly.org/revolutions/miscellany/paul...

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The amount of misuse this quote gets is as absurd as it is tiresome. People were using it to defend NFTs too. Someone’s opinion on one thing says nothing about someone else’s opinion about a different thing.

Yeah, the Krugman quote gets pulled out around literally everything. Bitcoin/Blockchain/NFTs, Metaverse, AR/VR, I'm sure some other things I was forgetting.

For every Krugman "the internet will be as useful as the fax machine" quote, there's a corresponding quote like Gartner in 2022 - "Gartner Predicts 25% of People Will Spend At Least One Hour Per Day in the Metaverse by 2026."[0]

[0] https://www.gartner.com/en/newsroom/press-releases/2022-02-0...

The point is that the upside of investing in a technology before everyone else does is huge.

The downside is whatever you end up investing it in.

Hype is then technologies fighting for that slice of the pie.

The upside to current AI is that we've solved natural language interaction with computers. We have the Star Trek computer you can talk to. You probably don't want to because natural language is naturally terrible at exactness which is why humans have endless meetings to discuss the next meeting about next quarters targets.

This was science fiction in 2020. Today I can do it on a top end consumer grade GPU.

By comparison blockchain is bullshit - to find out why just ask what the clearance rate is of the bitcoin network. You won't change the world at 7 transactions a second. If someone manages to build a block chain that can clear 10 million transactions a second you'd have something on par with the current AI hype train because it would be a legitimately useful finance tool and it will be worth investing billions in.

> We have the Star Trek computer you can talk to.

We certainly do not. I haven’t watched all of Star Trek, but from what I did the computer always understood the question and either executed it perfectly or was unable to comply for some reason outside of its control and broke down exactly what it was so the characters could fix it or find an alternative. Characters didn’t regularly have to verify the computer’s work, they just knew it was correct.

You're almost describing the lightning network, which depending on where you get your numbers can handle around 10-40x the transactions per second of Visa or MasterCard, neither of which are above 70k in anything I found with a quick search.

Granted it sounds like the lightning network has other issues.

He’s 100 percent correct and if you disagree you underestimate the effects of the Fax Machine on the economy and over-estimate the effects of the internet of 2005.

https://www.bloomberg.com/news/articles/2021-05-24/paul-krug...

Even though the Internet has displaced fax machines, fax machines enabled instant, worldwide, legal (signing contracts and such) communication.

That's not insignificant. They're stupid now because we have the Internet but they were a major leap in conducting business.

> most people have nothing to say to each other!

Now to be fair. He wasn't wrong in all his claims.

I guess it works if you replace the internet with email and if people don't include spammers.

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