Why is it that cryptographers made so much more money off Bitcoin than Austrian economists did?
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Yes this was always a fallacious argument that comes from taking economic theories too dogmatically. It's like arguing that an insurance contract can't be useful as an insurance contract until it's useful for something more concrete, say generating power or growing food.
It also helped me, when designing bit gold, that I studied the actual archeology and ethnography of the origins of money, and knew that money or something very much like it rose millenia before the dawn of spot commodity markets and widely respected property rights.
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Would love to know any sources you might remember off hand on this topic of the origins of money. Thanks.
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Prior to that time, my main source was the first few chapters of Roy Davies and some related readings in archaeology and ethnography about shell money etc. But I've since expanded my reading, you can finds refs in my own works:https://twitter.com/NickSzabo4/status/954225789129469952 …
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Excellent, thank you.
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Nick how would you apportion value in
#bitcoin between (security/not confiscateable) vs fixed supply? -
I think a wide variety of supply algos would have worked, as long as they are predictable. Bitcoin's works well because it is simple enough for a large number of users to understand. Security/trust min is responsible for more of the value, as I assess it.
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Indeed, Bitcoin at the core relies on people's 'bounded rationality' to sustain itself. So the simpler the incentive scheme, the more people will buy into it and contribute to its continued security. I wrote about this recentlyhttps://medium.com/@hugonguyen/bitcoins-incentive-scheme-and-the-rational-individual-dc20effa4715 …
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@NickSzabo4 how do you think Bitcoin's transition to a fee-driven model will impact security? given that fees are a lot less predictable than a fixed supply/fixed inflation schedule? -
And how you think that transition will impact the set of unusable UTXOs or 'dust' created by rising tx fees?
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After schnorr signatures the dust can be spent with larger UTXOs in the wallet without spending more fee than the dust is worth. But unspendable outputs are great for raising the value of everyone else’s coins a little.
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In turn, Bitcoin now allows people to observe the nature of money more deeply as its properties emerge organically in real time. This is an advantage over traditional economist thought.
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This is a very smart move. Money is a tool for exchanging goods and services, above all else, and researching the very essence of money before developing your own is crucial.
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Food was the first money. Alpha male getting first choice is a little like taxation.
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When people say there is not use case for
#Bitcoin they has zero understanding of the value of its security/not being confiscatable and trust minimized properties. That is actually quite laughable. -
People don’t know what they don’t know, if it’s all we think it could be they will learn.
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He almost said it.
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The Austrian agreement was simply that something can’t be used as money before it has a market value. I’m sure if Rothbard was alive he wouldn’t have struggled with something could develop a market value due to its surprisingly useful properties (as money).
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People can have foresight and foresee that some things make much better money than others. Especially true today when money has long been a specialized product. Much harder to foresee during the origins of money (OTOH there were no actual spot market prices back then either).
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Very interesting discussion guys. Thanks for sharing
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