The binomial time-energy – acrual
This article is a summary and also the way I connect the dots of what I have learnt after reading most of Nick Szabos posts on money.
According to the book “The selfish gene” we don’t like to give things for free unless it is within our kin, because we selifishly want to perpetuate not our particular genes, but those of our lineage.
As a result, while we can easily exchange things on credit within our kin because we can expect a differed exchange over time, we can’t do so on a large scale since credit is based on trust and you should not trust strangers.
Individuals within your kin have a clear advantage at being fair at exchange with you. Strangers don’t. This is not what you wish it were, this is just the way it is. You should trust people who has skin in the game, who wins when you win and loses when you lose.
The current political and financial system is based on trusting politicians and bankers that win when you lose and win even more when you win.
When there is no trust, we won’t in exchange either goods that satisfy our needs or goods that can be later exchanged for those needs, but they have to be present goods, that is, final settlement of the debt there is between both parties at an exchange.
If it is not a present good, what we are doing is actually exchanging a good/service for credit. Current fiat money is credit because it requires several central parties to fulfill several duties in order for it to have certain value.
A present good has value because the market decides it does, like in the case of gold. Nobody decided it has to have value. Therefore it really settles debts/disputes.
But it is not enough with being a present good. It needs to be scarce? Why?
Because scarcity is a measurement of the work needed to get a product/service, of what I call the binomial energy-time. You want in exchange things that represent actual time and energy spent. If it is not universally known as scarce, it will not be demanded.
It also needs to have certain properties you all know about like durability, transportability, but demand is certainly the one most difficult to achieve.
Mining is the most transparent way of converting energy and time into money. Bitcoin is the only money where you can easily estimate convertibility between the binomial energytime and any good and service. Price in Bitcoin is just that exchange and it is only a matter of time that the market acknowledges this fact.
Published at Tue, 15 Oct 2019 14:22:25 +0000
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