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Dr Strangelove

In a mailing list post of November 2008, Satoshi Nakamoto — the pseudonymous creator of bitcoin — agrees cryptography can’t solve political problems, but points to the possibility of it “winning a major battle in the arms race”, gaining “a new territory of freedom for several years”:

“Governments are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.” Satoshi Nakamoto, 6 November, 2008

In a later post, Satoshi Nakamoto repeats the “race” analogy, in respect of how his system design works:

“When you broadcast a transaction, if someone else broadcasts a double-spend at the same time, it’s a race to propagate to the most nodes first. If one has a slight head start, it’ll geometrically spread through the network faster and get most of the nodes.” Satoshi Nakamoto, 17 July…

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The phrase as good as gold is usually taken to mean well behaved and obedient. Strictly speaking, however, gold is no longer considered good or obedient in the manner of things past but is still believed genuine by being difficult to counterfeit in relation to a promissory note, which by optimal standards, becomes gilt edged (or as good as gold).

It might be further conjectured it is better to say as ideal as gold, but this perhaps is a futuristic expectation rather than a reflection: both John F Nash Jr. …

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“There have often been attempts by various students of history or writers on Economics to link times and places of good economic progress to cultural circumstances that might be imagined to favor, somehow, the good fortune.” John F Nash Jr., Ideal Money and Motivations of Savings and Thrift, 2012

John F Nash Jr. writes an afterword in The Essential John Nash (Kuhn and Nassar, 2002, page 241) where Nash acknowledges his sudden prominence (in 1994) to what is called “game theory”, upon which Nash starts attending meetings and becomes involved in a research project which Nash simply describes as “concerned with the realisation of the Nash program.” …

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A distrust of central banks is inherent in both John F Nash Jr.’s Asymptotically Ideal Money and Satoshi Nakamoto’s bitcoin, in words which almost mirror each other — to the extent it is speculated John Nash and Satoshi Nakamoto were one in the same — by expressing the value of existing money as diluted, the more new money is created.

This can become an observation about the nature of inflation, which through history has come to represent both the supply of money and the general price level.

In the realm of game theory however, further axioms are included which can help explain the shared distrust of central banks in both Nash’s ideal money and Satoshi’s bitcoin. …

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The opening passages of the bitcoin white paper address problems of fraud and dispute mediation which are regarded as inevitable where commerce on the internet has come to rely exclusively on financial institutions serving as trusted third parties to process electronic payments:

“A certain percentage of fraud is accepted as unavoidable.” Bitcoin: A Peer-to-Peer Electronic Cash System, 2008

Indeed, it becomes a small psychological jump from thinking a certain percentage of fraud is accepted as unavoidable TO a certain percentage of fraud is acceptable, in forming anticipations and expectations of the law, justice, and regulatory environments by which money assumes utility and value. …

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Source: Google

The representation of inflation in bitcoin expressed as steady and constant new coin issuance, means at any point in time, it is known how many coins will exist and when.

For example, in December 2020, approximately 88% of total coins were mined, helping create a realistic and rational expectation the existing bitcoin inventory could only sate future demand at a higher price than current.

Is Bitcoin a Reliable Medium of Exchange?

Such expectancy creates reluctance for bitcoin investors (hodlers) to spend their bitcoin, since they believe it a sensible probability they’ll be surrendering future growth in doing so.

This means as a retail money, bitcoin has disadvantages — even disregarding the settlement time not only for transactions where buyer and seller are physically present, but also the trust involved where commerce is conducted on the internet, and where transactions are not simultaneous and parties are strangers to each other — but this doesn’t mean bitcoin is an unreliable medium of exchange: a “medium of exchange” is wider than a Visa or merchant type system of adoption, where transactional efficiencies become synonymous with “scaling”. …

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“Chancellor Nash” by @ormpho

It is bitcoin folklore that Hal Finney was party to the first transaction on 12 January 2009 with creator Satoshi Nakamoto, a pseudonym for person or persons unknown.

One of the usual suspects for the identity of Satoshi Nakamoto is Adam Back, because bitcoin describes itself as a proof of work system similar to Back’s Hashcash.

However, Back denies he is Satoshi Nakamoto:

Another candidate for Satoshi has been named as John Forbes Nash Jr., the mathematician who had a Hollywood film A Beautiful Mind (2001) made about his life.

Hal Finney was aware of Nash:

Following on from the idea of “proto-Extropian” — and given Nash’s work in cryptography, mathematics, game theory, and economics — there are 19 compelling reasons to believe Nash was…

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There are observations from both Ludwig Wittgenstein and John Forbes Nash Jr., converging on the inherently temporal nature of the human condition: Wittgenstein remarking eternal life doesn’t represent infinite duration; Nash remarking the future is presumably long, unless some miracle occurs to bring it forward.

N-Person Games

In 1950, John Nash contributed a one-page PNAS article that defined and characterized a notion of equilibrium for n- person games.

This work came from the study of von Neumann’s and Morgenstern’s Theory of Games and Economic Behavior, where the definition of equilibrium for “noncooperative” games was largely confined to the special case of “two-person zero-sum” games, in which one person’s gain is another’s loss, so the payoffs always sum to zero. …

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Chess board

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“In game theory, the Nash equilibrium, named after the mathematician John Forbes Nash Jr., is a proposed solution of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.” Wikipedia

The Nash equilibrium can also be described as existing where players cannot achieve payoff benefit within the rules of a game, by behaving unilaterally. …

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Ludwig Wittgenstein

No taxation without representation is an old time slogan where a population protests against taxes, unless represented in the government issuing the taxes.

The implication being representation is a privilege to be paid for: that every government, court, election process, law, legislature, culture, jury verdict, democracy, and democratic institution is (literally) representative of majority decision making.

At the heart of representation are contracts, which can be expressed as principles of political rights — a social contract — or binding agreements intended to be enforceable by law.

The genealogy of representation has been subject matter for philosophy, perhaps most notably through the works of Friedrich Nietzsche, Ludwig Wittgenstein and Jacques Derrida. …


Jon Gulson

Ideas in games, language, and trust.

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